Editor’s Note: This month, we offer updates on three topics: FDA Approves Florida’s Plan to Import Prescription Drugs from Canada, The GLP-1 Market Dilemma, and Illinois Price Gouging Law Challenged by Generic Drug Trade Group . As always, if you have questions on any of the content found in this or previous market updates, please reach out to your IntegriChain Consulting Lead or consulting@integrichain.com and we would be happy to talk you through it.

Table of Contents

• FDA Approves Florida’s Pharma Drug Import Import Plan from Canada
• The GLP-1 Drug Market Dilemma
• Illinois Pharma Price Gouging Law Challenged

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FDA Approves Florida’s Pharma Drug Import Plan from Canada

Many studies have shown that Americans often pay more for their prescription drugs than in other countries such as Canada. According to an analysis, Canada’s prices are generally lower because the Canadian government has mechanisms in place to lower the cost of prescription drugs while the US does not. Since the early 2000s, Americans have had pharma drug imports from Canada because of the substantial high prices of these drugs in the US market under a system of importation that was fairly unregulated. Concerns about supply shortages and other safety issues prompted the Affordable and Safe Prescription Drug Importation Act. The current law allows for the importation of certain drugs from Canada but sets various conditions on the importation such as compliance with Canadian laws, regulations, and the drugs meeting FDA standards.

On January 5, 2024, the DeSantis Administration of the State of Florida received an FDA approval on its pharma drug import plan from Canada, thus becoming the first state in the United States to receive this consent. The intent of this plan is to safely import cheaper drugs from Canada and to give the people of Florida access to safe and affordable prescription drugs. The decision to pursue this approach was part of a strategy to lower drug prices that the policymakers from both federal and state governments had been trying to put in place for many years. The FDA approval represents a political victory for the state in its relentless pursuit and efforts to implement this program. Of course, the state will need to fulfill additional requirements to successfully implement it and overcome any barriers for entry

With other states trying out various approaches and strategies to lower drug prices, the FDA’s acceptance of this plan is likely to encourage other states to follow a similar direction. Whether this would cause a disruption within the US market remains to be seen. If importation were to be implemented on a large scale in the US, a likely scenario could be an impact on manufacturers’ US revenue. This could result in a reassessment of pricing and contracting strategies to ensure profitability. 

If you have any questions or want to discuss the implications of importation on your business, please reach out to your IntegriChain Advisory point of contact or send an email to Consulting@integrichain.com

Sources:

• What to Know About the FDA’s Recent Decision to Allow Florida to Import Prescription Drugs from Canada
• Florida Becomes First in the Nation to Have Canadian Drug Importation Program Approved by FDA
• FAQs on Prescription Drug Importation
• Importation of Drugs into the United States from Canada
• Policy Proposal: Importation of Prescription Drugs

The GLP-1 Drug Market Dilemma

We are in the midst of significant market access changes across the pharma ecosystem. The IRA has increased pricing pressures on manufacturers. Humira biosimilars and increased public scrutiny and transparency measures have ratcheted up pressure on PBMs. Declining reimbursement rates and unfavorable prescription economics are putting pressure on pharmacies. Tracking the decisions made across the channel for GLP-1s in light of this flux is a fascinating study due, in part, to the sheer size of this market.

The GLP-1 drug market has been around for about 20 years, but there has been high demand in the past few years with Ozempic predicted to be one of the leading drugs sold in 2024. This class of medicine has been used primarily for type 2 diabetes, but studies have shown that glucose management treatment medication can also be effective for weight loss. Drug manufacturers Lilly and Novo Nordisk have received FDA approval for their GLP-1 injectables, Zepbound and Wegovy, respectively. These two drugs are indicated for obesity specifically, while their predecessors are only indicated for diabetes. With the surge in demand and the associated surge in cost, many insurance providers and employers are restricting access to these drugs, and physicians and patients are faced with the reality that these drugs are not covered for weight loss by most insurance plans.

Patients continue to seek GLP-1s for various health reasons but face an uphill coverage battle. Will the anticipated increase in competition in this space eventually reduce the cost of therapy? Will direct-to-patient models implemented in this category continue to push pharma towards cash pay models? Will the revived Treat and Reduce Obesity Act of 2023 improve coverage within Part D? Will longer term data support the argument that costs associated with GLP-1 weight loss treatment are offset by reduced healthcare costs?

Stay tuned for developments in the GLP-1 drug market space as it represents an interesting case study in how potential blockbusters are managed across channels in our current pharma ecosystem.

Sources:

• GLP-1 Demand 
• The Impact of Eli Lilly’s New DTC Platform
• Leading Drugs Worldwide Based on Projected 2024 Sales

Illinois Pharma Price Gouging Law Challenged

The Association for Accessible Medicines (AAM), a US generic drug industry trade group filed a lawsuit on January 22, 2024, against the Attorney General of Illinois to prevent enforcement of the state’s recent pharma price gouging law (effective January 1, 2024). This law, HB 3957, would prohibit manufacturers and wholesale distributors from engaging in price gouging in the sale of an essential off-patent or generic drug that is ultimately sold in Illinois. Under this law, “price gouging” is defined as an unconscionable increase in the WAC of an essential off-patent or generic drug exceeding $20 of 30% or more within the preceding year, 50% or more within the preceding three years, or 75% or more within the preceding five years that would unduly burden customers.

In the lawsuit, AAM states the Illinois law violates the Constitution’s Commerce Clause by directly regulating sales that take place entirely outside Illinois and aims to declare the Illinois law void and unenforceable. AAM provides the example of “a drug manufacturer located in Pennsylvania that sells generic drugs to a wholesale distributor located in Ohio.” Under the Illinois law, if the Pennsylvania manufacturer’s price is deemed too high and the drug is “ultimately sold in Illinois,” the manufacturer’s sale would be prohibited despite it occurring outside of Illinois and the Pennsylvania manufacturer having “no connection to the State.”

This comes closely after a similar lawsuit was successfully filed by AAM against Minnesota for its pharma price gouging law ultimately resulting in the law’s suspension. Note that the state of Minnesota has since filed an appeal on the ruling.  

Manufacturers should also be aware of this trend impacting additional state agencies like Prescription Drug Affordability Boards (PDABs) that also have the ability to control pricing and set payment limits. The pharmaceutical industry and PhRMA have strongly opposed these PDAB regulations in the past and lobbied hard to prevent their enactment. There has been no official enforcement action yet, and IntegriChain is monitoring these boards closely as additional information is made available. 

Sources:

• Generic Drug Group Sues to Block Illinois Drug Pricing Law
• Illinois Generic Drug Price Gouging Law Challenged
• Generic Group Sues Illinois Over a Price-Gouging Law with “Draconian Regulations”
• PA PhRMA
• State Drug Pricing Boards Tee Up New Front in Pharma Legal Fight

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