In May 2022, the U.S. Food and Drug Administration (“FDA”) issued guidance (“Guidance”) regarding the “Importation of Prescription Drugs” final rule (the “Final Rule”), which became effective November 30, 2020. The Final Rule aims to reduce the cost of covered products and address shortages without increasing risk to American consumers’ health and safety by allowing certain “small entities” to import eligible prescription drugs from Canada.
Under the Final Rule, States and Indian Tribes, and, in certain future circumstances, pharmacists and wholesalers, may submit importation program proposals to the Food and Drug Administration (“FDA”) for review and authorization. An importation program may be cosponsored by a State, Indian Tribe, pharmacist or wholesaler.
Brief Discussion
Who may submit an importation proposal and import eligible prescription drugs?
The Final Rule implements section 804 of the Federal Food, Drug, and Cosmetic Act (“FD&C Act”), 21 U.S.C. § 384(b)-(h), through time-limited Section 804 Importation Programs (“SIPs”). SIPs are reviewed and authorized by the FDA and managed by States or Indian Tribes (“SIP Sponsors”). Pharmacists, wholesale distributors, States or Indian Tribes may co-sponsor SIPs.
Entities wishing to import drugs must meet specific eligibility requirements for participants in an authorized SIP. A SIP-authorized importer must be: (1) a licensed pharmacist or wholesale distributor; and (2) a U.S. owner of an eligible prescription drug at the time of import (“Importer”). The Importer’s pharmacist or distributor license must be issued by a State that is a SIP Sponsor or co-sponsor, and the license must be in effect or active at the time of import.
Note that the FDA may authorize a SIP for up to 2 years from the first shipment importation date and can extend the authorization for up to 2 additional years at a time.
What prescription drugs are eligible for import?
SIP Sponsors must specify the eligible prescription drugs to be included in the SIP. Eligible prescription drugs must be: (1) approved by the Health Canada’s Health Product and Food Branch (“HPFB”); and (2) properly labeled for marketing in Canada. While they do not have to meet U.S. labeling requirements, eligible drugs must otherwise meet the FDA-approval requirements for new drug or abbreviated new drug applications.
Note that the following types of drug products are excluded from eligibility under the Final Rule: controlled substances; biological products; infused drugs; drugs that are inhaled during surgery; drugs injected into a vein, spinal fluid or eyes; drugs that are subject to a risk evaluation and mitigation strategy; and drugs that are not subject to certain provisions of the Drug Supply Chain Security Act. A SIP Sponsor can file a SIP Proposal for drugs not explicitly excluded under the Final Rule, and the FDA will determine whether the drug can be imported safely, in the context of its SIP proposal, on a product-by-product basis. The SIP Proposal should explain how the Sponsor will address any concerns related to the manufacture, storage and transport of each prescription drug.
How do SIPs obtain eligible prescription drugs for import?
Aside from one Importer, a SIP supply chain also includes one manufacturer (“Manufacturer”) and one foreign seller (“Foreign Seller”). An eligible Manufacturer, according to the Final Rule, may own approved eligible prescription drug applications, hold a drug master file necessary for testing, or own and operate an establishment that manufactures eligible prescription drugs. A Foreign Seller is a Canadian establishment, registered with the FDA under section 804, that is authorized to distribute eligible drugs for importation into the United States.
A SIP authorized Foreign Seller must be: (1) licensed to wholesale drugs by Health Canada; and (2) registered with the FDA as a Foreign Seller. Foreign Sellers are prohibited from having an international pharmacy license that allows them to distribute drugs approved by countries other than Canada and which are not approved for distribution in Canada.
In a compliant SIP supply chain, limited to one Manufacturer, one Foreign Seller and one Importer, a Foreign Seller in Canada may purchase eligible prescription drugs directly from a Manufacturer, and a domestic Importer may buy the drugs directly from the Foreign Seller.
What actions should entities take to remain compliant with their FDA-authorized SIP?
The Final Rule requires entities to take a number of detailed steps including:
- Obtain manufacturer protocol to support the required testing for authenticity, degradation and compliance with statutory standards, including a validated stability-indicating assay of eligible prescription drugs for degradation;
- Submit manufacturer testing data or submit a testing plan, known as the Statutory Testing Plan, that states how samples will be selected and provides the name and location of a U.S. laboratory that will conduct the testing and describes the testing method(s) that will be used;
- Implement the written recall plan included in the SIP Proposal and identify a Foreign Seller within 6 months of submission;
- Relabel imported drugs to comply with U.S. requirements—including patient labeling such as Medication Guides, Instruction for Use documents, patient package inserts—and ensure that the Importer’s National Drug Code (“NDC”) replaces any other NDC appearing on the imported drugs; and
- Provide the FDA with cost-saving data, such as cost savings to the American consumer, and submit adverse event, field alert or other reports to both the drug’s manufacturer and the FDA.
Practical Takeaways
- Entities looking to act as a SIP Importer to address cost or shortage issues should ensure that they qualify as a “Small Entity,” that their license as a pharmacist or distributor is issued by a State that is a SIP Sponsor or co-sponsor, and that they are the U.S. owners of an eligible prescription drug at the time of import.
- SIP Importers should maintain a compliant supply chain by partnering with one Health Canada-approved and FDA-registered Foreign Seller and one eligible Manufacturer.
- SIP Importers should implement testing requirements, which are performed either by the manufacturer before exporting to the U.S. or by the Importer after receipt.
If you have questions regarding the FDA’s Guidance, please contact:
- Todd Nova at (414) 721-0464 or tnova@wp.hallrender.com;
- Amy Poe at (919) 228-2404 or apoe@wp.hallrender.com;
- Your primary Hall Render contact.
Special thanks to Zeke Shen and Anna Malcolm, Summer Associates, for their assistance in the preparation of this article.
Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot—outside of an attorney-client relationship—answer specific questions that would be legal advice.
