On January 5, 2024 the Food and Drug Administration (FDA) issued its approval of the State of Florida’s proposal to import certain prescription drugs from Canada under the Section 804 Importation Program (SIP).1 This approval is the first of its kind under Section 804 of the Food, Drug, and Cosmetic Act (FDCA) and represents the first step in the process of permitting the limited importation of Canadian copies of FDA approved prescription drugs. The initial application for Florida’s SIP program was made in November 2020, and it has taken over three years, multiple supplemental applications, and overcoming significant resistance from the pharmaceutical industry to get to this approval.
SIP Background
The FDCA requires that all new prescription drugs2 be approved by the FDA prior to marketing through an approved new drug application (NDA), abbreviated new drug application (ANDA), or biologics license application (BLA). Drug approvals cover the physical drug product as well as any packaging or labeling that accompany the drug. As a result, only drugs that are approved by the FDA that are in the FDA approved package and include the FDA approved labeling may be legally marketed in the United States. Foreign drugs that are exactly the same chemically, but that have different packaging and labeling, are considered adulterated or misbranded, and therefore, cannot be legally imported or sold in the U.S.
Importation of foreign copies of FDA approved drugs has been seen by many as a means of addressing the high prices of some FDA approved drugs, but legal means for the importation of such drugs has not existed in the past.3 The FDA issued its regulations for the Section 804 Importation Program in October 2020, and this program creates the potential for certain state, territorial, and Native American tribal governments to sponsor importation of Canadian copies of FDA approved drugs.
The SIP has significant requirements and restrictions:
- Proposed plans must be approved by the FDA prior to implementation.
- Plans must be sponsored by state, territorial, or tribal governments.
- All drugs must be copies of FDA approved drugs.
- All drugs must be approved by Health Canada and imported from Canada – no other foreign source of drugs is permitted.
- The sponsor must demonstrate that the proposed plan will result in significant savings for American consumers.
- Certain classes of prescription drugs are excluded from the program:
- Biological products
- Controlled substances
- Infused drugs
- Intravenous drugs
- Inhalation drugs
- Intrathecal drugs
- Intraocular drugs
- Drugs that are subject to a risk evaluation and mitigation strategy (REMS)
- Drugs that are not subject to the Drug Supply Chain Security Act (DSCSA)
- Initial approval for any plan includes only one foreign seller and one program importer (although more imports and sellers could potentially be added through supplements to the plan).
- The program has significant quality testing, distribution, and labeling requirements for the imported drugs.
Impact
The Florida SIP program will not open the floodgates to less expensive Canadian drugs for all customers. The drugs imported under this program will be limited to patients under Florida Medicaid and other state sponsored health programs. Further, because of the limitations on the types of drugs that can be imported, many of the most expensive prescription medicines, which are often biological products and injectable drugs, will be excluded. Nevertheless, Florida anticipates that this program could save up to $180 million the first year.
The FDA is not likely to stop with the Florida approval. In a January 5 press release, FDA Commissioner Robert Califf, stated: “The FDA is committed to working with states and Indian tribes that seek to develop successful Section 804 importation proposals.”
Despite the potential drug price savings under SIP, the importation does face challenges. Canada has long opposed the export of Canadian approved drugs to the United States over concerns about potential drug shortages and price increases for Canadian patients. On January 8, Health Canada issued a press release stating: “The Government of Canada is taking all necessary action to safeguard the drug supply and ensure Canadians have access to the prescription drugs they need and has been clear in its position: bulk importation will not provide an effective solution to the problem of high drug prices in the U.S.”4 Additionally it is believed that Pharmaceutical Research and Manufacturers of America (PhRMA) is preparing to file a lawsuit to block Florida’s SIP.
END NOTES
1 Section 804 was created by the Medicare Modernization Act of 2003, but enacting regulations were not finalized until October 2020.
2 For purposes of this alert, we are only referring to drugs for human use and are excluding the theoretical existence of “grandfathered” drugs.
3 FDA does permit under its enforcement discretion some limited personal supplies of imported drugs.
4 https://www.canada.ca/en/health-canada/news/2024/01/statement-from-health-canada-on-fda-decision-on-florida-bulk-drug-importation-plan.html
