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Kiowa Heath Mart Pharmacy techs Jonah Schofield, left, and Jessica Sierra, confirm a recently filled prescription on March 6, 2020, in Eads. (Mike Sweeney, Special to The Colorado Sun)

Colorado has taken another step toward importing lower-cost prescription drugs from Canada, after signing contracts with companies on both sides of the border that will handle the transaction.

The state hopes that bringing in regular, everyday prescription drugs from Canada, where they are sold at a lower price than in the United States, will help lower drug costs for people here. On Thursday, the state announced that it has signed deals with three companies: AdiraMedica, a wholesaler with a subsidiary in Canada that will act as the exporter; Premier Pharmaceuticals, an Idaho-based wholesaler that will act as the importer and distributor; and Rocky Mountain Poison and Drug Safety, which will run a program to collect reports on the drugs’ safety.

“We have hit a major milestone on importation, and that is, if you will, setting up the pathway and the partner contracts in order to enable the importation.” said Kim Bimestefer, the executive director of the Colorado Department of Health Care Policy and Financing, which is overseeing the importation program.

How it will work

Bimestefer’s department administers Medicaid in Colorado. But the drug-importation program is not aimed at reducing the state government’s prescription drug spending — which is around $1 billion a year, Bimestefer said.

The explanation for that is contained in a report released by the department last year that found, due to rebates and federal regulations, the prices Medicaid pays for drugs are already comparable to the prices of drugs in Canada. Bimestefer said Medicaid’s drug spending has been flat in recent years, while it has continued to climb for people on private insurance.

As a result, the state has set up the importation program with the goal of helping those privately insured folks, with the imported drugs ultimately ending up in local pharmacies.

Lauren Reveley, who is leading HCPF’s drug importation program, said AdiraMedica will work with the state to negotiate to purchase drugs from manufacturers in Canada. AdiraMedica will then buy the drugs and sell them to Premier Pharmaceuticals. Premier will contract with a laboratory to test the drugs and make sure they are what they claim to be, then will repackage and relabel the drugs and distribute them to participating Colorado pharmacies, which will sell them to consumers.

Meanwhile, Rocky Mountain Poison and Drug Safety will set up a program to monitor for adverse events and other safety concerns, so the state can spot problems in the supply chain.

Reveley said the system is designed to be market-driven, meaning the state will facilitate it but not need to finance it with taxpayer dollars. So far, Colorado has spent about $1.5 million to get the program up and running, Reveley said.

Seeking federal approval

Colorado has not yet identified which drugs it will seek to import. Some — biologics, like insulin, for instance — are off the table due to federal regulations. For others, it depends on how negotiations with manufacturers go, Reveley said. But the state is expected to finalize its list in the coming months because it’s a requirement for winning federal approval for the program.

Photo illustration by freestocks on Unsplash

Bimestefer said the state plans to submit its application to the federal Food and Drug Administration this fall. After that, it’s unclear how long the feds will take to review it.

State drug importation programs were made possible under rules passed during the Trump administration and continued during the Biden administration. But, so far, no state programs have been approved. Florida was the first state to file an application with the feds, but, nearly two years later, it still doesn’t have an answer.

A Polis priority

Colorado’s drug importation program is a major piece of Gov. Jared Polis’ health care agenda, one that has taken on even greater significance in an election year as Polis touts his efforts to save people money.

In a statement, Polis called Thursday’s announcement of the program’s contractors “a major piece in place to make drugs more affordable.”

“I am proud to see the progress of the program and the steps forward in making lower health care costs a reality across Colorado and look forward to delivering real results and savings,” Polis said.

In her own statement, Lt. Gov. Dianne Primavera, a four-time cancer survivor, referenced her personal experiences trying to pay for life-saving medications and said the administration is “committed to creating new innovative ways to ensure all Coloradans have access to high quality and affordable health care.”

Navigating Canadian concerns

Even if the program receives federal approval, it still faces significant hurdles. Among the biggest: Will Canada actually go along?

For years, officials and advocacy groups in Canada have raised concerns about what large-scale export of drugs to the U.S. would do to the price and supply of medicines in Canada. This resulted, in late-2020, in a rule blocking the export of medications that are in short supply.

“Our health care system is a symbol of our national identity and we are committed to defending it,” Canada’s health minister said at the time.

But, to Bimestefer and other Colorado officials, this is not exactly a no.

Bimestefer said she has held meetings with the Canadian consulate to better understand Canada’s position, and she believes Colorado can construct its program in a way that does not hurt Canada’s pharmaceutical supply. The state, she said, will only look to import drugs that are not in shortage — and most of the most commonly used medications are not.

“We have committed to monitor and to not import drugs in a way that would impede any of their supplies,” Bimestefer said, speaking of a need to “be a very good partner to our friends to the north.”

“I believe they came down in a way that allows us to do this.”

Beating industry opposition

If Canada goes along, that leaves only one obstacle remaining: the pharmaceutical industry, which has staunchly opposed the effort.

In 2020, the industry filed a lawsuit seeking to stop implementation of the federal rules for state importation programs. That lawsuit is still ongoing — Florida earlier this year filed an amicus brief in support of the federal rules; Colorado has not done the same, according to federal court records.

The industry also opposed a bill in Congress that would write the federal rules on state importation programs into law.

“Drugs that enter the United States through drug importation schemes would circumvent FDA’s review and approval of our medicine supply,” Priscilla VanderVeer, the vice president of public policy at the pharmaceutical industry group PhRMA, said in a statement following a committee hearing on the federal bill.

Advocates for importation, including Bimestefer, said the programs will have numerous safeguards, including a requirement that drugs be purchased directly from manufacturers. But those requirements also make the pharmaceutical industry’s opposition more consequential — essentially giving the industry veto power over the programs.

Still, Bimestefer said she is optimistic that some manufacturers will want to work with Colorado to export Canadian drugs.

“We are poised to be able to do what is right and poised to be able to take on those who would impede us in bringing savings to Coloradans,” she said.

“We are going to find manufacturers who are willing to negotiate. If we didn’t think we would be able to find manufacturers who are willing to negotiate, we wouldn’t be pursuing this.”

John Ingold is a co-founder of The Colorado Sun and a reporter currently specializing in health care coverage. Born and raised in Colorado Springs, John spent 18 years working at The Denver Post. Prior to that, he held internships at...