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U.S. Dept. of Health and Human Services Response to Sen. James Jeffords on Drug Reimportation
The Honorable James Jeffords
United States Senate
Washington, DC 20510
Dear Senator Jeffords:
I am writing to follow up on my earlier response to your letter of January 31, 2001, co-signed by fifteen of your colleagues, regarding the Medicine Equity and Drug Safety Act of 2000 (MEDS Act).
You and other Senators and Representatives asked that I reconsider former Secretary Shalala's decision and make the determination necessary to implement the MEDS Act. As I mentioned in my prior communication, I asked the Food and Drug Administration (FDA) to carefully reexamine the law to evaluate whether this new system poses additional health risks to U.S. consumers, and the Office of the Assistant Secretary for Planning and Evaluation (OASPE) to examine whether the new law will result in a significant cost savings to the American public.
I believe very strongly that seniors should have access to affordable prescription drugs. I applaud your leadership in this area, and agree that helping seniors obtain affordable medicines should be a priority. However, as my earlier response stated, I do not believe we should sacrifice public safety for uncertain and speculative cost savings.
Safety Concerns
After a thorough review of the law, FDA has concluded that it would be impossible to ensure that the MEDS Act would result in no loss of protection for the drugs supplied to the American people. As you know, the drug distribution system as it exists today is a closed system. Most retail stores, hospitals, and other outlets obtain drugs either directly from the drug manufacturer or from a small number of large wholesalers. FDA and the states exercise oversight of every step within the chain of commercial distribution, generating a high degree of product potency, purity, and quality. In order to ensure safety and compliance with current law, only the original drug manufacturer is allowed to reimport FDA-approved drugs.
Under the MEDS Act, this system of distribution would be opened to allow any pharmacist or wholesaler to reimport drugs from abroad; this could result in significant growth in imported commercial drug shipments. As you know, the FDA and the states do not have oversight of the drug distribution chain outside the U.S. Yet, opening our borders as required under this program would increase the likelihood that the shelves of pharmacies in towns and communities across the nation would include counterfeit drugs, cheap foreign copies of FDA-approved drugs, expired drugs, contaminated drugs, and drugs stored under inappropriate and unsafe conditions.
While the MEDS Act requires chain of custody documentation and sampling and testing of imported drugs, these requirements cannot substitute for the strong protections of the current distribution system. Counterfeit or adulterated and misbranded drugs will be difficult to detect, and the sampling and testing proposed under this program can not possibly identify these unsafe products entering our country in large commercial shipments.
I can only conclude that the provisions in the MEDS Act will pose a greater public health risk than we face today and a loss of confidence by Americans in the safety of our drug supply. Although I support the goal of reducing the cost of prescription drugs in this country, no one in this country should be exposed to the potential public health threat identified by the FDA in their analysis. Further, the expenditure of time and resources in maintaining such a complex regulatory system as proposed by the MEDS Act would be of questionable public health value and could drain resources from other beneficial public health programs.
Cost Savings
The clear intent of the MEDS Act is to reduce the price differentials between the U.S. and foreign countries. The review by the Office of the Assistant Secretary for Planning and Evaluation (OASPE) concludes there are significant disincentives for reimportation under the MEDS Act, including the costs associated with documenting, sampling and testing, the potential relabeling requirements and related costs and risk associated with such requirements, the overall risk of increased legal liability, the costs associated with the management of inventories by wholesalers and pharmacists, and the risk to existing and future contractual relationships between all parties involved. Moreover, there are a number of reasons (including potential responses by foreign governments) why lower foreign prices may not translate into lower prices for U.S. consumers. Insufficient information exists for me to demonstrate that implementation of the law will result in significant reduction in the cost of drug products to the American consumer.
Conclusion
Since I am unable to make the determination on the safety and cost savings in the affirmative, as required under the law, I cannot implement the MEDS Act. Please find attached to this letter a more detailed analysis of the factors influencing the public-safety and cost-savings questions. If you need further clarification of my position on these issues, please do not hesitate to contact me.
Thank you for your leadership in health care. I look forward to working with you on new initiatives for making medicine more affordable to our citizens, and on other health issues of importance to our Nation.
Sincerely,
Tommy G. Thompson
Secretary
Department of Health and Human Services
Under current law, commercial shipments of imported prescription drugs that do not meet the Federal Food, Drug, and Cosmetic Act (FDCA) requirements are subject to refusal for admission into the United States. Prescription drugs intended for marketing in the U.S. generally first must be approved by the Food and Drug Administration (FDA), whether manufactured domestically or abroad, must be accompanied by the FDA-approved labeling, and must be manufactured in accordance with U.S. current good manufacturing practices (cGMPs). The FDA inspects domestic and foreign manufacturing sites of prescription drugs to ensure that the manufacturer adheres to these cGMP requirements.
In addition, commercial shipments of approved prescription drugs that are manufactured in the U.S. and exported to a foreign country can be reimported only by the drug's original manufacturer or its designee. Congress created this reimportation restriction in the Prescription Drug Marketing Act of 1987 because of evidence that the integrity of some "American goods returned" was compromised during transshipments from abroad and therefore constituted a threat to the health of U.S. consumers to whom they were administered. Foreign distributors and foreign pharmacists are not subject to FDA or state oversight.
The current regulatory system provides the American public with multiple levels of protection against receiving unsafe, ineffective, and poor quality medications. First, as required under the FDCA, the FDA maintains high standards for prescription drug approval. Before FDA approves a prescription drug, the manufacturer must demonstrate that the product is safe and effective for its intended use, its labeling contains adequate directions for use, and the product is manufactured only at specific identified facilities that are registered with the FDA.
Second, once its drug is approved, the manufacturer must continue to comply with cGMPs to ensure that the quality of the product is systematically evaluated throughout the manufacturing process. The specific registered facility where the product is manufactured for sale in the U.S. remains subject to periodic inspection by the FDA.
Third, pharmacists and wholesalers who sell or distribute prescription drugs in the U.S. must be licensed or authorized by the states in which they operate.
Fourth, there are limited channels of entry into the American drug supply, thereby reducing the opportunity to place counterfeit or poor quality medications into the U.S. commercial distribution system. Today, prescription drugs on U.S. pharmacy shelves generally arrive either directly from a manufacturing facility, domestic or foreign, that meets FDA requirements or from a U.S. wholesaler who receives the approved drug from a manufacturing facility that meets FDA requirements. Therefore, together the FDA and the states can exercise oversight of every step within the commercial drug distribution chain from the manufacturing of the product to the point of sale to the consumer. The only exception to the current process is when the original U.S. manufacturer reimports its own product into the United States. However, even in this instance, the manufacturer must possess documentation that the product is authentic, has been properly handled, and is (as necessary) relabeled for the U.S. market.
This system is intended to ensure that drugs that do not meet FDA and state standards are not released to the American public. Under the current "closed" system, there is a high degree of assurance of the product's potency, purity, and quality. As a result of these safeguards, American consumers are assured that the prescription medications legally marketed in the U.S. are safe, effective, and of high quality. Once a product leaves this closed system, the FDA's ability to help assure that it is an authentic FDA-approved product or being properly handled is hampered.
The MEDS Act would allow increased commercial shipments of foreign drugs for importation. Specifically, the MEDS Act would allow pharmacists or wholesalers in the U.S. to reimport FDA-approved prescription drugs that were manufactured in FDA-approved U.S. facilities and exported to certain foreign countries, which are listed in the FDCA . Under current law, these drugs would not be allowed entry into the U.S. because only the original manufacturer or its designee can reimport their approved drug products. Thus, the MEDS Act "opens" the current "closed" system.
The MEDS Act creates a new untested importation system that weakens existing regulatory safeguards by increasing the number of channels through which prescription drugs can enter the U.S. commercial distribution chain, permitting the importation of drugs handled by persons not subject to federal or state oversight, and reducing the effectiveness of regulatory oversight. As a consequence, American consumers would be exposed to a greater risk of receiving counterfeit, superpotent, subpotent, contaminated, or inappropriate products.
Counterfeit drugs, which often are subpotent, superpotent, or contaminated, or which often contain the wrong active ingredient, clearly pose serious risks to patients. Since passage of the Prescription Drug Marketing Act of 1987, there have been few incidents of counterfeit prescription drugs entering the U.S. distribution chain from abroad. At the same time, there have been numerous reports of increased counterfeiting around the world, probably reflecting the substantial financial incentives for doing so.1 FDA believes that American consumers have been protected from most counterfeit or otherwise dangerous drugs because there is strong oversight of the U.S. commercial distribution system. However, under the MEDS Act, U.S. pharmacists and wholesalers would be able to obtain allegedly approved prescription drugs from foreign pharmacies and wholesalers. These foreign pharmacies and wholesalers are not subject to FDA or state oversight, not licensed in the U.S., not subject to review or inspection by U.S. regulatory bodies, not required to meet U.S. standards for storage and safe handling of drug products, and not subject to U.S. penalties for failure to comply with federal or state requirements. Creating an effective extra-territorial system for oversight and regulation of these entities, even if possible, would be a daunting and costly endeavor.
Once an FDA-approved prescription drug is exported for sale in another country, it is no longer subject to U.S. requirements, and it can no longer be monitored by U.S. regulators. In addition, it may not have the U.S.-approved labeling. Instead, it may have the labeling for the country to which it is exported. Once introduced into the foreign distribution system, the product may not be held under appropriate storage conditions. For example, a product may require constant refrigeration throughout the chain of custody to maintain potency. A person in the foreign distribution chain could substitute a counterfeit product, or could provide an approved drug that has been stored under inappropriate conditions or past its expiration date, and, therefore, potentially harmful or subpotent.
Moreover, even if the product introduced into the U.S is the appropriate FDA-approved product that was stored under appropriate conditions, it may be shipped with foreign labeling. Before it can be marketed in the U.S., it must be relabeled with the FDA-approved labeling. The necessary relabeling of the product opens the door to additional errors. A product that is incorrectly labeled could result in patients receiving the wrong medication. In addition, the legislation does not guarantee that U.S. pharmacists and wholesalers can obtain the U.S. approved label from the manufacturer. This increases the potential for mislabeling.
Finally, the greater the strains on the systems, the greater the likelihood for regulatory failure. The MEDS act would significantly increase the demands on the U.S. regulatory system. Under the MEDS Act, regulatory authorities would have to oversee the importation of many more commercial shipments of prescription drugs. This oversight would be further hampered by the fact that these prescription drugs are more likely to raise safety concerns because they will be coming from channels not subject to federal or state oversight. The increase in burden and the increase in potential problems with the imported products will undercut the ability to guard against the importation of dangerous prescription drug products.
The MEDS Act includes some measures aimed at addressing the risks associated with reimportation of prescription drugs. Specifically, the bill includes limited requirements for tracking the chain of custody and for sampling and testing the imported drug products for authenticity and degradation. These requirements differ depending on whether the drug is coming from the first foreign recipient or from subsequent recipients.
For drug products imported from the first foreign recipient, the bill requires documentation that tracks the product from its original manufacturing site, to all subsequent locations. Each batch of the initial imported shipment must be statistically sampled and tested. For subsequent shipments, the importer must present documentation demonstrating that a statistically valid sample of its shipments was tested.
For importations from other than the first foreign recipient, there is no requirement for tracking the chain of custody, but the importer must test a statistically valid sample from each batch of all shipments.
With these limited safety measures in place, the FDA could not ensure that the drugs reimported under this Act would be as safe as those currently found in U.S. pharmacies.
First, there is no requirement to document the chain of custody for products coming from other than the first foreign recipient. Instead the Act relies entirely on product testing. It is arguably more important to have a chain of custody requirement for products that change hands multiple times. Moreover, because documentation can be falsified, the chain of custody requirement is of limited value as a safety measure. FDA would have difficulty inspecting foreign traders to ensure that such documentation is accurate and not falsified.
Second, the sampling and testing strategy proposed could not possibly detect all potential counterfeit or substandard drug products. An enormous battery of prohibitively expensive tests would have to be conducted to ensure that the product is authentic and does not contain impurities. Furthermore, because it is not feasible to test entire shipments, it is possible that substandard or counterfeit product may be commingled with product that provided passable results. For example, when the product was not under the oversight of the FDA in a foreign country, certain lots may have been stored under unacceptable conditions, resulting in some product meeting specifications, and some not. If the portion of the shipment sampled does not contain the substandard product, it would be imported into the US for distribution to American consumers. For this reason, FDA takes the position that end-product testing such as the bill requires cannot substitute for in process-controls.
Although FDA's cGMP's require manufacturers to perform certain final product sampling and testing, it is only one small part of the U.S. systematic approach to ensuring drug quality. Sampling and testing final products for import/reimport cannot guarantee the quality, and therefore the safety of the product.
Third, many products entering the U.S. will be in the language of the country from which it is being imported. Even if there were some means to require the U.S. manufacturer to provide the U.S.-approved label for relabeling, this is not a straightforward process. Relabeling is a major operation, subject to rigorous cGMP controls, that generally is undertaken by large manufacturers who are accustomed to this process. For this reason, FDA has significant concerns about small pharmacies' and wholesalers' ability to relabel imported products without introducing errors and mix-ups.
Finally, because counterfeiting and other illegal activities may occur in foreign countries outside the jurisdiction of the FDA, enforcement will be difficult. The FDA could inspect shipments of reimported drugs for compliance with FDCA, however, there is no express authority to enforce inspections of foreign distributors and pharmacies in the chain of custody included in MEDS Act.
Any one of the concerns described above is sufficient to raise serious doubt about whether the new system envisioned by the MEDS Act could be implemented safely. Taken together, however, these concerns lead to the inescapable conclusion that the new system would pose additional health risks to U.S. consumers. Even if FDA could exercise its authority and implement regulations that might address some of the concerns, there is no guarantee that these regulations would be upheld. Even an expansion of FDA's authority would be of limited value. While it may decrease some of the risks, the expenditure in time and resources of maintaining such a complex, regulatory system would be of questionable public health benefit and could drain other public health programs.
In order to implement the MEDS Act, the FDA would require extensive additional resources. However, even with unlimited resources and/or expanded authority, the concerns with lack of oversight of the entire manufacturing process, testing and relabeling issues, and lack of jurisdiction would still remain. The result would be to weaken the safety of the current drug distribution system and undercut the ability to provide safe, effective, and high quality prescription drugs.
Although the MEDS Act includes a number of provisions aimed at ensuring the safety and quality of reimported drugs, FDA does not believe that it can be implemented in a way that ensures that there is no loss of protection to the American public. By opening the channels of distribution to persons that are not overseen by FDA or the states, the MEDS Act risks opening the borders to products that may be counterfeit, superpotent, subpotent, contaminated, or inappropriate. Given the paucity of data to show that this new law will actually save consumers money, it is not reasonable to impose this risk on the American public.
Footnote:While retail prices vary widely in the United States and abroad, prevailing retail drug prices in foreign countries are often lower than U.S. prices (frequently as a result of price controls imposed by foreign governments). Under the Medicine Equity and Drug Safety Act of 2000 (MEDS Act), P.L. 106-387, pharmacies and wholesalers are allowed to import FDA-approved products under specified conditions. Pursuant to the law, the HHS Secretary is required to certify a significant reduction in prescription drug costs to American consumers will occur as a result of the law. The following discussion examines the potential barriers to realizing price reductions for consumers under this legislation, and concludes the HHS Secretary can not demonstrate that the law will assure lower prices for U.S. consumers.
Foreign exporters and U.S. importers could face substantial hurdles attempting to import FDA-approved products under the MEDS Act. The numerous impediments include:
In a related vein, manufacturers are not obligated to guarantee the supply of products available for reimportation, and the levels of production based on historical usage in a respective country could impact the availability of products for reimportation into the United States. Moreover, foreign governments would have strong incentives to impose restrictions or tariffs to ensure adequate supply of a given product in their own country.
Manufacturers also are not obligated to ensure products sold to foreign recipients have the same identifying features (i.e. color, size, shape or dosage) as an equivalent product approved by the FDA for sale in the United States. Under the FDCA, then, these exported drug products may be precluded from being reimported, even though the drug itself is an approved drug under the FDCA. This would reduce the availability of drugs for reimportation.
Additional impediments directly affecting the costs include:
In light of the major uncertainties associated with the supply of reimported FDA-approved products and the costs involved in making these products available to U.S. consumers, a definitive conclusion about the magnitude of the expected cost savings, if any, is impossible. Thus, insufficient information exists for the Secretary to demonstrate that implementation of the law will result in a significant reduction in the cost of covered products to the American consumer.
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