Statement on Litigation Challenging Legality of Administration’s Final Rule Permitting State-Sponsored Drug Importation From Canada

WASHINGTON, D.C. (November 23, 2020) – Today, the Pharmaceutical Research and Manufacturers of America (PhRMA), Partnership for Safe Medicines (PSM) and Council for Affordable Health Coverage (CAHC) initiated litigation in the U.S. District Court for the District of Columbia challenging action by the U.S. Department of Health and Human Services (HHS) and Food and Drug Administration (FDA) permitting pharmacists and wholesalers, pursuant to state-sponsored programs, to import certain prescription drugs from Canada into the United States without drug manufacturers’ authorization or oversight (85 Fed. Reg. 62,094 Oct. 1, 2020) (the “Final Rule”).

PhRMA Executive Vice President and General Counsel James C. Stansel stated:

“It is alarming that the administration chose to pursue a policy that threatens public health at the same time that we are fighting a global pandemic. FDA has noted it is struggling to keep up with approving medicines while working around the clock to support COVID-19 therapeutics and vaccine development. Despite this, the administration is willing to divert precious FDA resources away from these efforts and to expose Americans to the risks that come with drug importation schemes.

“It is particularly disturbing that the administration is punting the responsibility for demonstrating safety and cost savings to state governments despite the clear requirement under federal law that the Secretary of HHS must certify that imported drugs both pose no additional risk to public safety and will lead to significant savings for the American consumer. In fact, the Final Rule fails to overcome the well-documented safety concerns regarding importation expressed for nearly two decades by previous HHS Secretaries across party lines or to make any showing that the proposal would result in any—let alone significant—cost savings to American consumers. The bottom line is that the administration has violated federal law by proceeding without proper certification and, in doing so, is putting the health and safety of Americans in jeopardy.”

PSM Executive Director Shabbir J. Safdar stated:

“Since the start of the COVID-19 pandemic, the key role of FDA in ensuring the availability of safe and effective medicines and the integrity of the American pharmaceutical supply chain has become even more clear. Once we weaken the longstanding defenses in place for our drug supply, as this Final Rule does, we open floodgates that cannot be closed. This makes absolutely no sense from a policy standpoint, which is why HHS and the FDA have long opposed and refused to effectuate importation measures like those in the Final Rule from ever seeing the light of day. For nearly 20 years, HHS and FDA heads, appointed by both Republican and Democratic administrations, have seen the dangers of these proposals and always declined to pursue them. The Trump Administration has defied this wisdom for seemingly political reasons at the worst possible time.

“The Final Rule would create large gaps in track and trace requirements, which were enacted to help ensure safety of our drug supply chain. It encourages diversion of drugs intended for Canada, a country that opposes the Trump Administration’s proposal. And it poses liability issues for pharmacists who would be left dispensing medicine from an untraceable supply chain.

“This policy was pursued over the objections of everyone in the supply chain that today safely transits lifesaving medicine from the factory floor to the patient. Safety must always come first.”

CAHC President Joel White stated:

“The importation scheme envisioned in this Final Rule brings a false promise to Americans that it will result in lower cost. Providers, pharmacists and the patients they serve may no longer trust the medicines they prescribe and dispense are safe and effective. There are better ways to lower costs through increased competition, paying for outcomes, and price transparency for consumers.”

Additional information about the complaint:

The complaint alleges the Final Rule disregards key protections of the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. § 301 et seq. (FDCA) that are designed to ensure patient safety. Section 804 of the FDCA, 21 U.S.C. § 384, authorizes HHS to permit both the importation of drugs by pharmacists and wholesalers for commercial distribution and the importation of drugs by individual patients. Section 804 is effective, however, only if the HHS Secretary certifies to Congress “that the implementation of this section will—(A) pose no additional risk to the public’s health and safety; and (B) result in a significant reduction in the cost of covered products [(i.e., certain prescription drugs)] to the American consumer.” § 384(l)(1).

In this Final Rule, Secretary Azar has made conclusory statements as to safety and cost savings in his “certification” with no supporting evidence and while punting the responsibility for safety and cost savings to state governments. The complaint, therefore, alleges the Secretary’s certification is contrary to Section 804 and unsupported by the record.

In addition, there is no indication that the Final Rule will reduce costs to actual American patients. In the preamble to both the proposed and Final Rule, HHS has acknowledged that it cannot quantify the savings, if any, that would result from its rule, even classifying it as “not economically significant” for purposes of review by the Office of Management and Budget. Indeed, in the budget document released with the rule, the cost savings chart was left blank, suggesting cost savings could not be calculated.

Furthermore, aspects of the Final Rule are contrary to the FDCA, violate manufacturers’ First Amendment rights and raise serious questions under the Fifth Amendment Takings Clause.

As such, PhRMA, PSM and CAHC are asking the Court to hold unlawful, set aside and permanently enjoin implementation of the Certification and Final Rule.

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