Senate Approves Amendment Allowing Pharmacies, Wholesalers To Reimport Rx Drugs from Canada

As part of a plan to reduce the price of prescription drugs, the Senate yesterday voted 69-30 in favor of an amendment that would allow U.S. pharmacies and wholesalers to reimport low-cost prescription drugs from Canada, where they are generally less expensive, the New York Times reports (Pear, New York Times, 7/18). Sponsored by Sen. Byron Dorgan (D-N.D.), the amendment is part of generic drug legislation that the Senate is using as a vehicle for a variety of prescription drug measures, including competing proposals to add a prescription benefit to Medicare. After approving the reimportation amendment, however, the Senate voted 99-0 to add a "major caveat" to the measure that may keep the provision from ever taking effect, the Washington Post reports (Dewar, Washington Post, 7/18). The additional amendment, sponsored by Sen. Thad Cochran (R-Miss.), added a requirement that the HHS secretary "certify" that drug reimportation "will be safe and provide consumers with 'significant' savings," the Wall Street Journal reports (Lueck, Wall Street Journal, 7/18). A similar provision was included in a 2000 law that would have allowed drug reimportation from 26 countries, but both the Clinton and the Bush administrations refused to promulgate rules to implement the law, saying they could not certify reimportation "would be safe or save money for consumers" (New York Times, 7/17).

To address the safety concerns that prevented implementation of the 2000 law, Dorgan added a provision that would allow HHS to end the program if there is "significant evidence" that counterfeit drugs are crossing the border, CongressDaily/AM reports. "I'm not interested in compromising safety under any circumstances," Dorgan said (Fulton/Rovner, CongressDaily/AM, 7/18). Supporters of the measure said that safety risks were "minimal" because Canada has a drug regulation system similar to that of the United States (New York Times, 7/18). Given the "slim chances" that Congress will add a drug benefit to Medicare this year, Dorgan said the reimportation provision would "force pharmaceutical companies to re-price prescription drugs in this country" (Wall Street Journal, 7/18). He added, "The American consumer is charged dramatically more for the same prescription drug available in Canada. It's unfair" (Carter, AP/Nando Times, 7/18).

Despite the new safety provision, the Bush administration said it would not implement the plan "because it would endanger public health," the New York Times reports. In a letter to the Senate, FDA Deputy Commissioner Dr. Lester Crawford wrote, "The bill would create an incentive for unscrupulous individuals to find ways to sell unsafe or counterfeit drugs that while purported to be from Canada, may actually originate in any part of the world. ... In many cases, we would not be able to determine the true country of origin" (New York Times, 7/18). Stating that the HHS certification provision "responsible," Pharmaceutical Research and Manufacturers of America President Alan Holmer, said, "We hope the Senate can now move beyond election-year gimmicks like reimportation" (Wall Street Journal, 7/18). Opponents also said that allowing reimportation would "undercut research by American pharmaceutical companies" (Frandsen, Gannett News Service/Detroit News, 7/18).

Meanwhile, Senate Finance Committee Chair Max Baucus (D-Mont.) continued efforts to reconcile some of the Medicare drug benefit proposals attached to the generic drug legislation. Baucus is working to "marry" the so-called "tripartisan" Medicare drug benefit plan with a proposal backed by Senate Democrats. Some senators hope that combining the proposals would create a plan that could win the necessary 60 votes on the floor. However, the effort has been complicated because the Congressional Budget Office has been unable to estimate the cost of such a combined plan (CongressDaily/AM, 7/18). The tripartisan group, which includes Sens. Charles Grassley (R-Iowa), Olympia Snowe (R-Maine), Orrin Hatch (R- Utah), John Breaux (D-La.) and James Jeffords (I-Vt.), has proposed a $330 billion, 10-year bill under which Medicare beneficiaries would pay a $35 monthly premium, and the government would cover 50% of seniors' annual out-of-pocket prescription drug costs up to $2,000 or $2,500, no costs between $2,000 or $2,500 and $3,700, 90% of costs that exceed $3,700 and 100% of costs that exceed $6,000. The leading Democratic bill, sponsored by Sens. Bob Graham (D-Fla.) and Zell Miller (D-Ga.), would establish a Medicare prescription drug benefit at an estimated cost of as much as $500 billion over eight years. Under the legislation, seniors would pay a $25 monthly premium with no deductible, a $10 copayment for generic drugs and a $40 or $60 copayment for brand-name treatments. The government would cover 100% of seniors' annual out-of-pocket prescription drug costs that exceed $4,000. Low-income seniors would pay reduced premiums, and the bill would exempt Medicare beneficiaries with annual incomes less than 135% of the federal poverty level from premiums and copayments (California Healthline, 7/17). Floor votes on any of the Medicare drug benefit plans are not expected until next week (Washington Post, 7/18).

In related news, PhRMA today ran a full-page advertisement in the Washington Post criticizing the generic drug bill that the Senate is using as a vehicle for the other prescription drug-related proposals (Washington Post, 7/18). The Senate yesterday voted 99-0 to proceed with debate on the bill (Fulton, CongressDaily, 7/17). The legislation would amend a provision in the 1984 Hatch-Waxman law that allows brand-name drug companies to receive an automatic 30-month patent extension from the FDA when they file a lawsuit against generic drug makers for alleged patent infringement. It also would prevent brand-name companies from paying generic manufacturers to keep their products off the market and would allow generic companies to legally challenge "frivolous patents," including "superficial changes" in a treatment's color or physical design intended only to "stifle competition" (California Healthline, 7/17). In its ad, PhRMA says the bill would "upset the balance between incentives for discovery of new medicines and the expedited availability of generic drugs." The ad continues, saying that without patent protections "work will not continue" on "pharmaceutical treatments to improve the lives of patients" (Washington Post, 7/18).

PBS' "NewsHour with Jim Lehrer" yesterday reported on the Senate debate over a Medicare prescription drug benefit. A transcript and a clip of the report in RealPlayer Audio are available online. Michael Weinstein, a Council on Foreign Relations economist and former New York Times health care columnist, and Gail Wilensky, a senior fellow at the international not-for-profit health education foundation Project Hope and a health care advisor to President Bush during his 2000 campaign, discussed the issue in a second segment (Dentzer, "NewsHour with Jim Lehrer," PBS, 7/17). A transcript of the discussion and a clip in RealPlayer Audio are available online.