Drug Re-importation – Real With Obama?

This is a topic that has been around for a while. Before the Medicare Prescription Drug Plan (PDP) and a significant number of drugs losing their patents, you used to hear about people driving to Canada to get their prescriptions at reduced prices.

I believe this is one of the things that Obama talked about in his plans to lower healthcare costs. I haven’t studied up on it in a few years, but I got to work with our General Counsel at Express Scripts on our position for this several years ago. At the time, a lot of our clients were asking what they should do and what we would do.

Here were my conclusions (updated with the general market conditions above):

  • There is certainly a window of opportunity to import brand drugs from other countries (e.g., Canada) into the US and reduce costs.
  • That window will be short-lived as the US is the biggest prescription drug market based on high prices and the manufacturers will simply increase global prices putting pressure on those governments to not allow re-importation.
  • There is some increased risk of “counterfeiting” but that could be managed with some of the drug pedigree things being discussed and implemented.
  • Brand drugs are cheaper in other countries because they negotiate as a country and have larger buying power and give higher probability of market share to the approved manufacturer. [Which isn’t likely to happen in the US anytime soon.]
  • (One of my biggest ah-hah moments…) This is only relevant for brand drugs which now represent less than 40% of all drugs dispensed in the US. Generic drug prices are cheaper in the US than anywhere else for the exact same reason – competition.

As a corporation, we couldn’t encourage this activity back then, but we could process paper claims as out of network for our clients if they included those locations as part of their benefit.

So, I think it’s an outdated suggestion that will ultimately hurt the other countries for our short-lived benefit. Hopefully, Obama brings some people onto his team that look at these facts not at playing to the general public’s perception. [And, yes…I would happily volunteer to help us fix the healthcare system no matter how painful of an experience.]

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