Importing Drugs from Canada: Overview

Introduction

The high cost of medication in the United States is both a public-health concern and a political issue, especially among the country's senior citizens, who are especially likely to depend on a daily dose of prescription medication. Studies show that in the twenty-first century prescription-drug prices have often risen well beyond the rate of inflation, for example increasing at nearly three times that benchmark between 2000 and 2006. Increasing use of generic drugs can slow cost inflation, but according to USA Today in 2013, pharmaceutical companies responded to this trend by raising the price of brand-name drugs to compensate; prescription-drug costs increased by 3.6 percent in 2012, more than twice the overall inflation rate of 1.7 percent. Prices continued to climb through the late 2010s.

Facing increasingly high pharmacy bills, many US citizens have turned to a cheaper alternative: ordering their medications online, from foreign pharmaceutical companies whose prices are typically much lower. Often, buyers also choose to purchase generic versions of their prescriptions instead of brand-name medications. The combination of convenience and low price may be attractive, but the problem of unregulated and unknown composition potentially makes imported drugs a dangerous cocktail. A quick internet search for prescription drugs in Canada will bring up thousands of hits for online stores that sell everything from Viagra to Lipitor to flea medicine. Many question the safety and validity of these websites.

Imported prescription drugs enter the United States from many different countries, including places in Asia and Europe. However, because the Canadian government imposes price controls on drugs, Canada has become one of the most popular sources of personal medication imports. The popularity of Canadian drugs is largely due to the perception that price is the only difference between Canadian and American drugs—a perception that is fiercely disputed by some.

Except under certain circumstances, parallel importing of prescription medication, even for personal use, violates US Food and Drug Administration (FDA) regulations that prohibit the importation of non-FDA-approved drugs and the reimportation of drugs originally produced in the United States. These practices are so widespread that the online pharmacy industry has become a multibillion-dollar business. Critics of the ban argue that this process should be legalized and have demanded federal legislation to lift the restrictions on importing drugs from Canada. Compelling arguments exist on both sides regarding issues such as safety, affordability, fairness, and free trade.

Understanding the Discussion

Generic or Generic Equivalent: A drug that is chemically identical to a brand-name drug but does not bear the advertised name. Generics can only be produced after the patent on the original brand-name drug expires.

Parallel Importing: Purchasing a drug from a foreign country for less money than it would cost to buy the drug in the United States. Also known as parallel trade.

Pharmaceutical: Having to do with the preparation, use, or sale of medicinal drugs.

Price Controls: When a government intervenes to set a fixed price on a particular good, usually in the form of a maximum limit.

History

Throughout the early history of the United States, the responsibility for regulating the production and sale of drugs generally fell to state and local governments. From the beginning, however, federal intervention was required to maintain a consistent level of safety and quality in medicinal products and to prevent adulterated (contaminated or impure) items from being sold in the marketplace.

Legislation governing the trade of drug products reached an important milestone in 1902 with the introduction of the Biologics Control Act, which policed the safety of serums and vaccines. Four years later, the Pure Food and Drug Act of 1906 banned the interstate trading of mislabeled or adulterated food or drug products. Congress had already passed the first federal law regulating foreign drugs as early as 1848, in the form of the Drug Importation Act. This legislation required medicines entering the country to be inspected by customs officials and sent back if they did not meet safety standards.

In 1938, the US government extended the laws relating to prescription medication to include the requirement that all drugs must pass safety tests before being marketed. Beginning in 1962, companies were also required to prove the effectiveness of their drugs before being allowed to sell them. Such proof of safety and efficacy typically involves many stages of extensive testing on both animals and humans. In 1977, the Bioresearch Monitoring Program was instituted to oversee the quality of testing during drug development and to ensure the safety of human subjects involved in clinical trials.

Strict regulations surrounding the production and sale of prescription medications in the United States contribute to the overall cost of drug research and development. It is possible for a drug company to invest years in a particular experimental medication, only to have it fail to acquire FDA approval. For this reason, the United States does not impose price controls on drugs; pharmaceutical companies must be allowed to make back the money they spend on research and development, and setting limits on drug prices would cause companies to cut back on research into new drugs.

Officials in the FDA and the pharmaceutical industry fear that without the high prices on existing drugs, there would be no new drugs. Legalizing parallel importation of prescription medications, these groups claim, would be catastrophic. In response, groups such as the American Association of Retired Persons (AARP) contend that huge advertising budgets, excessive profits, and overly generous patent-protection laws are the real forces behind high prescription-drug prices in the United States. These groups argue that legalizing the importation of drugs from Canada is necessary because it would provide lifesaving medications to individuals who could otherwise not afford them. Furthermore, the move would lower domestic drug prices in the long term by exposing US pharmaceutical companies to fair global competition.

The issue is complicated by lingering questions of safety. Many who oppose the legalization of parallel importation fear that drugs purchased from Canadian companies have the potential to pose serious health risks to consumers. These products, they claim, may not always come from licensed or regulated pharmacies and could therefore be counterfeit medications that contain the wrong ingredients, lethal ingredients, or no active ingredients at all. Others argue that Canadian regulatory methods for ensuring safety and efficacy are comparable to those in the United States and that the price controls imposed on medications in Canada discourage counterfeit trade. Additionally, a study by the Pharmaceutical Security Institute found that in 2004, the United States had the fifth-highest incidence of counterfeit drugs, behind China, Colombia, Russia, and India, while Canada did not make the top-ten list.

The prevalence of counterfeit drugs is reflected in a page on the FDA website that offers suggestions for assuring the safety of medicines, including the recommendation that consumers should only buy from state-licensed pharmacies in the United States or from members of the Verified Internet Pharmacy Practice Sites Accreditation Program online. The FDA also suggests that patients become familiar with what their medicines look, taste, and feel like so they can better identify counterfeits.

Importing Drugs from Canada Today

In the twenty-first century, support for the legalization of drug imports from Canada has grown. The question of parallel importation became a key issue in the 2004 presidential debate, when Democratic candidate John Kerry advocated lifting the ban on the purchase of low-priced Canadian drugs and Republican incumbent George W. Bush argued that he could only support such a program if more stringent regulations were in place to ensure the safety of drugs entering the country.

In response to urgent demands from constituents, Congress passed the Medicare Prescription Drug, Improvement, and Modernization Act in December 2003. This legislation marked a major restructuring of the US Medicare program, the federal health-insurance system for persons aged sixty-five and older and persons with disabilities. It established a voluntary prescription-drug benefit program for Medicare subscribers, allowing them to select from a wide array of prescription plans—as many as forty in some states—with different premiums, deductibles, co-payments, and qualifying drugs and pharmacies. Supporters of the new legislation claimed that increasing choice would lower drug prices, while opponents argued that it would only confuse the issue.

The act also includes a provision enabling the secretary of the US Department of Health and Human Services (HHS) to "promulgate regulations" that would allow prescription-drug imports from Canada, but only if the drugs could be certified as safe. Although HHS subsequently declined to establish any such certification program, some believe that the threat of cheaper, imported drugs played an instrumental role in the passage of various drug-pricing reforms, including those contained in the Affordable Care Act (ACA) of 2010. In exchange for support from the pharmaceutical industry for the ACA, which contained around $80 billion worth of prescription-drug discounts and rebates, the administration of President Barack Obama agreed not to negotiate drug prices or legalize the importation of prescription drugs.

A 2009 proposal by Senator Byron Dorgan would have given pharmacies, wholesalers, and consumers the ability to purchase drugs from Canadian and European businesses that have been inspected by the FDA. This proposal was a compromise between providing cheap medicine and keeping prescription drugs safe. However, the act was rejected by the Senate in December 2009, based largely on safety concerns that were raised by pharmaceutical companies.

On July 9, 2012, the Food and Drug Administration Safety and Innovation Act (FDASIA) was passed by Congress and signed into law by President Obama. Pharmaceutical companies had played a vital part in drafting and passing this law in order to safeguard against revenue loss due to Americans purchasing medications in Canada and bringing them back to the United States. Under section 708 of the FDASIA, the government has the right to seize and destroy any drugs imported to the United States from Canada and other countries. The law officially took effect on October 1, 2012. To counter this, in June 2014, senators Amy Klobuchar of Minnesota and John McCain of Arizona introduced the Safe and Affordable Drugs from Canada Act of 2014, which would legalize importation of Canadian prescription drugs for personal use (up to a ninety-day supply), excluding controlled substances. The bill was referred to committee, and no further action was taken.

In 2018, Vermont passed legislation to create a plan to import drugs from Canada, and it was joined by Florida and Colorado in 2019. The states formed a coalition to explore options, expected to begin with limited imports of specific expensive drugs that would make such a program cost effective. President Donald Trump signaled his support for the states' move, and in July 2019 his administration outlined a plan at the national level in which states, pharmacists, or wholesalers could propose importation plans to the FDA. However, certain drugs, including particularly expensive ones such as biologics and insulin, would also be ineligible for import under the proposal. Opponents also brought up the usual claims of danger due to counterfeit products. The idea also received considerable criticism in Canada, with many officials arguing that demand would overwhelm supply, to the detriment of Canadian consumers. Meanwhile, a 2019 poll by the Henry J. Kaiser Family Foundation found that 80 percent of Americans supported legalizing the importation of drugs from Canada.

In 2020, the FDA and the US Department of Health and Human Services began allowing states the ability to import specific prescription drugs from Canada after states submitted an FDA approved plan. An executive order issued by President Joe Biden in 2021 further opened the path for the FDA to work with states to import prescription drugs from Canada. Florida became the first state to gain such authorization in January 2024.

These essays and any opinions, information or representations contained therein are the creation of the particular author and do not necessarily reflect the opinion of EBSCO Information Services.

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