Patient Affordability and Access to Prescription Drugs 

As federal and state policymakers consider policies to lower drug costs, state drug importation has been proposed as a way to increase patient affordability and access to prescription drugs. The Section 804 Importation Program (SIP) allows states to request authority from the US Food and Drug Administration (FDA) to import prescription drugs from Canada. In January 2024, the FDA authorized the first SIP, requested by Florida, opening the door to state drug importation and the possibility of other states receiving subsequent authorization.  

What Does Prescription Drug Importation Look Like Without SIPs? 

Currently, the importation of prescription drugs is subject to varying levels of federal oversight, depending on whether it is classified as commercial or personal importation. Shipments deemed to be for commercial use are subject to all labeling and quality requirements under US statute for the approval and sale of that product. Shipments deemed to be for personal use are not subject to the same level of FDA scrutiny. Without clear health risks or evidence of intent for commercial sale, the FDA permits the importation of select prescription drugs that meet the following criteria: 

• The intended use is for a serious condition that lacks available effective treatments in the United States 
• There is no known commercialization or promotion to patients in the United States 
• The product is not considered to represent an unreasonable risk 
• The individual seeking to import the product affirms it is for their own use (i.e., <3 months’ supply) 

• • The patient provides the US doctor overseeing their treatment, or 
  • The patient provides evidence that the product is for the continuation of treatment begun in a foreign country 

The current oversight of personal importation, which is not tracked, has generated uncertainty about the legitimacy of prescriptions drugs allowed into the United States through alternative sourcing methods. It also makes quantifying the level of importation that takes place via these means difficult to estimate. 

How are SIPs Structured? 

In 2020, the US Department of Health and Human Services released a final rule on the importation of prescription drugs from Canada under a SIP, which changes FDA’s authority over importation. The change allows states to develop and submit SIP proposals to the FDA. A state, acting as the SIP sponsor, must demonstrate that the SIP would reduce prescription drug costs to patients and pose no increased risk to the public’s health and safety. Not all medical products are eligible to be imported under a SIP. Ineligible products include controlled substances, biologics, medical products with requirements that track patient safety concerns, or any drugs administered intravenously, intrathecally, or intraocularly.  

Ultimately, the FDA has authority over SIPs and it is responsible for the review of proposals, their authorization, and subsequent oversight. The manufacturer or importer is responsible for quality testing to confirm that the prescription drug can be used in the United States. The importer must also confirm that the labeling complies with US specifications or undergo relabeling to meet those requirements.  

Recent Actions, Implications, and Future Outlook 

In January 2024, the FDA authorized Florida’s SIP proposal. Seven other states are engaged in SIP proposal preparation or submission (see Figure 1).  

There are several FDA requirements that Florida must satisfy before implementing the SIP. First, it must submit pre-import requests and confirm supply chain compliance. Additionally, the state must ensure that all participating pharmacies and wholesalers meet the stringent FDA track-and-trace requirements. Furthermore, Florida must also demonstrate that the program will pose no additional risk to the public’s health and safety, and that it will result in a significant reduction in the cost of covered products to the American consumer.  

Florida’s program may encounter other challenges that could hinder implementation. There is the potential for litigation by stakeholders in opposition to the program, which could further delay implementation of Florida’s SIP. There are also uncertainties regarding Canada’s participation in the program. Canadian health officials have expressed opposition to SIPs, citing that Canada’s market for pharmaceuticals is too small to have any real impact on US drug prices and that its supply chain cannot accommodate the prescription drug volumes that would be exported to the United States.  

Figure 1. Status of State Importation Efforts as of January 2024​

While there is uncertainty regarding the next steps for SIP operationalization, this recent activity is likely to draw greater attention to SIPs from states that have yet to consider legislation or formalize their proposals. Additionally, updates on SIP authorization introduce a series of considerations for drug manufacturers operating in the United States. In particular, manufacturers should consider their demand projections and how the volume of certain prescription drug sales may shift due to SIP implementation. This could necessitate re-calibration of US commercialization strategies to accommodate for added risk from a demand perspective.  

To learn more about how Avalere can assist you in thinking through policy and access implications of state importation programs and the Section 804 process, connect with us.