Colorado took another step toward importing lower-cost prescription drugs from Canada on Monday when it submitted a formal application to the federal government for approval of the program.
The application for the first time reveals which drugs Colorado hopes to import — 112 of them in all, at an average cost savings of 65% over U.S. retail price. An analysis by the state Department of Health Care Policy and Financing estimates that the importation program could save Coloradans $53 million to $88 million annually on prescription drug spending.
“It’s a huge step for us,” said Lauren Reveley, the drug importation program manager at HCPF, which is overseeing the program. “It’s a significant milestone.”
The drugs on the list contain quite a few familiar names. There are EpiPens, which the state estimates it can get at a 66% price reduction from Canada — $91.13 per pop, instead of the $264.89 the HCPF analysis says they cost in the U.S. There are drugs to treat diabetes, cancer, multiple sclerosis, asthma and irritable bowel syndrome. There are drugs to help people stop smoking.
The most expensive drug on the list — the HIV treatment medication Cabenuva — could be imported from Canada for more than $3,000 less per dose, according to the state’s analysis. The least-costly drug on the list, the thyroid medication Synthroid, costs 95 cents per dose in the U.S. but can be had for 7 cents per dose in Canada — a savings of 93%.
“Colorado’s Drug Importation Program is a major piece in our work to lower the cost of prescription drugs, and this final step gets us even closer to making lower health costs a reality for Coloradans,” Gov. Jared Polis said in a statement.
Assembling the drug list
The drug list was created by looking at drugs that “are high cost or high volume drugs that Colorado consumers struggle to afford,” the state wrote in its application to the federal government. To make that determination, the state used data from the Colorado All-Payer Claims Database, a warehouse for information on what Colorado consumers and insurers are actually paying for health care and prescription drug costs. That makes the numbers uniquely tailored to Colorado.
The program is not allowed to import biologic drugs, which is why a medicine like insulin is not included. And the drug list also contains a number of other important caveats.
For one, the list is “aspirational,” according to the state’s application. In order to actually be able to import the drugs, Colorado will need not only the approval of the U.S. federal government but also the OK from the Canadian government and the agreement of the drugs’ manufacturers.
“We anticipate our initial list for the early years of the program to be significantly more narrow than the list presented,” the state wrote in its application. “In large part, this is due to likely modest participation from manufacturers in the short term, with a focus on small innovator companies and generic manufacturers. We believe, however, that with proof of the importation concept, more manufacturers will agree to participate due to market incentives that importation can offer.”
How the program will work
To pull off the importation program, Colorado has created a complicated system of importers, exporters and drug testers.
It will start with a Canadian wholesale company called AdiraMedica buying drugs from the manufacturers. AdiraMedica will then ship the drugs across the border using the port of entry in Buffalo, New York. From there, the drugs will be shipped to the designated importer, a company called Premier Pharmaceuticals, at its facility in Boise, Idaho.
Premier will send a small batch of each shipment to a lab to test for quality and authenticity. It will then route the rest of the shipment to another company to be relabeled. Once it gets the drugs back from the re-labeling company, Premier will be able to sell the drugs to participating pharmacies in Colorado.
The drug-importation program is designed to save money for Coloradans with private health insurance or Medicare. Because of the large rebates it enjoys, Colorado’s Medicaid program already is able to buy drugs at Canada-level prices, meaning the importation program is not expected to save HCPF, which administers Medicaid in Colorado, any money.
But Kim Bimestefer, the HCPF executive director, said the program could save money for the state via more affordable employee health benefits or on better deals for prescription medicines for people incarcerated in prisons.
Since the program is designed to be largely free-market, the state government doesn’t expect to spend huge money financing it.
The long wait ahead
It is unclear when the federal government may decide on whether to approve the state’s application. Colorado is the second state to submit an application to import drugs from Canada. The first state, Florida, has had its application pending for two years and has filed a lawsuit against the Food and Drug Administration to move things along. In a response filed last month, the federal government denied that it is dragging its feet on approving Florida’s application.
Bimestefer said Colorado worked to keep FDA officials in the loop as it developed the program, hoping that will lead to a shorter time frame. Reveley said the FDA has told the state the initial review timeline will take six months.
“We would hope that six-month review ends with an approval, but no guarantees,” Reveley said.
Even if the FDA gives its OK, other major hurdles remain. The Canadian government has said it will not allow U.S. state importation programs to threaten Canada’s pharmaceutical supply.
Bimestefer called the guidelines Canada has in place reasonable and said the state has committed never to try to import a drug that has been in shortage in Canada. None of the drugs on the list of 112 are in short supply in Canada, Reveley said.
“We’ve made commitments to our Canadian friends, and we will honor those commitments,” Bimestefer said.
Even if both governments sign off, there are still potential challenges from the health care industry. The pharmaceutical industry could sue to block implementation of the state plans, and Colorado’s application to the FDA also speculates that insurance companies, which sometimes benefit from pharmaceutical rebates on drugs bought in the U.S., could also challenge the import plans.
“Some parties, who enjoy the benefits of the status quo, stand ready to litigate and push back on our program through policy and other mechanisms,” the state wrote in its application.
Bimestefer said the state plans to begin negotiating with drug manufacturers soon. Reveley said state officials, along with representatives from Premier Pharmaceuticals, will tour Colorado in the coming months to talk to pharmacies interested in participating.