Opinion: Importing medicines from Canada is no guarantee of lower drug prices

The Colorado Department of Health Care Policy & Financing recently submitted a request to the FDA to import prescription medicines from Canada to combat the rising cost of prescription medicines in Colorado. However, importing medicines from Canada won’t be the silver bullet many are hoping for in America’s long-standing battle with rising healthcare costs. 

Since November 2020 states have had the option to seek permission from the FDA to import medicines from Canada by submitting a Section 804 Importation Plan and outlining how bringing medicines across the border will reduce the prices that Americans pay for prescription medicines. 

The Colorado Department of Health Care Policy & Financing identified 112 medicines they would like to import. The list includes prescription medicines to treat diabetes, cancer and HIV including some blockbusters such as Eliquis, Jardiance, Ibrance and Cabenuva. The department estimates that by importing these medicines from Canada, Colorado will save between $53 and $88 million on prescription medicines each year. Gov. Jared Polis applauded the submission, stating, “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.”

The reality, however, may significantly dampen both the impact and enthusiasm. 

In order for this program to be successful, a lot of things must be in Colorado’s favor. If the FDA approves the program, Colorado will then contract with multiple vendors to purchase the medicines in Canada, ship the medicines across the border, check the medicines’ quality and authenticity in US facilities, and then distribute the medicines to participating pharmacies in Colorado. 

Before Colorado can import medicines from Canada, Canada must first agree to export them. Canada represents 2% of the global pharmaceutical market and sources 68% of their medicines internationally, which suggests that they don’t have an abundance of medicines beyond what they need. It is estimated that between 10-15% of drugs are in shortage at any given time in Canada. 

The Canadian Minister of Health issued an order in November 2020 in response to the FDA importation plan stating that medicines can only be provided to people outside of Canada if they believe the distribution of the medicine will “not cause or exacerbate a shortage of the drug.” Prime Minister Justin Trudeau has stated that “Our priority will always be to ensure an adequate and safe supply for Canadians first and foremost.” 

It is also in question which pharmacies in Colorado will sell the Canadian medicines that have been imported. Pharmacies generally have contracts with wholesalers to provide their medicines, and these contracts usually require a certain amount of medicines be purchased in order to qualify for discounts. Pharmacies are concerned that if they get some of their medicines from Canada and the remainder from wholesalers in the U.S., that their domestically sourced order will no longer be large enough to qualify for the same amount of discounts that they receive now from the wholesalers — all of which could potentially make some medicines more expensive at their pharmacy.  

Assuming that the medicines are in Colorado, on pharmacy shelves and you want to purchase them, it is still a question of how much money you will be saving. It is highly unlikely that private health insurance companies will agree to cover the imported medicines because of the relationship between insurers, pharmacy benefit managers and drug manufacturers. If medicines are imported from Canada, insurance companies and pharmacy benefit managers will not receive rebates from US based manufacturers for providing access to their medicines — which would negatively impact their revenue. 

Even if all stars aligned and the medicines were in Colorado, on pharmacy shelves and insurance agreed to cover them, the cost savings wouldn’t be significant for most Coloradans. For example, the price of the stroke-prevention medicine Eliquis in the US for someone with insurance is approximately $84. The same medicine from an online Canadian pharmacy is only $9 cheaper. 

While I am making a point to highlight the problems with this plan, I do believe it has the potential to significantly improve prescription drug affordability for the 9% of Coloradans without health insurance. For those without coverage, a 60-day supply of Eliquis is around $600, or $546 with a GoodRx Coupon. 

However, my next question is: Are there enough uninsured Coloradans that need these 112 medicines to outweigh the $2 million in cost to operate the program annually? It is difficult to be certain either way. 

I understand the logic behind Colorado wanting to import medicines from Canada to improve prescription drug affordability, and I share the government’s frustration with people not being able to afford their medicines. However, a majority of Coloradans will not benefit enough from this program for there to be a substantial impact on prescription drug affordability. 

Instead, Colorado lawmakers should focus on reforming the healthcare system that makes this program both necessary and ineffective. An alternative initiative that would more directly lower healthcare costs for Coloradans would be to introduce a cap on the allowable amount of cost-sharing and copayments for medicines. This approach would have a positive impact for more Coloradans because it would benefit those with private health insurance or Medicaid and would tackle patient affordability head-on, at the pharmacy counter.

Danielle Bargo, of Montclair, N.J., is a health economist at the Japanese pharmaceutical company Eisai and an advisory panel member for Patient-Centered Outcomes Research Institute. She has previously been employed as a health economist at Flatiron Health, Pfizer, Eli Lilly and the University of Oxford.