Canadians are Hopping Mad About Trump’s Drug Importation Plan. Some of them are Trying to Stop It.
Canadians are furious about the Trump administration’s plan to import their prescription drugs. And some of them are determined to stop the proposal in its tracks.
Trump’s plan, which was announced late last month, would allow states, wholesalers, and pharmacies to import cheaper drugs from Canada. It’s a long way off from being implemented, but Canadians are baffled that America would look north to lower its own drug prices, and indignant that such a plan could exacerbate an already pressing drug shortage issue plaguing the country.
“You are coming as Americans to poach our drug supply, and I don’t have any polite words for that,” said Amir Attaran, a professor at the University of Ottawa, who calls the plan “deplorable” and “atrociously unethical.” “Our drugs are not for you, period.”
In the face of opposition, Canada’s health minister will meet Monday with pharmacists, patients, and industry officials to discuss a response. The minister, Ginette Petitpas Taylor, has publicly pledged to “ensure there are no adverse effects to the supply or cost of prescription drugs in Canada.”
For the advocates likely to fill the room, that means stopping American businesses from importing Canadian drugs.
“It’s time for it to crash and burn,” said John Adams, the board chair of the Best Medicines Coalition, a coalition of Canadian patient advocacy organizations, who will be joining the meeting by phone. “Canadians may die.”
The meeting will almost certainly be just a first step in a long and complicated process potentially involving obscure trade laws, international treaties, and some cutthroat diplomacy.
In advance of that meeting, STAT spoke with nearly a dozen trade and health policy experts in Canada and the U.S. to determine how, exactly, Canadians could thwart Trump’s plan — and how drug makers might just thwart it for them. Here’s what we learned.
Adding pharmaceuticals to Canada’s export control list
The most expedient way for Canada to stop Trump’s plan would be to put prescription drugs on its “export control list,” a watchlist of sorts that would require exporters get permission from Canada before shipping drugs across borders, multiple experts told STAT.
It’s an odd proposition, to be sure. The list is used primarily to prevent export of deadly weapons. Canada has, however, used the list to protect key products, including certain lumber, and even peanut butter.
The process is relatively simple: Canada’s federal cabinet, known as the Governor in Council, can add goods to the export control list at any time. There are some limits on what goods can go on the list, but the government essentially has carte blanche to protect any good against the possibility of shortages, particularly if it can make the case that doing so is in the interest of national defense. The cabinet is technically required to open any such proposal for public comment, but the government has the power to bypass those rules.
“Putting a particular good on the export control list is relatively quick and easy,” Geoffrey C. Kubrick, a partner at the Canadian law firm McMillan, told STAT.
Passing a new law
While Prime Minister Justin Trudeau’s government has unilateral power to control exports, Parliament could also pass a law explicitly banning exports of drugs meant for Canadians.
It’s not uncommon for Parliament to do so, even when the cabinet has the power to act unilaterally.
“Sometimes legislative actions are taken for the demonstration effect, just so it’s really, really clear that this is not an activity that Canada is in any way sanctioning,” said Laura Dawson, who heads the Canada Institute at the Wilson Center in Washington.
And veteran MPs are already familiar with this issue: Parliament nearly passed a similar law in 2005 after the U.S. Congress passed a law two years earlier giving the secretary of health and human services the power to greenlight drug importation. That bill would have empowered Canada’s health minister to “prohibit, by order, the export of a drug or class of drugs” if the government determined such exports could lead to a drug shortage.
The proposal was eventually tabled because the ruling party lost power and Parliament dissolved.
There’s a major roadblock to passing a similar bill in the coming months, however: Parliament is out of session and the country is in the midst of a federal election. Members of the left-flank New Democratic Party have criticized the ruling Liberal coalition for a lackluster response and called for the legislature to reconvene to address the issue, and the opposition Conservative Party has called for the federal government to act to prevent drug shortages.
Advocates like the Best Medicines Coalition have also called for an emergency session of Parliament, but that option seems unlikely.
Imposing new tariffs or taxes on drugs
Canada could also impose an additional fee — essentially a tariff — on exports of pharmaceuticals from Canada, thus making the drugs prohibitively expensive for Americans.
“It would be easy for other countries to stop this with tariffs,” said Dr. Bob Kocher, a former special assistant to President Obama and a venture capitalist. “The U.S. has certainly broken the glass already on using tariffs to protect local markets.”
But the Wilson Center’s Dawson isn’t so sure that’s a great idea, or even possible. These sorts of taxes, for one, are very unwieldy and nobody uses them, she told STAT.
“Why would you want to use the least efficient instrument to block these sales, when Canada could simply impose an export control?” she asked. “They could put those spike belts across the highway for trucks that have pharmaceuticals in them … but not so efficient.”
Asked if there was a precedent for such a move, the closest example Canada trade experts could point to was Canada’s restrictions on exports of certain lumbers. As part of a long-simmering trade dispute, Canada has at times required exporters to pay a tax when exporting lumber to the U.S. However, even that is an imperfect corollary.
The wait-and-see approach
Steve Morgan, a professor at the University of British Columbia, predicts at least in the short term Canada’s strategy will be “watchful waiting.”
The reasoning: Even if the U.S. moves forward with its plan and Canada doesn’t respond, existing contracts and business practices make it almost impossible to send prescription drugs across the border. Attempts to do so, experts said, could result in drug companies canceling contracts with wholesalers, wholesalers canceling contracts with pharmacies, and pharmacists being called before professional review boards.
While importation is popular with American consumers (a recent poll found that 80% of Americans surveyed liked the idea), the success of the plan will largely depend on the willingness of wholesalers, both in the U.S. and Canada, as well as retailers, to play ball.
Wholesalers, in particular, would have to decide it’s in their best interest to break or renegotiate contracts with pharmaceutical companies that often expressly ban the export of drugs sold for Canadian consumption, and the sales of drugs in the U.S. that weren’t originally packaged for the U.S. market.
“The reason they do this is because there’s a big difference in the wholesale price of a drug outside of the U.S. versus inside of the U.S.,” said Neeraj Sood, a professor at the University of Southern California, who studies the drug supply chain. “It’s written to prevent importation.”
Sood added that such provisions are commonplace.
Wholesalers who have been accused of breaking these contracts have ended up in court, according to Sood, who disclosed he was involved in one such case, although he declined to provide STAT with further details.
And early signs show wholesalers are less than eager to renegotiate these contracts: The Healthcare Distribution Alliance, the U.S. lobby group representing distributors, has called Trump’s plan “simply not worth the risk.”
Then there’s the possibility that the threat of importation will give states, wholesalers, and pharmacists the leverage to negotiate better terms with manufacturers, making it unlikely they’d need to import drugs in the first place.
“My suspicion is in the short term … it gives the retail sector greater leverage in trying to negotiate some kind of better terms of trade with manufacturers,” Morgan said.
There’s already early signs this is occurring.
Florida Gov. Ron DeSantis, for example, has said drug makers approached his office after it began pushing an importation bill with offers to sell drugs at a cheaper price.
Morgan said: “It’s premature to panic.”
In the meantime, that won’t stop Canadians from grousing over the prospect Americans creeping across the border and taking their cheap drugs.
“There is no Canadian constituency for this,” the Wilson Center’s Dawson said.
Canada’s major newspapers have been peppered in recent weeks with editorials slamming the plan. “Donald Trump, keep your hands off our drugs,” the Globe and Mail wrote.
“Welcome,” the paper added, “to the socialist paradise of Canada, Mr. Trump.”
Filed Under: ACA/Health Reform