In its simplest term, international drug sourcing, sometimes called “pharmaceutical tourism,” is the act of bringing prescription medicine from outside countries into the United States. With rising drug costs representing one of the most substantial costs to self-funded health plans, employers are looking for new and creative ways to lower their pharmacy spend, and with travel restrictions easing up, international drug sourcing is an approach they might consider. While cost-saving opportunities with this method do exist, there are several risk factors to be aware of when considering this as a strategy.
From Legality to Logistics
While patients cannot generally purchase medications in other countries and bring them into the U.S., there are two exceptions in which individuals may import prescription drugs legally. First, patients may obtain prescriptions from other countries that are limited to a 90-day supply and are for personal use. Another less common circumstance allows for the importation of drugs if an effective treatment for a serious condition is not available in the U.S. – in that case, the medicine may be imported as long as there is no unreasonable risk.
A significant concern for members hoping to import their medications is the logistical process of obtaining those medications. When weighing the pros and cons of pharmaceutical tourism, you first need to look at the pharmacy benefits management strategy and how your clients want to be seen as an employer. You have to consider how members will perceive being required to travel outside of the country to obtain a medication that was once a short ride away to their local pharmacy or even delivered to their door.
The Interest in International Drug Sourcing
It has long been known that it can be cheaper to purchase medications from countries outside the U.S. A 2020 Commonwealth Fund report found the U.S. spends more on prescription drugs than 32 OECD countries combined yet represents fewer than 25% of drug sales. The primary interest in international drug sourcing among employers lies in the opportunity to purchase medications at a lower price to achieve long-term savings for their self-funded plan.
Employers might see companies like CanaRx or PriceMD that advertise to assist employees in obtaining needed products from other countries. While this may seem attractive, there are concerns that employers must consider and weigh the risk vs. the benefits of importing. When it comes down to it, considering international drug sourcing as an option offers financial benefits, but not many others.
Cons of Prescription Importation
It’s critical that employers consider the flaws in this approach to lowering pharmacy spend. There are four key pitfalls to focus on when guiding your self-funded clients through this approach. They are the legal and safety issues, supply chain management concerns, clinical management concerns, and travel restrictions.
Legal and Safety Concerns
The potential legal and safety risks of pharmaceutical tourism are critical factors to keep in mind. The FDA has put in put in place numerous safety mechanisms to protect consumers from unfavorable outcomes related to their medications. A drug coming from outside of the country is not subject to the same reporting requirements if there were any safety concerns, mislabeling, or adverse effects from the product.
Clinical Management Concerns
An unnecessary prescription is always a waste of money. Therefore, we must focus on asking the right question first: Is the drug necessary? When we think about patients taking medications, it’s important to determine whether they’re taking the right medication, at the right dose, and for the right duration.
Suppose your client is interested in allowing certain members to source high-cost medications from outside the country. In that case, they need to understand the potential clinical efficacy and clinical management issues at play. By including pharmaceutical tourism as an option within the benefit, employers eliminate the clinical management protection they have in place that helps ensure the prescription is appropriate and necessary. Otherwise, it’s more money added to the plan spend, not to mention additional dollars wasted on travel expenses.
Pandemic & Travel Restrictions
Travel issues are perhaps the most practical concern when it comes to international drug sourcing. Travel risks have always existed with pharmaceutical tourism, and the COVID-19 pandemic is a great example of that. With today’s inconsistent travel restrictions, how are members expected to travel to obtain their prescriptions from outside the country if required or incentivized to do so?
Supply Chain Concerns
The big question regarding drug importation and the supply chain is how it will benefit consumers. While federal and state policymakers are looking at ways to lower drug prices, including allowing the importation of prescription drugs from Canada, the reality is that drug manufacturers would not increase the supply side at an equivalent rate to the demand side. Meaning, if the U.S. allowed residents to access prescriptions in Canada, then the demand would severely outweigh the supply, resulting in drug shortages, price increases, and rationing. We need a more scalable way to lower medication costs, and disrupting another country’s drug distribution system is likely not the best solution.
The Bottom Line
The potential financial benefit of international drug sourcing is the driving factor in this approach to providing a more affordable option to lower drug costs for both the employer and members. But while this method might make sense for the right type of patient, international drug sourcing isn’t a practical approach for lowering overall prescription drug costs for self-funded plans. When considering this option, it’s crucial to weigh the pros and cons surrounding safety and clinical management and balance those with the financial benefit that pharmaceutical tourism might or might not bring to your client and their members.