On January 5, the U.S. Food and Drug Administration (FDA) signed off on Florida’s application to import prescription drugs from Canada under the Section 804 State Import Program (SIP).
This agreement has initiated a significant discussion and elevated concerns about the possible influence on the Canadian drug supply. Although this decision aims to help the increasing costs of medications in the United States, it has also provoked a closer inspection of the consequences for Canada’s pharmaceutical landscape.
Canada, well-known for its price-controlled pharmaceuticals, has long been an attractive source of more reasonable medications for Americans. Nevertheless, the prospect of amplified drug exports to the U.S. has sparked concerns about potential shortages.
This statement debates the likely impacts on the Canadian drug supply and in what way the pharmaceutical business can gear up to ease these encounters.
In October 2020, the FDA delivered a rule to implement the SIP, as a facility of the Federal Food, Drug, and Cosmetic Act (“FD&C Act”), to permit the importation of certain prescription drugs from Canada to achieve a “substantial discount in the cost of enclosed products to the American consumer”.
In November 2020, Florida allotted its first SIP application. In January 2024, the FDA issued a letter signifying it accepted the SIP application to import drugs from Canada. In a news publication, Florida indicates that the agreement will save the state up to $180 million in the initial year.
While Florida is the primary state to obtain such approval, the example it sets could pave the way for other states to follow, increasing the strain on Canada’s drug supply.
On January 8th, just days after the SIP endorsement, Health Canada issued a news release, indicating that guidelines under the Canadian Food and Drugs Act were applied in 2021 to avert the sale of certain drugs proposed for the Canadian market from being traded outside the country. Health Canada also stated the Regulatory requirements before distributing Canadian drugs outside Canada, to remind investors of their pertinent regulatory obligations.
In particular, Drug Establishment License (DEL) owners, as well as drug producers, distributors, and wholesalers, are forbidden from distributing a drug for consumption or usage outside Canada except if the licensee has rational grounds to believe that the circulation will not cause or aggravate a shortage of the drug (Food and Drug Regulations, section C.01.014.13). In its current press release, Health Canada notes that this incorporates “all drugs that are qualified for bulk exportation to the U.S., including those recognized in Florida’s bulk importation strategy, or any other U.S. state’s forthcoming importation programs”. Furthermore, according to the news statement, Health Canada is aggressively monitoring the drug supply and will not hesitate to act to address non-compliance extending from demanding a plan for counteractive measures, delivering a public advisory or other methods of communication, to taking action on the authorizations of regulated parties who breach the export prohibition if warranted. It therefore remains to be seen if Florida will be approved to import drugs from Canada without causing or aggravating a shortage of drugs. Certainly, Florida has a population of about 22 million, more than half that of Canada.
