Plan Dropped to Reimport U.S.-Made Medications

Citing cost and safety problems, the Clinton administration said Tuesday that it will block a program passed by Congress in the fall to allow cheap prescription drugs to be reimported from abroad.

In a letter to President Clinton, Health and Human Services Secretary Donna Shalala said that she could not comply with the program’s requirement that significant cost savings be provided to consumers and that the drugs be safe.

“I feel compelled to inform you that the flaws and loopholes contained [in the new law] . . . make it impossible for me to demonstrate that it is safe and cost-effective,” she wrote in a letter dated Tuesday. “As such, I cannot sanction the allocation of taxpayer dollars to implement such a system.”

The legislation was intended to change current law to permit pharmacists and wholesalers to reimport prescription drugs originally manufactured in this country for sale abroad.

Pharmaceutical products are often much cheaper in other countries--as much as 30% to 50% less than in the United States--because most foreign governments control prices to keep drugs affordable for consumers. The United States is one of the few countries that does not have price controls for prescription drugs.

The measure was part of the 2001 agriculture spending bill signed into law by Clinton in October. At the time, White House officials warned that the reimportation provision could prove unworkable.

“Independent analysts were saying it does not address the issue of how to expand prescription drug coverage to the elderly, and it was unclear how many people would have access to the discounts,” said Chris Jennings, Clinton’s chief advisor for health policy.

The measure will expire in five years, making it unlikely that many drug wholesalers would make the investment necessary to create the infrastructure needed to reimport drugs at a significantly lower cost to consumers.

The reimportation measure initially appeared to be a quick way to help the elderly obtain affordable prescription drugs. The idea was initially championed by border-state Republicans, including Sens. James M. Jeffords of Vermont and Olympia J. Snowe of Maine. Many of their constituents have traveled to Canadian pharmacies to buy prescription drugs at prices much lower than those for the same medications in this country.

However, the measure gained support among a broad bipartisan group of lawmakers in both houses of Congress, in large part because it was an election year and members of both parties wanted to say that they had done something to help the elderly buy affordable prescription drugs.

Since there was deep disagreement on any major change in Medicare that would have given insurance to the elderly to cover prescription drugs--Republicans were leery of expanding the government insurance program and preferred a private-sector approach--the measure appeared to be the best that the two parties could agree on.

But in the rush to get something done, there were no hearings on the measure and there was little clear information about the mechanics of how it would work.

Overlooked, for instance, were the complexities of the international pharmaceutical business and the Food and Drug Administration’s strict safety rules requiring that any drugs sold in the United States carry the appropriate U.S. label. This means that before a drug imported to France could be resold in the United States, it would have to be relabeled, an expense that would erase some of the savings for U.S. consumers.

Pharmaceutical companies have an array of contracts with foreign buyers of prescription drugs and could add provisions to make it unattractive to foreign wholesalers to sell the drugs back to the U.S. market. Industry officials adamantly opposed the legislation. They argued that it could lead to unsafe drugs reaching U.S. consumers, since drug companies would not have control over how the drugs were stored once they reached foreign buyers. Privately, they also feared that it could be a back door to price controls.

Their view won support from a number of former FDA commissioners of both parties who sent a letter on the industry’s behalf saying that they too thought the legislation posed significant safety concerns.

On Tuesday, industry officials welcomed the news that Shalala had decided against implementing the legislation.

“Like many former FDA commissioners and patient groups, we oppose the reimportation legislation because it would increase risk to American patients and would not provide any significant savings for individual patients,” said Jeff Trewhitt, a spokesman for the Pharmaceutical Research and Manufacturers of America, the group that represents prescription drug manufacturers and researchers. “Secretary Shalala’s findings confirm all of our concerns.

“A number of logistical and safety questions were raised that never got answered because they ramrodded the legislation through.”

But backers of the bill, including Sen. Byron L. Dorgan (D-N.D.), who co-wrote the measure, were quick to express their disappointment.

“The best approach would have been to say, we’ll pass a law that does something and then we will wait and see how the drug companies react,” Dorgan said. “If they start playing games, then at least we’ll all know who the villain is. But this makes no sense at all. Now we know the drug companies will do nothing because we’re doing nothing.”

Implementation of the bill would have cost about $23 million in fiscal year 2001, according to a White House official.