Tagged Drug Costs

Best Reads Of The Week With Brianna Labuskes

Happy Friday! Ending a week in which I’ve been wondering if we all have been dropped into the first act of a supervillain movie since the news that the mysterious brain-injury-caused-by-sound has seemingly spread from Cuba into China.

Here’s some other whodunits — health policy thrillers, right? — for this three-day weekend.

Lawmakers were busy: Ahead of Memorial Day, the Senate sent a bill that would overhaul the VA health system and expand the Choice Program to President Donald Trump. While the legislation sailed through the chambers, critics say it’s too drastic a move toward privatized care, a hot-button topic that’s not going anywhere soon (especially with the Koch brothers’ billions behind it). On the other side of the building, the House approved a “right-to-try” bill (… coincidentally also backed by the Koch brothers … ), reviving the measure that had stuttered over the past few months.

• The New York Times: Senate Sends Major Overhaul of Veterans Health Care to Trump

• The Associated Press: Congress OKs Letting Terminal Patients Try Unapproved Drugs


Consider: $685 billion a year. That’s what it costs taxpayers to make health care affordable for Americans, and the price tag is expected to nearly double in the next decade. So, while some Republicans are refusing to touch a fresh attempt at repeal with a 10-foot pole this close to the midterms, others are trying to reclaim the topic that’s clearly going to be at the top of voters’ minds. High premium increases loom large in the next few months as each side races to control the conversation.

• The Wall Street Journal: New Push to Topple Affordable Care Act Looms 

• Bloomberg: It Costs $685 Billion a Year to Subsidize U.S. Health Insurance

And, for what it’s worth, despite Republicans’ attempts to chip away at the health law, the uninsured rate held pretty steady last year.

• The New York Times: Despite Attacks on Obamacare, the Uninsured Rate Held Steady Last Year


Requiring pharma companies to list their drugs’ prices in ads seems like a simple request. As with most things in the dark and confusing labyrinth that is the drug-cost pipeline, though, it’s a bit more complicated. The proposal, which is part of Trump’s blueprint to lower prices, at first seemed like an idle threat. But HHS Secretary Alex Azar keeps bringing it up. Companies are getting nervous, and are left asking — would the rule even be legal?

• The New York Times: Requiring Prices in Drug Ads: Would It Do Any Good? Is It Even Legal?


Adding work requirements to states’ Medicaid programs may be the hot new trend, but a new report shows that it will cost states and the government tens of millions of dollars. And despite garnering savings in the long-run, that money will come entirely from people losing coverage and access to care. On the flip side of things, red states are getting a serious reality check on just how far they can go with changes to their programs.

• Modern Healthcare: States Face Big Costs, Coverage Losses From Medicaid Work Requirements

• The Hill: Red States Find There’s No Free Pass on Medicaid Changes From Trump


The miscellaneous file is bursting with must-read stories, so it’s lucky there’s an extra day in the weekend to fit them all in: Patients addicted to opioids were promised free rehab but were instead put to work 16 hours a day for no pay at adult care homes changing diapers and dispensing medication; some new mothers in China are being forced to pay their medical bills before they’re allowed to see their babies; depression medication, insulin and birth control are ending up in our rivers and streams from poor wastewater disposal practices; scientists are on tenterhooks as they watch the effectiveness of the new Ebola vaccine play out in real time; and a captivating profile surfaced on a doctor who has been accused of putting his quest to make history ahead of the needs of some patients.

• Reveal: Drug Users Got Exploited. Disabled Patients Got Hurt. One Woman Benefited From It All

• Stat: Pharmaceutical Manufacturing Plants Are Sending Lots of Medicine Into the Water Supply

• The New York Times: Want to See Your Baby? In China, It Can Cost You

• The Washington Post: New Ebola Vaccine Faces Major Test in Congo Outbreak

• ProPublica: A Pioneering Heart Surgeon’s Secret History of Research

And make sure you’re following the L.A. Times’ comprehensive coverage of the controversy at the University of Southern California —

• Los Angeles Times: Students Warned USC About Gynecologist Early in His Career: ‘They Missed an Opportunity to Save a Lot of Other Women’


Have a great holiday weekend, and if you’re planning on soaking up any rays, stick with lotion instead of trying any of those sunscreen pills.

Pfizer Settles Kickback Case Related To Copay Assistance For $24M

Pfizer will pay the government nearly $24 million as part of a settlement to resolve allegations that it funneled money through a foundation resulting in illegal kickbacks.

The company is not admitting wrongdoing or liability as part of its settlement with the Department of Justice.

According to the settlement agreement, from 2012 through 2016, Pfizer made donations to the Patient Access Network (PAN) Foundation, a copay assistance nonprofit organization, and then used a specialty pharmacy to steer Medicare patients taking its drugs toward the foundation to cover their copays.

“Pfizer knew that the third-party foundation was using Pfizer’s money to cover the copays of patients taking Pfizer drugs, thus generating more revenue for Pfizer and masking the effect of Pfizer’s price increases,” said U.S. Attorney Andrew Lelling, citing the settlement. “The Anti-Kickback Statute exists to protect Medicare, and the taxpayers who fund it, from schemes like these.”

Drugmakers can’t directly offer copay assistance to Medicare or Medicaid beneficiaries under federal law. The concern is that covering such out-of-pocket costs for expensive drugs still leaves taxpayers with the bill for the remainder of the costs. Congress didn’t want beneficiaries to be shielded from price increases, allowing drugmakers to increase prices without risking that patients will switch to cheaper alternatives.

Pfizer spokeswoman Sally Beatty stressed that the company takes compliance “very seriously.” The company continues to donate to charities that offer assistance with copays.

“The Company believes all individuals deserve access to medicines prescribed by their physicians,” she said in a statement provided to Kaiser Health News. “Pfizer continues to believe these programs help patients lead healthier lives.”

Joel Hay, a health policy and economics professor at the University of Southern California, disagrees. “In essence, it gives the drug companies free rein to jack the price up to whatever they want,” he said. “You totally dilute any effort on the part of the doctor or consumer to think carefully about whether these drugs are worth their cost.”

Pfizer gave the PAN Foundation $16.9 million in 2015, according to Kaiser Health News’ Pre$cription for Power database, which covers contributions from drugmakers to patient groups in 2015 but will expand over time. Asked why the settlement was only $7 million more than what Pfizer gave the PAN Foundation in 2015, the Department of Justice said its policy was not to comment on settlement amounts.

The chemotherapy drugs at the center of the alleged scheme were Sutent, which treats kidney cancer and other cancerous tumors, and Inlyta, which also treats kidney cancer.

Sutent cost Medicare Part D $183 million in 2016 before rebates, or about $47,000 per patient. Medicare’s spending for each unit of this drug had increased by 80 percent since the illegal conduct allegedly began in 2012. Inlyta cost Medicare about $73 million in 2016, or about $57,000 per patient. Medicare spent 34 percent more on each unit of the drug in 2016 than it did in 2012.

Tikosyn, a Pfizer drug to treat an irregular heartbeat, was also part of the alleged scheme, according to the settlement. The drugmaker raised the list price of 40 Tikosyn capsules from $220 to $317 in the final three months of 2015. It cost Medicare $107 million in 2016 before rebates.

Planning a price increase, Pfizer worked with the PAN Foundation to “create and finance a fund” for Medicare patients with a specific irregular heartbeat, the settlement says. “For the next nine months, Tikosyn patients accounted for virtually all of the beneficiaries of PAN’s fund.”

Hay said the DOJ action is “long overdue.” Pfizer is one of many drug companies engaging in such behavior with various copay assistance nonprofits, he said, and the DOJ should have been aggressive about it “years if not decades earlier.”

“The basic fact is it’s illegal under the False Claims Act,” he said.

PAN Foundation President and CEO Daniel Klein said the foundation learned about the DOJ settlement Thursday.

“While PAN has received contributions from Pfizer, we endeavor to operate our patient assistance programs independent of any influence by donors,” he said. “Without the assistance PAN provides, many thousands of underinsured patients would be unable to afford their critical medications.”


KHN’s coverage of prescription drug development, costs and pricing is supported by the Laura and John Arnold Foundation.

Watch: What’s In The White House Plan To Lower Drug Prices

President Donald Trump began talking about the high cost of prescription drugs long before he took office. He often spoke about how drug companies “got away with murder” on the campaign trail.

He has continued these attacks, and in April the Trump administration unveiled a 44-page blueprint.

But what’s in it?

KHN’s Sarah Jane Tribble breaks it down, explaining the real-life consequences.

Drugmakers Blamed For Blocking Generics Have Milked Prices And Cost U.S. Billions

Makers of brand-name drugs called out by the Trump administration for potentially stalling generic competition have hiked their prices by double-digit percentages since 2012 and cost Medicare and Medicaid nearly $12 billion in 2016, a Kaiser Health News analysis has found.

As part of President Donald Trump’s promise to curb high drug prices, the Food and Drug Administration posted a list of pharmaceutical companies that makers of generics allege refused to let them buy the drug samples needed to develop their products. For approval, the FDA requires so-called bioequivalence testing using samples to demonstrate that generics are the same as their branded counterparts.

The analysis shows that drug companies that may have engaged in what FDA Commissioner Scott Gottlieb called “shenanigans” to delay the entrance of cheaper competitors onto the market have indeed raised prices and cost taxpayers more money over time.

The FDA listed more than 50 drugs whose manufacturers have withheld or refused to sell samples, and cited 164 inquiries for help obtaining them. Thirteen of these pleas from makers of generics pertained to Celgene’s blockbuster cancer drug Revlimid, which accounted for 63 percent of Celgene’s revenue in the first quarter of 2018, according to a company press release.

The brand-name drug companies “wouldn’t put so much effort into fighting off competition if these weren’t [such] lucrative sources of revenue,” said Harvard Medical School instructor Ameet Sarpatwari. “In the case of a blockbuster drug, that can be hundreds of millions of dollars of revenue for the brand-name drugs and almost the same cost to the health care system.”

Indeed, a KHN analysis found that 47 of the drugs cost Medicare and Medicaid almost $12 billion in 2016. The spending totals don’t include rebates, which drugmakers return to the government after paying for the drugs upfront but are not public. The rebates ranged from 9.5 percent to 26.3 percent for Medicare Part D in 2014, the most recent year that data are available.

The remaining drugs do not appear in the Medicare and Medicaid data.

(Story continues below.)

By delaying development of generics, drugmakers can maintain their monopolies and keep prices high. Most of the drugs cost Medicare Part D more in 2016 than they did in 2012, for an average spending increase of about 60 percent more per unit. This excludes drugs that don’t appear in the 2012 Medicare Part D data.

Revlimid cost Medicare Part D $2.7 billion in 2016, trailing only Harvoni, which treats hepatitis C and is not on the FDA’s new list. The cost of Revlimid, which faces no competition from generics, has jumped 40 percent per unit in just four years, the Medicare data show, and cost $75,200 per beneficiary in 2016.

Some drugs on the FDA’s list, including Celgene’s, are part of a safety program that can require restricted distribution of brand-name drugs that have serious risks or addictive qualities. Drugmakers with products in the safety program sometimes say they can’t provide samples unless the generics manufacturer jumps through a series of hoops “that generic companies find hard or impossible to comply with,” Gottlieb said in a statement.

The Department of Health and Human Services Office of Inspector General issued a report in 2013 that said the FDA couldn’t prove that the program actually improved safety, and Sarpatwari said there’s evidence drugmakers are abusing it to stave off competition from generics.

Gottlieb said the FDA will be notifying the Federal Trade Commission about pleas for help from would-be generics manufacturers about obtaining samples, and he encouraged the manufacturers to do the same if they suspect they’re being thwarted by anticompetitive practices.

Celgene spokesman Greg Geissman said the company has sold samples to generics manufacturers and will continue to do so. He stressed maintaining a balance of innovation, generic competition and safety.

“Even a single dose of thalidomide, the active ingredient in Thalomid, can cause irreversible, debilitating birth defects if not properly handled and dispensed. Revlimid and Pomalyst are believed to have similar risks,” Geissman said.

The highest number of pleas for help related to Actelion Pharmaceuticals’ pulmonary hypertension drug Tracleer. In 2016, that drug cost Medicare $90,700 per patient and more than $304 million overall. Meanwhile, spending per unit jumped 52 percent from 2012 through 2016.

Actelion was acquired by Johnson & Johnson’s pharmaceutical arm, Janssen, in 2017.

(Story continues below.)

Actelion spokeswoman Colleen Wilson said that the company “cooperate[s]” with makers of generic drugs and “has responded to all requests it has received directly from generic manufacturers seeking access to its medications for bioequivalence testing.”

PhRMA, the trade group for makers of brand-name pharmaceuticals, said the FDA’s list was somewhat unfair because it lacked context and responses from those it represents.

“While we must continue to foster a competitive marketplace, PhRMA is concerned that FDA’s release of the ‘inquiries’ it has received lacks proper context and conflates a number of divergent scenarios,” said PhRMA spokesman Andrew Powaleny.

Congress is considering the CREATES Act, which stands for “Creating and Restoring Equal Access to Equivalent Samples” and would foster competition in part by allowing generics manufacturers to sue brand-name drug manufacturers to compel them to provide samples.

The bill’s sponsor, Sen. Patrick Leahy (D-Vt.), said more transparency from the FDA is helpful, but more work from the agency is needed to end the anticompetitive tactic. “With billions of dollars at stake, a database alone will not stop this behavior,” Leahy said.

Co-sponsor Sen. Chuck Grassley (R-Iowa), chairman of the Judiciary Committee, expressed similar sentiments, telling KHN: “The CREATES Act is necessary because it would serve as a strong deterrent to pharmaceutical companies that engage in anticompetitive practices to keep low-cost generic drugs off the market.”

The FDA hasn’t come out in support of CREATES. “They should know that this is going to require a legislative solution,” Sarpatwari said. “Why are they not stepping into this arena and saying that?”


KHN’s coverage of prescription drug development, costs and pricing is supported by the Laura and John Arnold Foundation.

Best Reads Of The Week With Brianna Labuskes

From nursing home bullies to do-it-yourself gene editing in teenagers’ garages, this week was a wild — or should we say “royal” in anticipation of a certain big event across the Atlantic — ride in health news. So, buckle up, here’s what you might have missed.

This is the story that you’ll get sick of reading over the next six months, but it’s important because you can bet that the rising health law premiums will play a big role in the midterms. The only question is: Who’s going to win the blame game? As the first glimpse of sky-high rate hikes come out, Democrats are eager to point fingers, but Republicans say their liberal colleagues should “look in the mirror” when it comes to assigning responsibility.

• The Hill: Premium Hikes Reignite the ObamaCare Wars


In a decision that was expected, the Trump administration is resurrecting a Reagan-era policy that would add abortion restrictions to federally funded family planning programs. Abortion advocates say the policy — which they call a domestic “gag order — puts government into the middle of the doctor-patient relationship. But the other side sees it as another victory from an administration that is living up to its campaign promises.

• The Associated Press: Trump to Deny Funds to Clinics That Discuss Abortion


Pharma remained in the spotlight this week after all the attention from President Donald Trump’s plan to curb high drug costs, announced last Friday. While HHS Secretary Alex Azar is busy adamantly defending that blueprint, the Food and Drug Administration is naming names of companies accused of hindering generics development, in hopes that public shaming can get some bad actors to “end their shenanigans.” Celgene is one of those drugmakers in the hot seat.

• The Associated Press: FDA Names Drugmakers Accused of Blocking Cheaper Generics

• NPR: Celgene’s Patent Fortress Protects Revlimid, Thalomid

And you know how Viagra was a happy accident? Well, researchers want fewer oopsie successes and more that are deliberately planned.

 • The Washington Post: Viagra and Many Other Drugs Were Discovered by Chance. Now Science Is Hoping to Change That.


It was a good week to keep an eye on the states. Up in Vermont, the governor signed legislation that could allow the state to import drugs from Canada. HHS still has to approve the policy, though, and since Azar has called the tactic “a gimmick,” there’s no sure bet that it will move forward. The health world’s eyes are also on the state because its experimental plan to control costs is going to come within 1 percent of its financial target. An “impressive” feat, experts say.

• Politico: Vermont Becomes First State to Permit Drug Imports From Canada

• The Associated Press: Eyes Turn to Vermont As It Sees Success With Health System

And Maryland remains on the forefront of innovative thinking to control costs with the approval of its unique all-payer model.

• The Associated Press: Maryland Announces Agreement on All-Payer Health Model


“It’s one of the big demographic mysteries of recent times,” fertility experts say of the nation’s record-low birth rate for the second year in a row. Researchers aren’t sure why the numbers haven’t increased along with the improved economy as would be expected. But some suspect that younger women are putting off having babies as they focus on their careers.

• The New York Times: U.S. Fertility Rate Fell to a Record Low, for a Second Straight Year

And this doctor is pushing the boundaries of what is considered possible in fertility research with “three-parent babies” — sparking talk of sci-fi dystopian worlds. But critics worry there’s no oversight to stop the slide down the slippery slope of tinkering with human life.

• The Washington Post: Fertility Doctor John Zhang Pushes Boundaries in Human Reproduction


In the miscellaneous gotta-read files: An in-depth investigation reveals just how far a center once renowned for its heart transplant program has fallen; a tragic suicide sparks debate over whether colleges should tell parents when students are struggling; what the president’s proposed border wall means for a community burdened by extremely poor health; and a keyless ignition jaw-dropper. People are leaving their cars in the garage — not realizing the motors are still running — and suffering fatal consequences.

• ProPublica: At St. Luke’s in Houston, Patients Suffer As a Renowned Heart Transplant Program Loses Its Luster

• The New York Times: His College Knew of His Despair. His Parents Didn’t, Until It Was Too Late.

• The Wall Street Journal: Youth Suicidal Behavior Is on the Rise, Especially Among Girls

• US News & World Report: A Battle for Community Health in Texas’ Rio Grande Valley

• The New York Times: Deadly Convenience: Keyless Cars and Their Carbon Monoxide Toll


Have a great weekend!

Vermont Legislators Pass A Drug Importation Law. So What?

This week, Vermont passed a first-in-the-nation law that would facilitate the state’s importation of prescription drugs wholesale from Canada. It represents the state’s effort to tackle head-on the issue of constantly climbing drug prices.

Other states, including Louisiana and Utah, have debated similar legislation and are watching Vermont’s progress closely.

After all, the issue of drug importation polls well across the political spectrum and has been endorsed by politicians ranging from candidate Donald Trump, before he became president, to liberal firebrand Sen. Bernie Sanders (I-Vt.).

So how much impact might a state law like this actually have?

Trump has since stepped back from his campaign position, and the White House did not include drug importation in its proposal last week to bring down drug prices.

And cautions abound that importation may not actually save that much money as questions swirl about whether the policy undermines drug safety standards.

Kaiser Health News breaks down the challenges that lie ahead for importation champions, and what it shows about the future of the drug pricing fight.

States need federal approval to launch any kind of importation program.

Just having a law like Vermont’s on the books is not enough to legalize importation. The next step is for the state to craft a proposal outlining how its initiative would save money without jeopardizing public health. The proposal, in turn, is then subject to approval by the federal Department of Health and Human Services.

HHS has had yea-or-nay power over state importation programs since at least 2003, because of a provision included in the law creating Medicare Part D. But it’s never actually approved such a plan. And — despite mounting political pressure — there’s little reason to think it will do so now.

In the past weeks, HHS Secretary Alex Azar has come out strongly against importation, calling it a “gimmick” that wouldn’t meaningfully bring down prices.

He also has argued that the U.S. government cannot adequately certify the safety of imported drugs.

HHS declined to comment beyond Azar’s public remarks.

Importation backers — including the National Academy for State Health Policy (NASHP), which helped craft Vermont’s bill and has worked with state lawmakers — hope he’ll reverse these positions. But few are optimistic that this will happen.

“I don’t expect that Vermont alone will be able to bring sufficient pressure to bear on Secretary Azar to convince him to change his mind,” said Rachel Sachs, an associate law professor at Washington University in St. Louis, who tracks drug-pricing laws.

A state’s importation program would also require buy-in from Canadian wholesalers. What’s in it for them?

Perhaps not much. Canadian wholesalers might stand to lose financially.

After all, pharmaceutical companies that market drugs in the United States might limit how much they sell to companies that have supply chains across the border. They could also raise their Canadian list prices.

“Almost inevitably, Canadians would cease getting better prices,” said Michael Law, a pharmaceutical policy expert and associate professor at the University of British Columbia’s Center for Health Services and Policy Research. “If I were a [Canadian] company, I wouldn’t want that to occur — and [drugmakers] could take steps to limit the supply coming north. … It probably results in [Canadians] getting higher prices.”

Trish Riley, NASHP’s executive director, dismissed this concern, saying some Canadian wholesalers have indicated interest in contracting with Vermont.

Vermont would still have to prove to HHS that its proposal would yield “substantial” savings. This  won’t be easy.

In fact, some analysts suggest savings would be limited to a narrow slice of the market.

Importation could bring down the price of some generics and off-patent drugs by increasing competition, suggested Ameet Sarpatwari, a lawyer and epidemiologist at Harvard Medical School who studies drug pricing.

Many generic drugs have also seen substantial price hikes in recent years — but curbing these costs is only part of the equation.

“It’s not a panacea for the drug-pricing reform or high drug prices as a whole,” Sarpatwari said.

Branded drugs, which drive much of the American problem with prescription price tags, are distributed by a single company and, therefore, that company has greater control over supply and pricing pressure.

Drug safety looms over the debate.  

The worry, according to critics, is that American regulators can’t effectively determine whether imported drugs meet the same safety standards as those sold directly in the United States. A year ago, a bipartisan group of former Food and Drug Administration commissioners made that very argument in a letter to Congress.

Azar has argued this same point, as has the influential pharmaceutical industry, represented by the Pharmaceutical Research and Manufacturers of America.

“Lawmakers cannot guarantee the authenticity and safety of prescription medicines when they bypass the FDA approval process,” said Caitlin Carroll, a PhRMA spokeswoman, in a statement released on Vermont’s law.

This position, though, draws skepticism.

In cases of drug shortages or public health emergencies, the United States has imported drugs. And many Canadian and American drugs are made and approved under similar standards, Law noted.

“In terms of general safety, it is kind of nonsense. … We share plants,” he said. “The idea that Canadian drugs are somehow unsafe is a red herring.”

An argument in favor of plans like Vermont’s focuses on the idea that because the state would import drugs wholesale — rather than enabling individuals to shop internationally — it would be able to address concerns about safety or quality, Riley said.

Plus, Sarpatwari suggested, the government has resources to track drugs that come from Canada, especially if a drug were recalled or ultimately found to have problems.

“Our technology is catching up with our ability to do effective monitoring,” he said. “Particularly when it’s coming from a well-regulated country, I think there is less fear over safety.”

States have been leading the charge on addressing the drug price issue, but their efforts reach only so far.

The federal government has taken little action to curb rising drug prices — though HHS now says it plans to change that.

So far, state legislatures have been pushing for laws to penalize price gouging, promote price transparency or limit what the state will pay.

But state initiatives often require federal permission.

Vermont’s law, which is arguably meaningless without HHS’ say-so, is just one example.

Sarpatwari pointed to a request from Massachusetts to develop a drug formulary for its Medicaid insurance program — theoretically giving the state more leverage to negotiate cheaper prices by reducing how many drugs it’s required to cover.

That proposal also is contingent upon approval from HHS. The administration has been publicly silent, though some news reports suggest it leans toward rejecting the request.

Meanwhile, Sachs said Vermont’s law, and others like it, will challenge the White House to show its mettle in taking on drug costs.

“We’re seeing explicit actions by the states to put pressure back on the federal government,” Sachs said. “The administration is publicly committed to lowering drug prices. It is being asked to make decisions which will, in some ways, show how much it really is attempting to accomplish that goal.”


KHN’s coverage of prescription drug development, costs and pricing is supported by the Laura and John Arnold Foundation.

Vermont Legislators Pass A Drug Importation Law. So What?

This week, Vermont passed a first-in-the-nation law that would facilitate the state’s importation of prescription drugs wholesale from Canada. It represents the state’s effort to tackle head-on the issue of constantly climbing drug prices.

Other states, including Louisiana and Utah, have debated similar legislation and are watching Vermont’s progress closely.

After all, the issue of drug importation polls well across the political spectrum and has been endorsed by politicians ranging from candidate Donald Trump, before he became president, to liberal firebrand Sen. Bernie Sanders (I-Vt.).

So how much impact might a state law like this actually have?

Trump has since stepped back from his campaign position, and the White House did not include drug importation in its proposal last week to bring down drug prices.

And cautions abound that importation may not actually save that much money as questions swirl about whether the policy undermines drug safety standards.

Kaiser Health News breaks down the challenges that lie ahead for importation champions, and what it shows about the future of the drug pricing fight.

States need federal approval to launch any kind of importation program.

Just having a law like Vermont’s on the books is not enough to legalize importation. The next step is for the state to craft a proposal outlining how its initiative would save money without jeopardizing public health. The proposal, in turn, is then subject to approval by the federal Department of Health and Human Services.

HHS has had yea-or-nay power over state importation programs since at least 2003, because of a provision included in the law creating Medicare Part D. But it’s never actually approved such a plan. And — despite mounting political pressure — there’s little reason to think it will do so now.

In the past weeks, HHS Secretary Alex Azar has come out strongly against importation, calling it a “gimmick” that wouldn’t meaningfully bring down prices.

He also has argued that the U.S. government cannot adequately certify the safety of imported drugs.

HHS declined to comment beyond Azar’s public remarks.

Importation backers — including the National Academy for State Health Policy (NASHP), which helped craft Vermont’s bill and has worked with state lawmakers — hope he’ll reverse these positions. But few are optimistic that this will happen.

“I don’t expect that Vermont alone will be able to bring sufficient pressure to bear on Secretary Azar to convince him to change his mind,” said Rachel Sachs, an associate law professor at Washington University in St. Louis, who tracks drug-pricing laws.

A state’s importation program would also require buy-in from Canadian wholesalers. What’s in it for them?

Perhaps not much. Canadian wholesalers might stand to lose financially.

After all, pharmaceutical companies that market drugs in the United States might limit how much they sell to companies that have supply chains across the border. They could also raise their Canadian list prices.

“Almost inevitably, Canadians would cease getting better prices,” said Michael Law, a pharmaceutical policy expert and associate professor at the University of British Columbia’s Center for Health Services and Policy Research. “If I were a [Canadian] company, I wouldn’t want that to occur — and [drugmakers] could take steps to limit the supply coming north. … It probably results in [Canadians] getting higher prices.”

Trish Riley, NASHP’s executive director, dismissed this concern, saying some Canadian wholesalers have indicated interest in contracting with Vermont.

Vermont would still have to prove to HHS that its proposal would yield “substantial” savings. This  won’t be easy.

In fact, some analysts suggest savings would be limited to a narrow slice of the market.

Importation could bring down the price of some generics and off-patent drugs by increasing competition, suggested Ameet Sarpatwari, a lawyer and epidemiologist at Harvard Medical School who studies drug pricing.

Many generic drugs have also seen substantial price hikes in recent years — but curbing these costs is only part of the equation.

“It’s not a panacea for the drug-pricing reform or high drug prices as a whole,” Sarpatwari said.

Branded drugs, which drive much of the American problem with prescription price tags, are distributed by a single company and, therefore, that company has greater control over supply and pricing pressure.

Drug safety looms over the debate.  

The worry, according to critics, is that American regulators can’t effectively determine whether imported drugs meet the same safety standards as those sold directly in the United States. A year ago, a bipartisan group of former Food and Drug Administration commissioners made that very argument in a letter to Congress.

Azar has argued this same point, as has the influential pharmaceutical industry, represented by the Pharmaceutical Research and Manufacturers of America.

“Lawmakers cannot guarantee the authenticity and safety of prescription medicines when they bypass the FDA approval process,” said Caitlin Carroll, a PhRMA spokeswoman, in a statement released on Vermont’s law.

This position, though, draws skepticism.

In cases of drug shortages or public health emergencies, the United States has imported drugs. And many Canadian and American drugs are made and approved under similar standards, Law noted.

“In terms of general safety, it is kind of nonsense. … We share plants,” he said. “The idea that Canadian drugs are somehow unsafe is a red herring.”

An argument in favor of plans like Vermont’s focuses on the idea that because the state would import drugs wholesale — rather than enabling individuals to shop internationally — it would be able to address concerns about safety or quality, Riley said.

Plus, Sarpatwari suggested, the government has resources to track drugs that come from Canada, especially if a drug were recalled or ultimately found to have problems.

“Our technology is catching up with our ability to do effective monitoring,” he said. “Particularly when it’s coming from a well-regulated country, I think there is less fear over safety.”

States have been leading the charge on addressing the drug price issue, but their efforts reach only so far.

The federal government has taken little action to curb rising drug prices — though HHS now says it plans to change that.

So far, state legislatures have been pushing for laws to penalize price gouging, promote price transparency or limit what the state will pay.

But state initiatives often require federal permission.

Vermont’s law, which is arguably meaningless without HHS’ say-so, is just one example.

Sarpatwari pointed to a request from Massachusetts to develop a drug formulary for its Medicaid insurance program — theoretically giving the state more leverage to negotiate cheaper prices by reducing how many drugs it’s required to cover.

That proposal also is contingent upon approval from HHS. The administration has been publicly silent, though some news reports suggest it leans toward rejecting the request.

Meanwhile, Sachs said Vermont’s law, and others like it, will challenge the White House to show its mettle in taking on drug costs.

“We’re seeing explicit actions by the states to put pressure back on the federal government,” Sachs said. “The administration is publicly committed to lowering drug prices. It is being asked to make decisions which will, in some ways, show how much it really is attempting to accomplish that goal.”


KHN’s coverage of prescription drug development, costs and pricing is supported by the Laura and John Arnold Foundation.

Podcast: KHN’s ‘What The Health?’ Much Ado About Drug Prices

President Donald Trump’s blueprint to reduce drug prices frames almost as many questions as answers, but it does shine light on a vexing and complicated problem. Meanwhile, Vermont passed a law to do something that’s not in the president’s plan: import cheaper prescription drugs from Canada. The state will need federal permission to do that, which is unlikely to be granted.

And Timothy Jost, emeritus professor of law at Washington and Lee University in Virginia, discusses the state of the Affordable Care Act and what might be in the health law’s immediate future.

This week’s panelists for KHN’s “What the Health?” are Julie Rovner of Kaiser Health News, Anna Edney of Bloomberg News, Joanne Kenen of Politico and Rebecca Adams of CQ Roll Call.

Among the takeaways from this week’s podcast:

  • It is not yet clear how many of the myriad proposals in Trump’s 44-page prescription drug price proposal will be implemented, but the plan does jump-start the discussion across a wide range of drug issues.
  • Although Trump walked back his promise to move Medicare toward negotiating drug prices, his drug proposal would move some drugs administered in physicians’ offices — currently paid under a formula — to be handled by the Part D prescription drug plans, for which insurance companies negotiate prices.
  • The drug price initiative is welcomed by Republican candidates who think it will be a potent defense against Democratic charges that GOP efforts on the Affordable Care Act are driving overall health care spending up.
  • With the increasing reports that in the not-too-distant future one or more justices will retire from the Supreme Court, abortion-rights activists are nervous about how a new court would view the issue and are working hard to avoid a big federal lawsuit that could overturn Roe v Wade.

Plus, for “extra credit,” the panelists recommend their favorite health stories of the week they think you should read, too.

Julie Rovner: Kaiser Health News’ “For The Babies Of The Opioid Crisis, The Best Care May Be Mom’s Recovery,” by Sarah Jane Tribble

Joanne Kenen: Science Magazine’s “Hoping to Head Off an Epidemic, Congo Turns to Experimental Ebola Vaccine,” by Jon Cohen

Rebecca Adams: Kaiser Health News’ “Under Trump Proposal, Lawful Immigrants Might Be Inclined To Shun Health Benefits,” by Christina Jewett and Melissa Bailey and Paula Andalo

Anna Edney: Vox.com’s “The Blockbuster Fight Over This Obscure Federal Program Explains America’s Drug Prices,” by Dylan Scott

To hear all our podcasts, click here.

And subscribe to What the Health? on iTunesStitcher or Google Play.

Podcast: KHN’s ‘What The Health?’ Much Ado About Drug Prices

President Donald Trump’s blueprint to reduce drug prices frames almost as many questions as answers, but it does shine light on a vexing and complicated problem. Meanwhile, Vermont passed a law to do something that’s not in the president’s plan: import cheaper prescription drugs from Canada. The state will need federal permission to do that, which is unlikely to be granted.

And Timothy Jost, emeritus professor of law at Washington and Lee University in Virginia, discusses the state of the Affordable Care Act and what might be in the health law’s immediate future.

This week’s panelists for KHN’s “What the Health?” are Julie Rovner of Kaiser Health News, Anna Edney of Bloomberg News, Joanne Kenen of Politico and Rebecca Adams of CQ Roll Call.

Among the takeaways from this week’s podcast:

  • It is not yet clear how many of the myriad proposals in Trump’s 44-page prescription drug price proposal will be implemented, but the plan does jump-start the discussion across a wide range of drug issues.
  • Although Trump walked back his promise to move Medicare toward negotiating drug prices, his drug proposal would move some drugs administered in physicians’ offices — currently paid under a formula — to be handled by the Part D prescription drug plans, for which insurance companies negotiate prices.
  • The drug price initiative is welcomed by Republican candidates who think it will be a potent defense against Democratic charges that GOP efforts on the Affordable Care Act are driving overall health care spending up.
  • With the increasing reports that in the not-too-distant future one or more justices will retire from the Supreme Court, abortion-rights activists are nervous about how a new court would view the issue and are working hard to avoid a big federal lawsuit that could overturn Roe v Wade.

Plus, for “extra credit,” the panelists recommend their favorite health stories of the week they think you should read, too.

Julie Rovner: Kaiser Health News’ “For The Babies Of The Opioid Crisis, The Best Care May Be Mom’s Recovery,” by Sarah Jane Tribble

Joanne Kenen: Science Magazine’s “Hoping to Head Off an Epidemic, Congo Turns to Experimental Ebola Vaccine,” by Jon Cohen

Rebecca Adams: Kaiser Health News’ “Under Trump Proposal, Lawful Immigrants Might Be Inclined To Shun Health Benefits,” by Christina Jewett and Melissa Bailey and Paula Andalo

Anna Edney: Vox.com’s “The Blockbuster Fight Over This Obscure Federal Program Explains America’s Drug Prices,” by Dylan Scott

To hear all our podcasts, click here.

And subscribe to What the Health? on iTunesStitcher or Google Play.