Managed Care

 

Massachusetts City Attempts To Import Drugs From Canada

MANAGED CARE October 2003. © MediMedia USA
Legislation & Regulation

Massachusetts City Attempts To Import Drugs From Canada

The outgoing mayor of Springfield, Mass., is taking on the FDA over his plan to buy medications at a discount from Canada.
John Carroll
MANAGED CARE October 2003. ©MediMedia USA

The outgoing mayor of Springfield, Mass., is taking on the FDA over his plan to buy medications at a discount from Canada.

John Carroll

Michael Albano is just a few months away from wrapping up eight years as the mayor of Springfield, Mass. He isn't running again and has no great ambition for some other office. But instead of planning a smooth exit from the public scene in this old Northeastern manufacturing center, Albano is a whirl of activity — the unlikely advocate of a right to buy drugs from Canada at a deep discount.

In open defiance of federal drug regulators, Albano is not just pushing a plan he says can save the city upward of $9 million a year, he's promoting the idea to other public officials struggling to pay for an ever-growing health care tab. Potentially at stake are billions in drug revenue and a protest that has grown to include Albano's recent decision to hit the pharmaceutical industry where it hurts: by taking city pension money out of drug company stock and hoping others will do the same.

Idea keeps growing

This is one idea, though, that started small. Just last January, the Springfield paper didn't even bother to report Albano's plans to put city employees and retirees in touch with CanaRx. Now, he routinely gets calls from the likes of the New York Times and the Wall Street Journal. A few days before talking with Managed Care, he had been huddling with Sen. Ted Kennedy and some other congressional heavyweights to discuss Capitol Hill strategies.

And it's all because Albano has decided to go toe-to-toe with the Food and Drug Administration. Eager to slam the door on a possible avalanche of imports, the FDA swung into action after an Associated Press reporter picked up on the Springfield plan.

In no uncertain terms, the FDA has made it clear that bringing in drugs from Canada violated the agency's mission to maintain a closed distribution system to ensure basic safety. FDA Associate Commissioner William K. Hubbard outlined cases of consumers who thought they were buying a Canadian drug but were actually delivered an Indian alternative not approved for use in the U.S.

Warm insulin

Another person brought in insulin from Canada that was shipped by regular mail, while the FDA demands that it be refrigerated and shipped overnight to avoid degradation. "Virtually all drugs imported to the United States from Canada violate [federal law] because they are unapproved, labeled incorrectly or dispensed without a valid prescription," Hubbard wrote recently.

Yes, high prices are a real issue for everyone to deal with, Hubbard adds, but the FDA is doing its part in streamlining drug approval processes and expanding the availability of generics. And the administration is advocating a drug benefit in Medicare that will go a long way to easing access.

But Albano isn't buying any of it. "This issue about safety is really a red herring," he says. "I've said that the FDA is a pawn of the drug companies, and I still believe that."

Not only that, he adds, but the FDA is hypocritical. It has publicly and privately conceded that it won't stop busloads of senior citizens from going to Canada to buy discount drugs. And retirees won't find a regulator at the door if they have something shipped from north of the border. So why does the FDA want to go after Springfield? "It's OK for seniors but not OK for the mayor of Springfield to go to Canada," he says.

The real issue, he says, has to do with protecting drug companies' prices. "They see the momentum building here," he says. Public officials from around the country have been in contact to see about imitating Springfield, says Albano.

Officials in Iowa recently asked for FDA input on the issue, saying they might push for regulatory changes that would allow for importation. And California officials asked for and got an FDA position statement after the hugely influential California Public Employees Retirement System and others in the state started to explore the issue.

What they'll all find, says Albano, is a compelling argument to buy Canadian.

At the time he took office in 1996, says Albano, the city's health care budget was $33 million. Today, it's $67 million. Drug costs, he notes, have been going up even faster than most other health care factors. And as he couldn't control what physicians or hospitals charge, he did figure he could get a handle on drugs.

That's when he chose to experiment with an end-run around U.S. prices — the last industrialized nation without nationwide price controls — and take the city's business to price-capped Canada.

"We took a look at it and the results were astounding," says Albano, who personally uses CanaRx to buy insulin for his teenage son.

Prime example

Lipitor is a prime example of the simple cost equation that city employees have to consider, says Chris Collins, the city's insurance program director. Purchased from a Canadian supplier, the drug costs about 40 percent less than the retail price at a local pharmacy or regional supplier. For certain drugs, the savings can run as high as 80 percent. In other cases, it may be closer to 20 percent.

Individuals save money on their out-of-pocket portion of the drug cost, and Collins has estimated that the city will be able to squeeze down drug costs from $4 million to $9 million.

At the same time Springfield's health care costs have been shooting up, federal and state money has been drying up — to the tune of $15 million over the past 18 months.

Powerful support

That's an argument that has won powerful support in Congress, where the House easily passed a bill — H.R. 2427 — that would sanction just what Albano is advocating. A majority of the Senate, though, hasn't been persuaded and the bill is up for fresh scrutiny this fall as both sides see if they can hammer out a compromise Medicare drug bill.

Meanwhile, the influential Pharmaceutical Research and Manufacturers Association has been fighting the reimportation bill, amplifying the FDA's position on safety. PhRMA can also count on some major league supporters in the White House, which recently declared that H.R. 2427 "would open new channels for the importation of drugs into the U.S. without a workable system of oversight and enforcement, allowing counterfeit, adulterated, inactive and unapproved drugs to enter the country."

Albano may be just a small-city mayor, but he thinks the FDA and the White House are on the wrong side of a Main Street political issue.

"I think there will be a big backlash," says Albano. Once again, he isn't waiting for someone else to take the lead. With the clock ticking towards his scheduled January departure from the mayor's office, he is pushing the city's pension plan to sell off its stocks in U.S. pharmaceuticals.

"You can't have it both ways," he says. You can't fight U.S. drug prices on one hand and then look to big pharma's stock gains to fund pensions with the other.

Meetings

4th Partnering With ACOs Summit Los Angeles, CA October 27–28, 2014
PCMH & Shared Savings ACO Leadership Summit Nashville, TN November 3–4, 2014
2014 Annual HEDIS® and Star Ratings Symposium Nashville, TN November 3–4, 2014
Medicare Risk Adjustment, Revenue Management, & Star Ratings Fort Lauderdale, FL November 12–14, 2014
World Orphan Drug Congress Europe 2014 Brussels, Belgium November 12–14, 2014
Healthcare Chief Medical Officer Forum Alexandria, VA November 13–14, 2014
Home Care Leadership Summit Atlanta, GA November 17–18, 2014
HealthIMPACT Southeast Tampa, FL January 23, 2015