Shalala Rejects Drug Reimportation Plan
HHS Secretary Donna Shalala will not implement a law that would allow drugstores and distributors to buy U.S.-produced drugs in certain countries for resale in the United States, the Washington Post reports. In a Dec. 26 letter to President Clinton, Shalala wrote that the law is "unworkable and would not lower costs." Congress passed the reimportation measure in October and appropriated $23 million to establish a system to monitor drug reimportation from Canada, but required HHS approval before resale could begin (Kaufman, Washington Post, 12/27). Under the measure, called the Medicine Equity and Drug Safety Act, FDA-approved drugs from certain countries could be imported and U.S.-manufactured drugs could be reimported. A provision in the law required the HHS secretary to ensure the measure would not "pose a safety risk" and would "significantly" cut prescription drug prices for consumers. Shalala declined to endorse the legislation, saying the law had "serious flaws and loopholes" (McGinley, Wall Street Journal, 12/27).
The New York Times reports that under the legislation, labels that are required for prescription drugs sold in the United States could be withheld from reimporters by drug companies, effectively blocking reimportation. Also, the program would expire in five years, making it unlikely that wholesalers would invest in the program. In addition, pharmaceutical companies could have "thwarted" the intent of the law by requiring reimporters to sell drugs at high prices (Pear, New York Times, 12/27). In her letter, Shalala wrote, "I feel compelled to inform you that the flaws and loopholes contained ... make it impossible for me to demonstrate that [the law] is safe and cost-effective. As such, I cannot sanction the allocation of taxpayer dollars to implement such a system" (Newton, AP/Philadelphia Inquirer, 12/27). Shalala's decision was supported by the Pharmaceutical Research and Manufacturers of America, which had opposed the legislation because "it would increase risks to American patients and would not provide an significant savings" (Washington Post, 12/27). Jackie Cottrell, a spokesperson for PhRMA, said "Secretary Shalala's findings ... confirm all of our concerns" (New York Times, 12/27). After receiving Shalala's letter, Clinton on Wednesday said he would send the 107th Congress suggestions for fixing the law when it convenes this week. Clinton said, "What we'd like to see is a law that protects safety that will lower consumer prices. As soon as Congress comes back, I will send them a statement of the things ... [that] would meet the standard of the law" (Holland, AP/San Jose Mercury News, 12/28).
The New York Times reports that the timing of Shalala's letter was "a surprise" as HHS could have left the issue to President-elect Bush's new administration. Shalala's letter also "took a jab" at Bush and the GOP-controlled Congress, as she said reimportation could never "substitute for providing drug benefits to the elderly as an integral part of Medicare." During the campaign, Bush had said the reimportation plan "makes sense" as a way to provide "an immediate helping hand" to the elderly. Gail Wilensky, a health policy adviser to Bush, said Shalala's action "effectively kills the [law]." She added that the Bush administration will decide "whether to try to perfect the program or to pursue other strategies to slow the growth in spending on pharmaceuticals,'" such as amendments to drug patent laws and changes in Medicare. Sen. Byron Dorgan (D-N.D.), a sponsor of the legislation, said he was "deeply disappointed, puzzled and surprised," by Shalala's letter. He said he hopes the Bush administration will "reverse" the decision, but added, "The new administration will be more hospitable to the pharmaceutical industry" than the Clinton administration. Joseph Karpinski, a spokesperson for Sen. James Jeffords (R-Vt.), said the senator may lobby Bush to undo the decision. "Today's decision puts Democrats in a difficult political position. It's now the Democrats who are blocking access to affordable prescription drugs. If the new administration reverses the Shalala position, Republicans will be the heroes," Karpinski said. Federal law still allows individuals to buy drugs from abroad, as law enforcement officials "generally do not challenge" the importation of "small quantities" of drugs for "personal use" (Pear, New York Times, 12/27).
In the wake of Shalala's decision, several newspapers weighed in on the topic. In an editorial today, the Washington Post asserts that the "drug reimportation bill that Congress passed just before the election was never more than show, and HHS Secretary Donna Shalala was right to exercise the power that Congress gave her to cancel it." The editorial maintains that the bill "was understood even as it was passed and signed to be phony, an effort by Congress to look as if it was addressing an issue -- the high cost of prescription drugs -- that in fact it continued to evade" (Washington Post, 1/2). A Los Angeles Times editorial last week called the reimportation bill a "sham, riddled with devilish eleventh-hour loopholes." The editorial states, "Shalala did the right thing [last week] in announcing that her department will not implelment the legislation" (Los Angeles Times, 12/28). Calling the reimportation law a "scheme" and a "bad bill," a Washington Times editorial last week said, "In reality, the much balleyhooed legislation was little more than a back door effort to establish price controls in the U.S. pharmaceutical industry" (Washington Times, 12/28).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.