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Final Canadian Drug Importation Rule and HHS Certification Issued Under Section 804 of the Food, Drug and Cosmetic Act

As previously covered on this blog, in mid-2019 the U.S. Department of Health and Human Services (HHS) and the Food and Drug Administration (FDA) jointly published the Safe Importation Action Plan, which outlined the Trump Administration’s two-part plan to allow foreign prescription drugs to be imported into the United States in an effort to reduce drug prices (see here). Then in December 2019 they proposed two different pathways, the first called the “Section 804 Importation Program,” which is being implemented via notice-and-comment rulemaking, and the second called the “MMA Products Program” being implemented via an FDA guidance document. Our December 2019 blog post with a detailed explanation of the Section 804 proposed rule and draft FDA guidance document is available here.

Since those proposals were released and public comments for each solicited, the country and the world have changed drastically as a result of the ongoing COVID-19 pandemic. However, drug pricing and the need to control increasingly unsustainable health care costs throughout the fragmented U.S. health system continues to be a high priority for all stakeholders, including the Trump Administration. In July 2020, President Trump signed a series of executive orders related to this topic, including one that directed HHS to finalize the rulemaking it had begun last year pertaining to drug importation from Canada (see our prior post on those orders here).

On September 24, 2020, HHS announced that it had finalized the Section 804 Importation Program regulations, which fall under the authority of Section 804 of the Federal Food, Drug and Cosmetic Act (FD&C Act) (21 U.S.C. § 384). Although the Section 804 authority has been in place for nearly twenty years, no previous HHS Secretary had been willing to certify, as required by the law, that drug importation would “pose no additional risk to the public’s health and safety” and would “result in a significant reduction in the cost of covered products to the American consumer.” The preamble to the Final Rule states that HHS Secretary Alex Azar is making the necessary certification to Congress in conjunction with this Final Rule. It also addresses a variety of comments from stakeholders regarding the scope and timing of the Section 804 certification, each of which raise novel questions of law and policy in light of the untested nature of the requirement. Perhaps most interestingly, however, the Final Rule notes several times that HHS/FDA is “unable to estimate the cost savings from this final rule, because we lack information about the likely size and scope of [Section 804 Importation Programs], the specific eligible prescription drugs that may be imported, the degree to which these imported drugs will be less expensive than nonimported drugs available in the United States, and which eligible prescription drugs are produced by U.S.-based drug manufacturers,” making it difficult to reconcile how the HHS Secretary was able to certify that it would result in a significant reduction in costs for U.S. consumers.

The Final Rule is scheduled for publication in the Federal Register on October 1, 2020; it is available for review in pre-publication form here. The effective date of these new regulations will be 60 days after that official publication. Because, as we described previously, the framework for Canadian drug importation that has been developed under Section 804 is extremely robust and requires participants to use a tightly controlled supply chain, which will likely be expensive and resource-intensive to implement, it is unclear how much interest there will be from the various necessary participants in such future FDA-approved importation programs.

FDA also released a finalized version of its guidance describing the MMA Products Program on the same day, which is available here. This guidance on drug manufacturer reimportation programs includes several notable policy changes from the draft version, as is apparent from the document’s expanded title: “Importation of Certain FDA-Approved Human Prescription Drugs, Including Biological Products, and Combination Products under Section 801(d)(1)(B) of the Federal Food, Drug, and Cosmetic Act.”

We will continue to monitor and report on industry, patient, and government responses to these federal developments. It seems likely that the Section 804 Importation Program regulations in particular will become subject to legal, administrative, or constitutional challenges in the future.

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Joanne counsels global clients on the regulatory and distribution-related implications when bringing a new FDA-regulated product to market and how to ensure continued compliance after a product is commercialized.