In a letter to Commissioner Gottlieb, Klobuchar and Lee encourage the Food and Drug Administration (FDA) to use its authority to stop an arbitrage practice that increases prescription drug prices and press for their bipartisan legislation to clarify the FDA’s authority to use temporary importation in noncompetitive markets to reduce prescription drug costs

WASHINGTON, DC – U.S. Senators Amy Klobuchar (D-MN) and Mike Lee (R-UT), the ranking member and chairman of the Senate Judiciary Subcommittee on Antitrust, Competition Policy, and Consumer Rights, have urged the Food and Drug Administration (FDA) to consider temporary importation to lower prices on prescription drugs that face little or no competition. In a letter to Commissioner Gottlieb, Klobuchar and Lee encourage the Food and Drug Administration (FDA) to use its authority to stop an arbitrage practice that increases prescription drug prices and press for their bipartisan legislation to clarify the FDA’s authority to use temporary importation in noncompetitive markets to reduce prescription drug costs.

Under the Short on Competition Act, the FDA could allow a company to sell a drug that faces little or no competition in the U.S. if the company already had approval to sell it in another country with similar safety requirements to the U.S and if the product has been on the market in that country for at least ten years. As a result, a company could market its product while seeking FDA approval, which may significantly decrease the incentives for pharmaceutical companies to engage in dramatic price increases for these drugs.

“Promoting competition in pharmaceutical markets should be a bipartisan issue. One area that we believe warrants focus is what you have referred to as arbitrage: a practice in which a company raises the price of a niche drug that faces little or no competition in the United States,” the senators wrote. “We encourage you to use the FDA’s authority to stop this practice, which increases the cost of prescription drugs without any benefit, and to consider whether additional authority is needed.”

The senators continued, “We continue to press for our legislation to clarify the FDA’s authority to use temporary importation in noncompetitive markets. But, we urge the FDA to use its existing temporary importation authority to combat regulatory abuses that increase drug prices. If you determine that the FDA’s authority is insufficient or unclear, we ask you to inform us of what additional authority is needed. We look forward to working with you to eliminate regulatory abuse, promote competition, and reduce prescription drug costs.”

Klobuchar has championed efforts to protect consumers and lower costs by promoting competition in the healthcare system, including authoring multiple pieces of legislation that would address the high cost of prescription drugs. The bipartisan Preserve Access to Affordable Generics Act Klobuchar introduced with Senator Chuck Grassley (R-IA) would crack down on anti-competitive pay-for-delay deals in which branded companies pay their more affordable generic competitors not to compete as part of a patent settlement. She also introduced the Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act with Senators Grassley, Leahy, Feinstein, and Lee to combat anticompetitive practices used by some brand-name pharmaceutical and biologic companies to block entry of lower-cost generic drugs.  She also introduced the Medicare Prescription Drug Price Negotiation Act, which would allow for Medicare to negotiate the best possible price of prescription drugs on behalf of 41 million seniors. In addition, Klobuchar introduced the Safe and Affordable Drugs from Canada Act with Senator John McCain (R-AZ) that would require the FDA to establish a personal importation program that would allow individuals to import a 90-day supply of safe prescription drugs from an approved Canadian pharmacy.

The full text of the senators’ letter is below.

Dear Commissioner Gottlieb:

We write to stress the importance of competition in addressing the cost of prescription drugs in connection with the Food and Drug Administration’s meeting “The Hatch-Waxman Amendments: Ensuring a Balance Between Innovation and Access.”

Promoting competition in pharmaceutical markets should be a bipartisan issue. One area that we believe warrants focus is what you have referred to as arbitrage:  a practice in which a company raises the price of a niche drug that faces little or no competition in the United States. Often, the product has been on the market for years, and there is no patent on the active ingredient. We encourage you to use the FDA’s authority to stop this practice, which increases the cost of prescription drugs without any benefit, and to consider whether additional authority is needed.

At the same time, versions of these products are often available at much lower prices in other countries. For example, in 2015, Turing Pharmaceuticals increased the price of its anti-parasitic drug Daraprim by 5,000% overnight – from $13.50 to $750 per pill. Although Daraprim faced no competitors in the United States, generic versions of the drug were available in Europe for as little as $1 a pill. In 2007, Mylan acquired EpiPen, an epinephrine auto-injector used to treat severe allergic reactions. Since then Mylan has raised the price of EpiPen nearly 500% from $100 to over $600 by exploiting a lack of competition. Meanwhile, the Jext pen was available for $34 to $67 throughout Europe. Valeant Pharmaceuticals acquired and immediately increased the price of the heart drug Isuprel from $180 to $1,472 a vial – a 718% increase. Isuprel was originally approved in 1956 and faces no competition in the United States. A generic version is available in Canada for $159 a vial.

We appreciate your recognitions that competition should bring down prices, and your announcement of a series of FDA measures to expedite approvals in markets with little competition.

We suggest the FDA consider an additional solution consistent with S. 183, the Short on Competition Act, which we have introduced: temporary importation. Under this approach, the FDA could allow a company to sell its product in the United States pending its approval, if the company already had approval to sell its product in another country with similar safety requirements to the United States.  Rather than having to wait for the full FDA approval process, consumers would see the benefits of competition sooner, and companies would be more likely to seek approval in the United States. Further, the threat of temporary importation may significantly decrease the incentives for pharmaceutical companies to engage in these dramatic price increases through regulatory arbitrage.

The FDA should have to ensure that the product being imported is safe and effective. Limiting importation to products already approved by jurisdictions with safety standards similar to the United States is one way the FDA could help ensure safety and efficacy. Additionally, the history and performance of the products already on the market would further allow the FDA to assuage any additional concerns. The FDA already has authority to permit temporary importation to address drug shortages, and has successfully used this authority to allow the importation of the anti-cancer agent doxorubicin while the company sought approval. 

We continue to press for our legislation to clarify the FDA’s authority to use temporary importation in noncompetitive markets. But, we urge the FDA to use its existing temporary importation authority to combat regulatory abuses that increase drug prices. If you determine that the FDA’s authority is insufficient or unclear, we ask you to inform us of what additional authority is needed.

We look forward to working with you to eliminate regulatory abuse, promote competition, and reduce prescription drug costs.

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