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Personal Importation of Prescription Drugs: A Viable Option for Self-Insured Employers?

Posted in Employer/Employee Matters, FDA, Legislation and Public Policy, Life Sciences, Medicare and Medicaid, Pharmaceuticals, Private Insurers, State Matters, Tax Matters/IRS

Employers opting for self-insured benefit programs have a unique opportunity to control costs by designing custom plans and offering services from selected providers. With the price of prescription drugs rising rapidly, many self-insured employers have considered directing their beneficiaries toward international providers who promise huge savings by facilitating the personal importation of prescription drugs from foreign countries.

Some so-called “prescription referral services” refer to the international drug products they source as “FDA approved” and advertise that importation of these products is legal because U.S. consumers have the right to import drugs under the Food and Drug Administration’s “Personal Importation Policy.” However, the FDA has expressed a more nuanced position regarding personal importation. Even when a manufacturer has FDA approval for a drug, the version produced for a foreign market usually does not meet all of the requirements for U.S. approval, and therefore may not be considered FDA approved. Nonetheless, the FDA has stated that as a matter of policy and enforcement discretion, it will not object to importation of foreign drugs for personal use in certain circumstances.

The opportunity to save on prescription drug costs through foreign importation, particularly from countries like Canada where there is a level of safety assurance, is appealing. The high price of drugs has created a tremendous burden for plan sponsors and beneficiaries, and the price differential between domestic and foreign-sourced drug products is substantial. Foreign importation has gained popular support from both American consumers and lawmakers, and to date the FDA has not interfered with the personal importation of prescription drugs.

With the cost of drugs skyrocketing, many self-insured employers view the opportunity to source prescription drug benefits through foreign imports as a viable mechanism to lower costs, but is it legal, and do the benefits outweigh the potential risks? For a full discussion of the risks and benefits for employers considering using drug import companies to manage costs, read this article published in the American Health Lawyers Association’s AHLA Weekly.

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