The FDA has finished draft guidance on one of two of the Trump administration’s drug importation policy ideas, referred to as Pathway II. The title of this post may seem like a joke for those of you who follow the issue of drug importation in America, but it is real. As a reminder, in August 2019 the administration took its support for drug importation a step further by stating its willingness to support state drug importation programs, Pathway I, and a new idea to give drug companies greater flexibility with their global drug supplies to offer better prices in the U.S, called Pathway II.
Earlier this week, the guidance on Pathway II was sent to the White House Office of Management and Budget (OMB), although I believe it’s not public yet. I found out about the submission to OMB here (BioCentury). It doesn’t relate – at least not directly – to personal drug importation, but it frees the hands of drug companies to sell their own foreign versions of FDA-approved drugs at lower prices in the U.S. market. Its indirect relation to personal drug importation is noted at the end of this post.
Some of this is guesswork. It’s not entirely clear to me what drugs are permissible under Pathway II and it won’t be until the draft guidance is made public.
Let’s just break it down. The discussion below applies to brand-name (not generic) drugs.
1. Drug companies make their products in many countries and ship those same drugs around the world to different markets. Sometimes a drug company will manufacture a product in only one plant, which is then shipped to many countries. In other cases, two or even three plants will make the same drug for different markets. “FDA-approved” drugs must be made in manufacturing plants that are registered with the FDA. Wherever they are made, all FDA-approved drugs must have a National Drug Code (NDC) number. Those FDA-approved drugs also are labeled and packaged in accordance with U.S. law. Most prescription drugs sold in the U.S. are made outside the U.S., imported by drug companies and sold to wholesalers in the supply chain. It’s legal to import those drugs.
2. There are foreign versions of those same drugs sold all over the world, which do not have an NDC number. That’s because other countries require their own codes, or other identifiers, for approved drugs in their markets. Canada, for instance, has a Drug Identification Number (DIN). According to the plan announced by the Department of Health and Human Services (HHS), under Pathway II:
“Manufacturers of FDA-approved drug products would be able to import versions of these FDA-approved drugs that they sell in foreign countries into the U.S. To use this pathway, the manufacturer or person authorized by the manufacturer would need to establish with FDA that the foreign version is the same as the U.S. version (such as through manufacturing records).”
Also, to sell those foreign versions in the U.S. would require a different, new, NDC number.
3. In referring to “versions” of FDA-approved drugs, they must mean foreign unapproved versions. After all, they are either “FDA-approved” or not. Those that are not, are “unapproved” in the lexicon of drug importation. This is surprising. According to the FDA, foreign versions of FDA-approved drugs are often not the same as the FDA-approved version (i.e Nexium tablets in the EU, not Nexium capsules like in the U.S.). It’s one of the reasons the agency gives for why they can’t guarantee the safety of those drugs to Americans who want to personally import them.
HHS is saying that the drug company seeking a new NDC number for a foreign version of a drug must show that the drug is the “same.” But this is a nebulous term. Do they mean “identical”? Maybe, but HHS didn’t use that word in announcing the plan. But BioCentury did in its analysis (italics added for emphasis):
“While the imported products would be designated with different NDCs, manufacturers would be required to ensure that the imported drugs are identical to those produced for the U.S. market. The imported drugs would be manufactured in the same factories as those intended for the U.S. market.”
If that’s true, then HHS is merely saying you can sell FDA-approved drugs under a different, agreed upon NDC number. If that’s the case, then there would be no additional burden of proving safety to the FDA. After all, it’s already an FDA-approved drug.
And with Pathway II, there are no geographical limitations. The imports can come from Canada, Croatia, Cambodia, and any country (that start with any letter) – as long as the manufacturer can show that it’s the “same” as the FDA-approved drug.
How will this lead to lower prices? I’m not certain of this, but I believe that the concept of how this will lower drug prices goes like this:
The drug companies have contracts with pharmacy benefit managers (PBMs). Those contracts are based on NDC numbers. Let’s say the drug Januvia, made by Merck, costs $20,000 for 2000 pills, $10/pill, under a contract with a CVS Caremark (this is guesswork to give an example). Within this fictional scenario, the list price is $25,000 but CVS Caremark gets a 20% rebate. Merck is locked in to that $25,000/2000 pills price. But that is specific to Januvia’s NDC number. If Merck can slap a new NDC number on new Januvia packaging, then it’s freed from this list price! It could then sell “Januvia 2.0” for less than $25,000 for 2000 pills but more than $20,000 that they actually get and still make as much money.
In the case of Januvia, the drug sold in the U.S. is made in the UK. Presumably the same, identical drug is sold in the UK, too. I don’t believe this is even a “foreign version” of an FDA-approved drug, but an FDA-approved drugs packaged differently.
The wild card here is whether or not HHS actually means foreign versions of FDA-approved drugs. My favorite example is GlaxoSmithKline’s Daraprim. The FDA-approved version sold by Vyera, formerly Turing Pharmaceuticals, is still about $750/pill. The GlaxoSmithKline version is about $5/pill in the UK. Would GlaxoSmithKline be allowed to sell the foreign unapproved version? According to the FDA, they would have to show that it’s the “same” and made in an FDA-registered plant.
So how does this relate to personal drug importation? Americans want to lawfully buy foreign medications at lower prices when they can’t afford local pharmacy prices. As part FDA’s public education, the agency seems to say it’s generally illegal to import medications for personal use because they can’t guarantee the safety of foreign unapproved drugs. We know, of course, that the lack of FDA’s guarantee doesn’t make the GlaxoSmithKline Daraprim less safe than the FDA-approved version. Now, apparently, the FDA is potentially saying ‘yes’ to foreign unapproved drugs to help drug companies charge less but still make a lot of money. If that ends up helping patients at the pharmacy counter, the stated goal of Pathway II, then it’s great. It’s also more evidence to support the safety of personal drug importation from licensed pharmacies in other countries.