On January 5, 2024, the U.S. Food and Drug Administration (FDA) signed off on Florida's request to import prescription drugs from Canada under the Section 804 State Importation Program (SIP).

This approval has sparked significant discussions and raised concerns about the potential impact on the Canadian drug supply. While this decision aims to address the rising costs of medications in the United States, it has also prompted a closer examination of the implications for Canada's pharmaceutical landscape.

Canada, renowned for its price-controlled pharmaceuticals, has long been an attractive source of more affordable medications for Americans. However, the prospect of increased drug exports to the U.S. has sparked worries about potential shortages.

This bulletin discusses the possible impacts on the Canadian drug supply and how the pharmaceutical industry can gear up to mitigate these challenges. 

Context

On October of 2020, the FDA issued a rule to implement the SIP, as a provision of the Federal Food, Drug and Cosmetic Act ("FD&C Act"), to allow the importation of certain prescription drugs from Canada with the objective of achieving a "significant reduction in the cost of covered products to the American consumer".1

On November 23, 2020, Florida issued its first SIP proposal. On January 5, 2024, the FDA published a letter indicating it approved the SIP proposal to import drugs from Canada. In a news release, Florida indicates that the approval will save the state up to $180 million in the first year.2

While Florida is the first state to receive such approval, the precedent it sets could pave the way for other states to follow suit, magnifying the strain on Canada's drug supply. 

Canada's Reaction

On January 8th, just days after the SIP approval, Health Canada published a news release, pointing out that regulations under the Canadian Food and Drugs Act were implemented in 2021 to prevent the sale of certain drugs intended for the Canadian market from being sold outside the country.3  Health Canada also released the Regulatory requirements prior to distributing Canadian drugs outside Canada, to remind stakeholders of their relevant regulatory obligations. 

In particular, Drug Establishment License (DEL) holders, including drug manufacturers, distributors and wholesalers, are prohibited from "distribut[ing] a drug for consumption or use outside Canada unless the licensee has reasonable grounds to believe that the distribution will not cause or exacerbate a shortage of the drug" (Food and Drug Regulations, section C.01.014.13). In its recent press release, Health Canada notes that this applies to "all drugs that are eligible for bulk exportation to the U.S., including those identified in Florida's bulk importation plan, or any other U.S. state's future importation programs". 

Moreover, according to the news release, Health Canada is actively monitoring the drug supply and will not hesitate to take action to address non-compliance "ranging from requesting a plan for corrective measures, issuing a public advisory or other forms of communication, to taking action on the licenses of regulated parties who contravene the export prohibition if warranted". It thus remains to be seen if Florida will be able to import drugs from Canada without causing or exacerbating a shortage of drugs. Indeed, Florida has a population of about 22 million, more than half that of Canada. 

Legal Action

Also note that, on October 1, 2020, the Pharmaceutical Research and Manufacturers of America (PhRMA), the Partnership for Safe Medicines and the Council for Affordable Health Coverage filed a complaint in the U.S. District Court for the District of Columbia challenging the SIP under the FD&C. Innovative Medicines Canada (IMC), the leading trade organization representing Canada's innovative pharmaceutical industry, filed an amicus brief supporting their position. The complaint was dismissed in February of 2023, for lack of subject matter jurisdiction. 

Following the green light in Florida, PhRMA president Stephen Ubi released a statement indicating strong opposition to the FDA's decision, calling it "reckless": "Ensuring patients have access to needed medicines is critical, but the importation of unapproved medicines, whether from Canada or elsewhere in the world, poses a serious danger to public health, [...] PhRMA is considering all options for preventing this policy from harming patients." Likewise, David Renwick, interim president of IMC, stated that allowing Florida to import drugs meant for Canadian could "disrupt" Canada's healthcare system: "Canada simply can't supply drugs to Florida, or any other U.S. states, without significantly increasing the risk and severity of drug shortages nationwide".4

Mitigation Measures

In the meantime, pharmaceutical companies have measures at their disposal to help curb export from Canada, including, for example, modifying the terms and conditions of sale to wholesalers. 

The life sciences team at Fasken remains available to assist with this and all other related regulatory matters.

Footnotes

1. Federal Register: Importation of Prescription Drugs

2. Florida Becomes First in the Nation to Have Canadian Drug Importation Program Approved by FDA

3. Statement from Health Canada on FDA decision on Florida bulk drug importation plan

4. Quotes from: U.S. allowing Florida to import drugs from Canada, reviving fears of shortages

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