If you develop osteoporosis, your doctor might prescribe for you a drug called teriparatide, which is sold by the drugmaker Eli Lilly under the brand name Forteo.
In the pharmaceutical industry, Forteo, which helps rebuild bone, is what is known as a blockbuster — a massive, reliable seller that brings in billions of dollars for its maker. But, when you walk into the pharmacy to pick up your prescription, you might be in for a shock. After seeing its prices rise the third-most among top-selling brand name drugs between 2012 and 2017, Forteo now costs an average of $3,906.62 in Colorado for a one-month supply, according to a report released this month by the state’s Department of Health Care Policy and Financing.
Cross the border into Canada, however, and Forteo is a relative bargain — $880.58, according to the same report.
That $3,026.04 difference explains why Colorado health officials, after two years of ups and downs, continue charging forward with a plan to import prescription drugs from Canada, even as they have begun to realize that the savings might not actually impact state Medicaid spending all that much. Instead, the state believes the importation program will mainly benefit the commercial sector — the private insurance companies and self-funded employers that provide health coverage for roughly half of all Coloradans.
On Monday, the state released an “invitation to negotiate,” seeking potential vendors who will help pull the importation program together. The state is looking for a company to assist with administration of the program, as well as a wholesaler in Canada to export the drugs and an importer in the United States to make sure the drugs meet safety standards and distribute them.
Interested companies have until April 26 to apply. If all goes according to plan, the state will submit the program for federal approval in the fall, and it will be up-and-running beginning in 2023.
“Everything that we do will color inside the lines and follow the protocols established by the (Food and Drug Administration) and the feds,” said Kim Bimestefer, HCPF’s executive director. “… The quality will match the same protocols, but the prices will be dramatically different.”
Savings for the privately insured — but not Medicaid
The 117-page report released this month by HCPF examined the prices of 50 prescription drugs in Colorado and in Canada. The differences were most notable in the most expensive drugs, like Forteo. But they exist all along the price spectrum, the report found. Epi Pens that are $250 in Colorado are $88 in Canada. An inexpensive thyroid drug called Synthroid that costs $1.20 in Colorado is even less expensive in Canada — only 8 cents.
All together, the HCPF report found that importing those 50 drugs from Canada could result in an average savings of 63%.
But the report contained a surprise: An importation program wouldn’t actually save much money for the state Medicaid program — which, in the pandemic, is now covering close to a quarter of all Coloradans. The reason has to do with a federal rule requiring pharmaceutical companies to sell drugs to Medicaid at their best price. Medicaid also benefits from rebates that are required to grow rapidly when drug prices increase faster than inflation.
Bimestefer said HCPF analysts discovered the post-rebate prices that Medicaid now pays for prescription drugs are already comparable to prices for those drugs in other countries.
“That is an astounding finding,” she said.
Drug rebates for Colorado’s Medicaid program tripled between 2014 and 2019. The end result was that the Medicaid program in Colorado actually paid less in total for prescription drugs in 2019 than it did in 2014.
So Bimestefer said the importation program will mostly help those who are privately insured.
“We can build it the way that the proposals come in.”
Exactly what Colorado’s program will look like is still up in the air. By issuing an invitation to negotiate — as opposed to the more standard request for proposal — state officials are hoping to keep discussions with potential partners open ended. Exactly what drugs are imported and how the program runs will only be finalized after Colorado has selected its vendors.
“There isn’t a playbook for this,” Bimestefer said. “The industry is creative and innovative and expert. So it gives us the most flexibility. … We can build it the way that the proposals come in.”
Colorado also hopes to benefit from greater certainty around the whole concept of importation, now that federal authorities have finalized the rules allowing states to set up their own programs. The combination of the federal rules and the state’s flexible approach have Bimestefer confident that Colorado will avoid the fate of Florida — which launched its own importation program only to have zero companies bid on the contract.
Kelly Swartzendruber, a pharmacist with HCPF who is working on the importation program, said the state has received initial interest from some Canadian wholesalers. Bimestefer said HCPF is talking with Canadian authorities to make sure Colorado’s program doesn’t harm Canada’s supply of drugs, something Canadian officials have previously raised concerns about.
“It is not our intention to in any way impede the Canadian supplies,” Bimestefer said. “We’re doing everything we can to be a good partner to our friends to the north.”