Responding to Criticism of ‘State Pharmaceutical Importation Programs Threaten Patients and Innovation’

“While it’s true that some kinds of counterfeit drugs, like the kind made with too much fentanyl, will cause you to drop dead immediately, many other kinds with insufficient or no active ingredient are silently deadly and leave no trace or cause for a Medical Adverse Event report.”

A recent article by Dr. Kristina M. L. Acri née Lybecker highlighted her research about the fiscal workability of state pharmaceutical importation programs from two aspects:

Cost of counterfeit testing of products that have been handled by unregulated entities

Because these medicines will be handled by unregulated entities, they need to be subjected to finished product testing using statistical sampling to ensure they’re genuine. The counterfeit pharmaceutical business is well established and has even involved licensed Canadian pharmacies and wholesalers, so no entity in Canada can be trusted, especially since we’ve previously had difficulties extraditing them for trial.

Cost of adverse medical events due to counterfeits vs. potential savings achievable

If you do miss a counterfeit and an American patient has an adverse medical event, how much of your savings that you got from “buying from Canada” gets wiped out?

Dr. Acri’s whole paper is very good. I recommend you read it if you’re into policy and not sound bites. I noticed, however, that the comments on the article elicited some common myths about Canadian drug importation that are important to address if we’re going to really understand this issue. Here are a few of them.

“I must say that I probably have as much confidence in Canadian and European Drug Control as in the [Food and Drug Administration] FDA.”

This is a common misunderstanding for people not familiar with the world of perfect-looking counterfeit medicines. Yes, the legitimate Canadian drug supply is safe, but that doesn’t mean that if you buy something that looks like a Canadian medication, even from a Canadian vendor, it’s actually a legitimate Canadian drug supply product.

In fact, there are plenty of examples of Canadians taking advantage of Americans and selling them fake medication (Quantum Solutions, TC/SB Medical). Some of the criminals have even operated as licensed Canadian wholesalers (CanadaDrugs.com) and pharmacists (Andrew Strempler).

“Any drug marketed in the USA is subject to Adverse Effect control and reporting by/to the FDA. Imported drugs are not an exception…There is of course no reason to re-check imported drugs”

The implication here is that if there’s anything wrong with a medicine, it will get caught by a healthcare practitioner and they’ll file an adverse event with the FDA, so we don’t need to do the expensive finished-product testing Dr. Acri’s models in her paper.

While it’s true that some kinds of counterfeits, like the kind made with too much fentanyl, will cause you to drop dead immediately, many other kinds with insufficient or no active ingredient are silently deadly and leave no trace or cause for a Medical Adverse Event report. There is no unusual medical adverse event even to report when you have cancer, you get a counterfeit oncology medicine, and you die of cancer. This isn’t theoretical. Counterfeits with insufficient active pharmaceutical ingredients being shipped under the 2013 Maine importation program were discovered by Dr. Kenneth McCall before a federal court invalidated the program.

Having your blood pressure spike because you’re taking a counterfeit with no active ingredient will result in your physician upping your dose or switching your medication. It’s not likely to cause them to file a medical adverse event report.

All of these reasons and many more are why four former FDA commissioners, the American and Canadian Pharmacists Association, and many law enforcement groups have all come out against Canadian drug importation as a policy. You can learn more on our website.

Image Source: Deposit Photos
Image ID: 83605638
Copyright: lightsource

Shabbir Imber-Safdar is the Executive Director of the Partnership for Safe Medicines, a not for profit that studies and educates Americans about the counterfeit drug problems.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author as of the time of publication and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com.

Join the Discussion

22 comments so far.

Anon
February 5, 2020 08:09 am
Interestingly enough, there is a guest post (by Prof Holbrook) over on that other blog providing one Academic’s view on exhaustion.

Even as I mention this, is do not recommend that piece. It is poorly written and appears to be more of a lament of a decision than a clear expose of why the decision was as easy and clear as it was. The writing is a fine example of how to attempt to make something far more complicated than it actually is.
Anon
January 28, 2020 05:14 pm
Correction Xtian:

“, that batch (i.e., those 1000 blister packs each containing 12 doses of drug product) have had ALL their patents rights exhausted.”

As to your addition to the story of “this does not mean that once any sale of the drug product (i.e., one blister pack) is made in Canada by the Brand company who is the US patent holder, any generic company can (itself make) and import an unlimited amount of any drug product to the US through Canada.” — this is more than a bit of a strawman, as ANY such making simply does NOT fall under the doctrine of patent exhaustion and Is NOT a part of my view here.

NO ONE is saying that just because a product is sold outside the domain of a Sovereign protection realm, that ANY making is then allowable FOR importation back into a realm of Sovereign protection.

NO ONE is saying that patent rights are nullified as your hypo draw out.

Such has NEVER been a part of the conversation that I have been involved with.
Xtian
January 28, 2020 02:50 pm
Anon @12 I went back and re-read Lexmark. While I could argue that what the court said about foreign sales is dicta, let’s proceed with the understanding that foreign sales exhaust patent rights for those articles sold (as you point out).

So – in the pharma space this would mean that when sales of a branded product are made in Canada by the Brand company who is the US patent holder, that batch (i.e., those 1000 blister packs each containing 12 doses of drug product) have had its US patents rights exhausted. Those blister packs, if not consumed in CA, could be imported into the US (ignoring FDA rules for argument sake) free of liability from US patent infringement. This is similar to European parallel importation rules. I agree with this.

However, if I understand this doctrine correctly, this does not mean that once any sale of the drug product (i.e., one blister pack) is made in Canada by the Brand company who is the US patent holder, any generic company can (itself make) and import an unlimited amount of any drug product to the US through Canada.

The judicially created rule of patent exhaustion is tied to the actual article sold in Canada (in our example) if imported into the US. It does not nullify the US patent in its entirety. Is that your understanding of the law of patent exhaustion?
Anon
January 28, 2020 11:31 am
Further, I will point out that my fight is NOT the fight that you seem to want to imply. My fight is NOT merely that “someone on the internet is wrong.” My fight is a much larger and more important fight as to being one against a certain Corportacracy and officiousness of Big Pharma bending things like patent protection, exhaustion and geo-pricing to their own selfish ends.
Anon
January 28, 2020 06:23 am
Anon2,

Funny. And even if that has a grain of truth (how late were you up?), you actually might start by addressing the points presented. Sort of like how I addressed the errors of your points.
Anon2
January 27, 2020 04:34 pm
I think that instead of the lengthy response I’d started, I’ll simply concede the futility of convincing someone on the internet that they’re wrong and bow out of this discussion. Simple solutions for complex problems rarely work.
https://imgs.xkcd.com/comics/duty_calls.png
Anon
January 27, 2020 09:56 am
… being “good at math” in no way provides for the level of market control that your comments implicate. There is NO “seems to elude a lot of people,” but rather, your comment seems to take the tone that one cannot fight Big Pharma.

Quite the contrary, one SHOULD be fighting Big Pharma.
Anon
January 27, 2020 09:19 am
Anon2,

Respectfully, I reject your position, as it is merely an abandonment against the Big Pharma machinations, and cedes to them the ‘win’ and fait accompli to which I say that we must fight against.

You also cede too much power over secondary markets and ASSume that the “danger” of fakes is (and must be) constrained to the flow of products that are re-import bound. There is simply no basis for such an imperious view.
Anon2
January 24, 2020 05:42 pm
I’ll toss another thought into the hat that seems to elude a lot of people. Pharmaceutical companies can do math. They’re really quite good at it, actually. They can, will, and have done the math, and know at a very granular level what a country needs to meet its domestic demand for each drug, region by region, province by province, state by state. If necessary to protect it’s US sales, a pharmaceutical company will sell an amount just sufficient to meet domestic demand and no more into the supply chain of each country that US citizens might be able to import from. Suppliers that won’t play along and allow unchecked diversion of drugs back to the US will find that their services as suppliers are no longer required. If strong arming the supply chain is ineffective to prevent diversion to the US, then the governments themselves will be forced to take action (be it Canada or elsewhere) and restrict domestic suppliers from reselling back to the US, so as to ensure adequate supply for their own citizens. As a result, the only drugs US citizens will have dependable access to for importation or “reimportation” will be counterfeit.
Be realistic. A pharmaceutical company has no obligation to continue to provide Canada or any other country with an amount of a drug that exceeds that country’s domestic needs. The notion that we can somehow magically obtain high priced pharmaceuticals from another country for less is a lovely simple idea, but ultimately is not a solution to the problem of high US domestic pricing. Makes for good political grandstanding, but it will achieve nothing. It is a domestic issue that we’ll have to address domestically. -and no, I do not have (nor do I believe there is) an easy solution to what is really a difficult and complex problem.
Anon
January 24, 2020 02:34 pm
As to:

“I reiterate that I disagree with other nations fixing a medicinal price when those countries and their citizens are sufficiently well-off to pay the US price.”

Whereas I do not.

The benefit of being a Sovereign nation is that you have the right to make such edicts.

But make no mistake, Big Pharma has every equal right to decline and NOT enter the market in that Sovereign.

The issue here is LESS what any one Sovereign may ask/demand/do, and is MORE the ensuing games OF Big Pharma in deciding to enter markets at a known loss, and then playing geo-pricing games to force ‘altruism’ on US citizens.
Anon
January 24, 2020 01:35 pm
Exhaustion (for example, by a sale) does in fact exhaust all patent rights.

And yes, that is all patent rights tied to the item sold — no matter where the sale is.

That is a proper understanding of the principle.
Xtian
January 24, 2020 10:53 am
Anon – My apologies if my post implied any sentiment onto you. My comments are a reflection of my thoughts, and mine alone. I reiterate that I disagree with other nations fixing a medicinal price when those countries and their citizens are sufficiently well-off to pay the US price.

What I still don’t understand is your concept of patent exhaustion across territories (#9 comment). Are you saying that you believe that once a product is sold anywhere in the world, all patent rights are exhausted? More specifically – a patent exists in France and the US. A product covered by the patent is sold in France. If product is resold in France, I agree that patent rights have been exhausted. To use your term the the patent holder cannot control the secondary market.

Here’s where i don’t understand. After the sale of that product in France, it is your position that that product could be imported in the US (or anywhere else in the world) free of patent infringement, despite the existence of a US patent covering the product? Do I have that correct?
Anon
January 23, 2020 11:31 am
As to: “I am not O.k. with denying life-saving medicine to countries that can’t pay”

Do NOT force your sentiments on me or others.

Frankly, you are out of line to attempt to do so, and it is a charade, a fallacy (or worse) to inflict this type of ‘forced altruism’ as some type of justification for shrouding the facts that US individuals ARE serving as the ‘profit beaters’ of the CHOICE of Big Pharma to partake in markets with reduced profit margins.

Further realize that my position is NOT so much any US Sovereign forced price point, as it is more a forced clarity of just what Big Pharma IS already doing with its geo-pricing.

Having THAT information — and the subsequent pressures from an informed public should well be enough to drive Big Pharma to make different business decisions of their own accord. As it currently is, the entire Big Pharma ecosystem is shrouded in shadows and game-playing (that hides the appalling notion of US consumer forced altruism).
Anon
January 23, 2020 10:28 am
Xtian,

One quick note: your stated view in regards to a sale is NOT correct in view of exhaustion. Exhaustion does not — nor should not — play into the Geo-pricing game.

Importation of items chosen by the patent holder to be let loose into the stream of commerce no longer hold onto the patent power to prevent such.

The view that the patent power should control secondary markets is a Big Pharma ploy, and NOT in accord with either a proper understanding of the patent power, or respect for secondary markets.
Xtian
January 23, 2020 08:49 am
Anon – Appreciate the discussion. Lets consider some consequences.

Big Pharma will make money where they can. If there is enough of a margin in a country (say Canada) to make money on the sale of the drug, the pharma company will enter that market. However, entry into Canada (or any other secondary market) will only come after development costs are recouped in the US market. That’s why most drugs are launched first in the US, not in Thailand or Singapore, or even Canada, Australia, or Japan,

So, taking an America first approach, why should US consumers pay for socialized medicine in Canada? Why are other countries social medicine programs not set up to allow pharmaceutical companies to launch 1st that country with the understanding that the pharma company will recoup its investment within a reasonable time? Why is there no great innovative pahrmaceutical companies in Canada? Is there a correlation? I think so.

Also, an unintended consequence that you allude to is that pharma companies may not go into that secondary market. (and most don’t – why does Africa and the ASIAPAC countries not have access to western medicines?) I am not O.k. with denying life-saving medicine to countries that can’t pay (African nations and the like), but I am o.k. with denying life saving medicines to countries can pay but won’t under their socialized medical systems (Canada, EU, etc.)

I do take issue with one of your statements, which is not limited to pharmaceutical products. You state “and rightfully so (this is called the secondary market, and Big Pharma has no right to control the secondary market.” I agree with the concept of patent exhaustion within the geographical sovereignty of a nation. I sell a patented widget in the US to an end consumer, that consumer resells the widget. I cannot control that resell. However, the sale of a good ex-US, then imported into the US where there is patent protection on the product, is not a restriction on a secondary market. To say it is renders meaningless all nation’s patents (which are limited in their enforcement to the geographic borders of the sovereign).
Anon
January 22, 2020 05:56 pm
Xtian,

I appreciate your additional comments.

First, I do not intend to be snarky, so if this comes across in that manner, my apologies.

Second, you rather make my point for me.

The fact that adverse event reporting remains the duty of the first producer indicates that liability is of the type that THAT first producer must be culpable for.

As I noted, I do “get” the notion that generics should not receive a full “carte blanche” excuse from liability.

That being said, your second paragraph is rather a condemnation against Big Pharma, more so than it is any real accusation against US sovereignty. What you basically point out is that Big Pharm plays the geo-pricing game. THAT is most definitely part and parcel of the problem. Instead of any type of “ceding sovereignty” what the effective end game is the removal of (or drastic reduction in) the games that Big Pharma engage in with its geo-pricing game. Big Pharma chooses to agree to any particular Sovereign’s price caps, and then turns around and makes up profit differential with geo-pricing.

Don’t like the fact that our Sovereign may act to curtail this game? Fine. Don’t agree to put your product into the stream of commerce at such price differentials. Once you put your product into the stream of commerce, you LOSE any ability of control of price and movement of that product — and rightfully so (this is called the secondary market, and Big Pharma has no right to control the secondary market — for any reason). What is “really just” going on is as you state: “Its not like there are Canadian companies making these drugs!!” With this admission, you are basically admitting that US nationals are bearing the brunt of geo-pricing and a net overall profit margin and allowing Big Pharma to subsidize its lost profits in geo-markets that impose price controls. But it is the choice of Big Pharma to enter such a market in the first place. They DO have the option of saying ‘no,” and walking away from a “fair” margin rather than play the geo-pricing game. In essence, their willingness to enter into low margin geographies has NO bottom line impact to Big Pharma because they can — and do — achieve a desired net profit with higher prices in the US (which of course is reflected in the vibrant secondary market).

Full clarity — across the board is a much better way of addressing any and all price/cost disparities. Stop the Big Pharma game playing (and by this, I DO include the insurance and pharmacy gameplaying as well), and when people have a full clear picture, decisions and choices BY Big Pharma will yield to informed public opinion. Delving into “questions of Sovereignty” need not even arise.
Xtian
January 22, 2020 01:38 pm
Anon,

This liability increases brand pharmaceutical costs. Also, generic don’t need adverse event reporting personnel and support. They use the branded phone numbers on their packaging. So as a policy point. I think if these costs were shared or lowered for the brands, then prices would come down.

The concept of importing a drug from Canada is such a joke. Importation is really just imposing the Canadian pricing board’s power on the US pharmaceutical market. Branded drugs are made for the CA market, and go through the CA pricing board, which compares the new drug to the standard of care treatment to set a “fair” price. Then, our congressman and women think that we should import Canada’s lower cost drug into the US. Its not like there are Canadian companies making these drugs!! Its the same drug made for the US, just shipped to Canada and with price controls. So, what our congressmen and women are advocating is to cede our sovereignty to the Canadian pricing board! Might as well just do away with the FDA and rely on Canadian regulatory review. think of the taxes we could save by eliminating the office of generic drugs!!
Anon
January 22, 2020 11:56 am
xtian,

You raise a potentially interesting point.

One wonders though, are such product liability claims (purportedly in regards to generics who are ONLY providing that which the branded producer has ‘painstakingly’ advanced through the regulatory hurdles) rightfully dis-associable from liability of that first producer? Is not such liability a matter that would also attach to that first producer (and that the source then is not as material to the actual instance of liability?)

I “get” that it seems unfair to provide generics a full ‘carte blanche’ excuse from liability, but I do not think that the situation may be as cut and dried as your post may indicate.

(and believe me, I am no fan of how generics ALSO play into the larger game of Pharma costs)
xtian
January 22, 2020 09:21 am
The notion of product liability is an important one. Branded pharmaceuticals are on the hook for product liability claims (failure to warn etc) of generic’s products. Freely importing generic products from CA will place more liability risk on the brand. If we are revisiting policy, then lets revisit product liability claims/failure to warn claims for branded pharmaceuticals.
Anon
January 20, 2020 08:59 pm
Ternary,

And yet another item for which we are in accord…?

You keep on getting more and more intelligent 😉
Ternary
January 20, 2020 12:37 pm
I thinks all of us are in support of addressing fake medicines. However, in the context of this blog, one issue was high prices of drugs in the USA and in support of that the article maintained that “robust pricing” as in the US (yes really, robust not excessive) was required to maintain innovation.

I actually proposed that US drug manufacturers load trucks with US manufactured drugs and drive these trucks out-and-in from Canada to create lower prices by re-importation. Re-importation, not import from foreign manufacturers. No need for re-check I would say. Safe and cheap. You can even save more money in the US by lowering prices to Canadian/European levels. No trucking needed. Even reduces carbon emissions. There is a concept: affordable and safe pharmaceuticals. And more than enough money generated to maintain a “robust” research pipeline.

It always strikes me from the drug-industrial-complex that all proposed solutions to control the idiotic drug prices in the US are marked as being bad: bad for health, bad for quality, bad for economy, bad for innovation, bad, bad, bad. And no matter what the proposal is for controlling drug prices, there is always someone with a report or study to “prove” the negative and disastrous effects of the proposal. Usually without offering a sound alternative (“I was not hired to do that.”)

The industry wants a free hand in setting prices with perhaps a nominal charity program to “help” people who cannot afford it. They treat drugs like the common drug-dealer: users need it, so you can charge any price you want.
Anon
January 20, 2020 09:47 am
Sorry — not buying the notion that curbing the Big Pharma ability to play the ‘geo-pricing’ game is the ‘boogeyman’ that this article implicates.