Statement for the Senate Committee on Health, Education, Labor, and Pensions on Prescription Drug Importation

Source: AARP Press Center |  | May 20, 2004

Mr. Chairman and members of the Committee, thank you for convening this hearing and for providing AARP an opportunity to share our views on the need to address rising drug costs through the safe importation of prescription drugs.

Over five months ago, Congress enacted some sweeping changes to Medicare – including long-overdue prescription drug coverage. We believe that the new law, while far from perfect, lays the foundation for affordable Medicare prescription drug coverage upon which will we will build over time. AARP will continue to work with Congress to strengthen and improve the drug benefit and the Medicare program.

The Need for Importation Legislation

The Medicare prescription drug benefit was an important first step. But now more needs to be done to control the rising costs of prescription drugs so that Americans of all ages can afford needed medications. Modern medicine increasingly relies on prescription drug therapies; yet the benefit of these therapies still eludes those Americans who cannot afford to pay escalating drug prices. Between 1998 and 2003, prescription drug prices rose at nearly twice the annual rate of inflation for that same period.

CMS estimates that, in 2003, per capita spending on prescription drugs rose approximately 12 percent, with a similar rate of growth expected for this year. Much of the increase in drug spending is due to higher utilization and the shift from older, lower cost drugs to newer, higher cost drugs. However, rapidly increasing drug prices are a critical component.

High drug prices, combined with the surging older population, are also taking a toll on state budgets and private sector health insurance costs. Medicaid spending on prescription drugs increased at an average annual rate of nearly 20 percent between 1998 and 2001. Until lower priced drugs are available, pressures will continue to squeeze public programs at both the state and federal level. Pressure will continue on the private sector as well, possibly leading to elimination of, or reductions in, employer-provided drug benefits. Further, over 43 million Americans currently have no health insurance coverage. Without access to negotiated prices, these Americans pay among the highest prices for prescription drugs in the world or, worse yet, don't fill prescriptions because they cannot afford to pay for them.

AARP surveys demonstrate that our members consider drug prices exorbitant and the single most significant barrier to obtaining needed medications. Responses to an AARP Bulletin questionnaire last fall showed that our members split pills, skipped doses, asked doctors for free samples, and sold possessions because the costs of needed medications were too expensive. One woman poignantly noted that she begged for the unfinished prescriptions of friends who had died, hoping their left-over drugs would meet her needs.

Americans of all ages need affordable prescription drugs now. Safe importation of prescription drugs from Canada is one way to begin to secure lower priced drugs. Our members question why prices in Canada can be lower, sometimes far lower, than prices in the U.S. It is a national embarrassment that people from all over the world come to the United States to access our advanced medical systems while many of our own citizens need to look outside our borders in order to afford their prescription drugs. But with the same drugs selling, in some cases, at 30 percent and even 50 percent less in Canada and overseas, it is hardly surprising that so many make that choice.

It is no longer a question of whether we should or should not allow the importation of drugs from abroad. The simple fact is that importation is already happening. Many Americans travel to Canada for less costly prescription drugs, or purchase their drugs through the Internet without any systematic U.S. oversight process in place to assure safety. Importation of drugs is likely to continue whether or not Congress acts. The trend is growing, and we have a responsibility to ensure that Americans can access lower cost drugs without putting their health at risk. AARP therefore supports legalizing importation through a system that ensures safety and lowers drug costs.

We are very pleased that this Committee – and the Senate as a whole – is moving the issue forward. We strongly urge you and your colleagues to take action that will lead to enactment of importation legislation this year. We believe we can meet the challenges of designing a prescription drug importation program that will ensure the integrity of pharmaceuticals and provide a streamlined process that enables consumers to access lower cost prescription drugs.

AARP supports efforts – such as the bipartisan bill introduced by Senators Dorgan, Snowe, and Kennedy and the legislation being developed by Senator Gregg – that move to make lower priced drugs available to American consumers. We have specific recommendations for safety features that should be included in any importation legislation, and look forward to working with all of these bill sponsors on these recommendations. AARP and its members will actively support bipartisan legislation that lowers costs and ensures safety and we will aggressively work for passage this year.

Safety Issues

The health and safety of individuals is paramount in any importation system. AARP supports importation with strong safety features from licensed Canadian pharmacies and wholesalers. Regulation of the Canadian pharmacy system closely resembles its U.S. counterpart. As a result, we are confident that drugs purchased from Canada can be as safe as drugs purchased in the United States.

However, we recognize that some manufacturers are curtailing their drug supply to Canada, which could lead to supply shortages. Thus, limiting importation legislation to Canada may not be feasible. Our members do not want hollow promises of importation legislation – they want legislation passed that will allow them the opportunity to fill their prescription safely and at a lower cost. Therefore, legislation that expands importation beyond Canada should also include strong consumer safeguards to ensure that these systems closely align with the U.S. standards.

FDA Certification

Congress has tasked the Food and Drug Administration ("FDA") with ensuring the safety and effectiveness of U.S. pharmaceuticals. Drugs manufactured for distribution in other countries may differ slightly from drugs destined for the U.S. Some differences may be minimal and have little or no effect on the efficacy of the drug. Other differences may actually change the efficacy of the drug. Therefore, the FDA should determine whether imported drugs are safe for the U.S. market.

In order to accomplish this goal, FDA will need the authority and resources to inspect pharmaceutical plants in foreign countries – much as they do now – to ensure that these plants conform to rigorous U.S. safety requirements. Where appropriate, a specific manufacturing line in a plant may receive certification in lieu of undergoing the more lengthy process of certifying the entire plant. We therefore urge the Committee to ensure adequate FDA resources to effectively monitor and enforce these standards.

Once the safety of pharmaceuticals from a given plant has been determined, a process should be established to guarantee the quality and efficacy of pharmaceutical distribution and dispensing. Pharmaceuticals should be dispensed and distributed according to the usual and customary pharmacy practices in the United States.

The safety and authenticity of these pharmaceuticals should be assured at each point along the stream of commerce. Regular inspection of the flow of prescription drugs from the point of manufacture to the ultimate point of dispensing is necessary. FDA should implement mechanisms by which foreign pharmacies and wholesalers can be registered with and licensed by, or on behalf of the FDA. These entities should be fully accredited and licensed by a reputable licensing board.

Consumers should be made aware of the results of FDA plant inspections and licensing activities. For example, FDA could provide electronic links from its Internet site to approved Internet pharmacies in Canada and other countries as appropriate. Having the FDA web site as the point of contact for a list of approved pharmacies would provide consumers with an official, secure source of information on safe drugs. However, not all consumers have access to the Internet; therefore, there should be mechanisms in place that will allow consumers to call a toll free number sponsored by the FDA, or other appropriate entities, in order to get information on approved foreign sources from which consumers can purchase lower cost pharmaceuticals. Consumers should also have confidence in the Internet sites they use to purchase drugs from other countries. We recommend that a system be put in place to identify and shut down unregistered Internet pharmacies.

Pedigree Requirements

One way of effectively ensuring the safety of pharmaceuticals is the institution of pedigree requirements – being able to trace a drug from the point of origin to the point of dispensing. In order to accomplish this task in an expanded international arena, there should be a way to trace pharmaceuticals back to the point of manufacture and enforce pedigree requirements. Each entity that handles prescription drugs should be required to maintain records as to the drug's pedigree. Furthermore, there should be no impediments to an entity's ability to receive records regarding a drug's pedigree.

Anti-tampering/Anti-counterfeiting Requirements

Pharmaceuticals imported from another country should be equipped with anti-tampering materials and anti-counterfeiting measures. As the technology in this area progresses, imported pharmaceuticals should be equipped with state of the art devices, such as bar codes, and specialized ink, or other appropriate technology. We urge the Committee to work with the FDA and others with the expertise necessary to determine appropriate anti-tampering and anti-counterfeiting requirements.

Other measures aimed at counterfeiting and tampering to be considered include the prohibition on repackaging and re-labeling of pharmaceuticals from other countries. This requirement could be enforced through the pedigree standards. Repackaging and re-labeling of pharmaceuticals creates the potential for misbranded or counterfeit drugs to enter the stream of commerce. Imported pharmaceuticals should be shipped in a manner that provides a tracking number (e.g., via international mail systems or some similar entity) to reduce the opportunity for counterfeit pharmaceuticals to enter the stream of commerce from outside the point of manufacture.

Because pharmaceuticals may be manufactured in countries where English may not be the official language, pharmaceutical labels and patient package inserts destined for the United States should be written in English as well. These labels should be applied at the point of manufacture, or prior to entry into the United States. Imported pharmaceuticals should be labeled in such a way as to indicate to the consumer that the drug has been imported under the new law.

Other Issues

We believe that features such as those previously outlined will help assure the safety of imported pharmaceuticals. Any system designed by Congress should also be realistic in terms of its safety requirements and FDA's responsibilities and capacity. This system should not be overly burdensome and costly to the point where American consumers will not be able to realize savings from imported pharmaceuticals. In addition to drug prices, shipping and handling, processing fees, licensure, and other costs should be reasonable and fully disclosed to the consumer at the time of purchase.

Consumer privacy also must be protected. As American consumers are able to purchase prescription drugs from other countries, not only should the integrity of the pharmaceuticals be ensured, but so should the privacy of the individual's protected health information. With the promulgation of the Health Insurance Portability and Accountability Act ("HIPAA") privacy standards, we have moved our nation closer to assuring protection against misuse of an individual's medical information. Studies have shown that individuals will not take advantage of a system if they fear their protected health information may be misused. Therefore, we encourage you as you design an importation system, to ensure that an individual's private medical information is protected at least to the level currently required by HIPAA.

There are additional issues that we urge Congress to consider. There remains a strong need to examine the safety of pharmaceuticals within the United States' drug supply in order to prevent counterfeit, diluted, or ineffective drugs. As Congress examines foreign pharmaceutical supply systems, there is also an opportunity to revisit the integrity of the U.S. pharmaceutical system – from point of manufacture to the ultimate consumer.

Finally, importation legislation undoubtedly will impact the worldwide pharmaceutical market. The FDA should be required to submit reports to Congress, annually or as otherwise appropriate, to monitor the impact of regulated importation on the price, quality, and access to pharmaceuticals both in the U.S. and worldwide.

Conclusion

Our members want Congress to enact legislation this year to allow for legal, safe importation of lower priced prescription drugs. We commend this Committee for its work in moving forward on the issue. We pledge to work with members on both sides of the aisle to develop a system to enable our members – and all Americans – to have secure access to lower cost imported prescription drugs.