Drug Price Reporting Implications of FDA’s Pathways for Importation

On September 25, 2020, the U.S. Centers for Medicare and Medicaid Services (CMS) issued guidance that addresses the treatment of certain imported drugs under the Medicaid Drug Rebate Program. Specifically, CMS states its positions, which constitute only subregulatory guidance, on whether such imported prescription drugs qualify as Covered Outpatient Drugs (CODs) and the impact of such imported drugs on Medicaid price reporting obligations.

Background

On September 24, 2020, FDA issued Final Guidance (No. 2020-449) addressing the importation of certain FDA-approved drugs that are authorized for sale in a foreign country in which the drugs were originally intended to be marketed. The Final Guidance refers to the FDA-approved drugs that may be imported as multimarket approved (MMA) products.

On the same day, FDA also issued a Final Rule (No. 2020-199) that sets up a legal framework for allowing the importation of certain prescription drugs from Canada.

Additional information summarizing these developments can be found here.

CMS Guidance on MMA Products

According to CMS Manufacturer Release No. 114, MMA products can meet the MDRP’s definition of COD. CMS takes the position that an MMA product qualifying as a COD would, therefore, be eligible for Medicaid coverage and rebates under the MDRP. CMS’ guidance for MMA products sets forth novel positions that may change the substantive rights of manufacturers and may be subject to litigation challenge.

AMP Guidance

With respect to calculating the Average Manufacturer Price (AMP) for MMA products, CMS states in Manufacturer Release 114 that it “view[s]” situations where a manufacturer “authorizes the sale of the MMA product in the United States” under the Final Guidance as "akin” to an authorized generic. CMS concludes that in this situation, manufacturers should apply the agency’s guidance on the treatment of branded and authorized generic drugs (as set out in subregulatory guidance from CMS). Under this approach, CMS takes the position that a manufacturer should “treat the FDA-approved MMA product as a separate product” and “submit a separate AMP” for both the MMA product and the non-MMA product.

Best Price Guidance

The MDRP statute requires, “in the case of a manufacturer that approves, allows, or otherwise permits any other drug of the manufacturer to be sold under [an NDA] approved under section 505(c) of the [FFDCA],” Best Price “be inclusive of the lowest price for such authorized drug available from the manufacturer during the rebate period” to eligible entities. CMS further states that it believes that MMA products “should be viewed similarly to that of the brand drug and authorized generic drug scenario.” CMS then states the position that the manufacturer’s determination of Best Price should, therefore, “include the prices of the MMA product that is available from the manufacturer when sold in the United States.”

CMS Guidance on Canadian Imports

Under State Medicaid Program Release 187, CMS states its conclusion that “[Canadian] imported drugs … do not meet the definition of a covered outpatient drug ... [and] would not be eligible for federal rebates [under the MDRP].” Specifically, a COD under the MDRP is defined in relevant part as a drug that is approved for safety under section 505 of the FFDCA, which includes approval under an NDA or ANDA. Here, however, FDA indicates that “eligible prescription drugs” that are imported from Canada pursuant to the Final Rule will not be subject to an NDA or ANDA approval. CMS states, as a consequence, that manufacturers “would not report [Canadian imported] drugs for ‘best price’ or Average Manufacturer Price purposes.”

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