Florida’s decision to apply for permission to import drugs from Canada isn’t likely to lower prices for most Georgians. But it could be a first step towards reigniting a debate around why Americans pay more than Canadians, Germans, and the French for the same drugs – and that debate could ultimately push the federal government and states to press pharmaceutical companies for lower prices.
“The logical corollary of ‘We want to import cheaper drugs from Canada,’ is for Americans to ask ‘Why are drugs cheaper in Canada?’” Eric Miller, a former senior Canadian official who is now a U.S.-Canada trade consultant, told The Atlanta Journal-Constitution.
Canada and many European countries appoint one government body to purchase drugs for their national health systems, which gives taxpayers a stronger bargaining position in talks with pharmaceuticals companies, Miller said.
On January 5, the FDA approved Florida’s plan to buy drugs in bulk from Canada for state programs that serve jail populations and Medicaid users. Florida had been in litigation with the FDA to force the FDA to implement a 2003 federal law allowing U.S. states to import drugs from Canada.
In late 2023, Florida presented the FDA with a revised plan to import 17 pharmaceuticals used to treat HIV, mental health, prostate cancer, and circulatory issues. The plan foresees Florida buying drugs from Methapharm Inc. of Ontario. LifeScience Logistics LLC of Texas would then import the drugs on Florida’s behalf, re-label the drugs in a warehouse in Indiana according to FDA standards, and ship the drugs to a state-owned distribution facility in Lakeland, Florida.
“This is the first time the FDA has authorized a state to do this,” Meredith Freed, senior policy analyst with the think tank KFF’s Medicare policy program, told the AJC. “However, Florida must submit a pre-approval request to the FDA for each drug they intend to import, conduct quality testing, and assure that drugs meet FDA standards. It’s unclear when the plan might actually take effect.”
Freed said a number of states intend to follow Florida’s lead. Colorado is the furthest along, she said. Texas has filed its own plan, while Vermont’s governor has said he wants to import abortion drugs from Canada. The FDA rejected New Hampshire’s proposal. Georgia is not among the states considering buying Canadian drugs.
It’s an issue that has made for strange bedfellows, uniting conservatives like Florida Gov. Ron DeSantis with left-leaning Vermont Senator Bernie Sanders. Both say it’s unfair for Americans to pay higher prices than the rest of the world.
A 2021 report by the U.S. Government Accountability Office (GAO) found that 20 brand-name drugs had retail prices in the U.S. that were 2 to 4 times higher than prices for the same drugs in Australia, Canada, and France. Studies by KFF and the Rand Corporation have come to the same conclusion.
Drug prices in the U.S. are higher than elsewhere because “we have a fragmented set of purchasers (states, federal government, employers) that give us less leverage for negotiating prices,” Stacie B. Dusetzina, Professor of Health Policy and Ingram Professor of Cancer Research at the Vanderbilt University School of Medicine, told the AJC. “Other countries use more of a consolidated negotiation approach where manufacturers must agree to the price or they cannot sell the drug in the whole country.”
She suggested the federal government and states improve negotiations with drug makers. “For example, perhaps states could work to develop group purchasing contracts to allow for greater negotiation with manufacturers for specific drugs.”
Drugs companies counter that higher prices give U.S. consumers earlier access to new drugs, especially for drugs designed to treat cancer and rare diseases. In 2021, the U.S. held a 65% share of of Global First Launches of New Medicines, according to a report by the Pharmaceutical Research and Manufacturers of America.
Freed noted that Canadian law limits the export of drugs outside of Canada to prevent shortages to their own supply. Canadian Health Minister Mark Holland told the Canadian Broadcasting Corp., “We’re going to do everything in our power to make sure that another country cannot be given the ability to pillage our health system for its own benefit.”
Anna Adams, executive vice president of external affairs at the Georgia Hospital Association, told the AJC that her members are taking a wait-and-see approach.
“Florida is looking for cost savings for some of their managed care programs,” Adams said. “But it’s unclear whether, after the repackaging and the FDA checks, this will result in cost savings. We are in a posture right now in which we will wait to see how this develops in Florida.”
Senator Rev. Raphael Warnock told the AJC in an emailed statement: “Exploring options to lower soaring health care and prescription drug costs is a good thing.” He said he is encouraging state leaders to strengthen access for 640,000 Georgians to affordable healthcare via Medicaid expansion.
While Florida’s proposal amounts to “a lot of discussion around something that’s not going to happen,” Miller says it will put pressure on American lawmakers to act.
“Baby boomers are heading into the period of their lives when they will be making maximal use of healthcare,” Miller said. “That’s going to force a discussion of how the federal government and the states can drive a better bargain on prices, just like it’s done in others place in the world.”
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