Americans are living in a political climate where there is much concern about escalating retail drug prices and profits being earned by drug manufacturers in this country.1 This concern is accompanied by discussion of the often cheaper prices, by comparison, of equivalent prescription drugs in foreign countries.2 Repeated Congressional efforts to potentially address and remedy the issue have not been successful.3 This environment gives rise to potential inquiries of counsel by providers or individual patients in the United States seeking to avail themselves of such lower prices from foreign drug sources by importing such drugs. This in turn raises questions of the legality of such importing.
Fact Pattern 1: Client is a U.S. based private clinic or pharmacy interested in importing prescription drugs into the United States due to price savings. The drugs are of equivalent quality to U.S.-manufactured drugs.
Fact Pattern 2: Client is an individual with a valid prescription for a drug which the client wishes to acquire from a pharmacy outside of the United States and bring into the United States.
In which of the two scenarios is the client likely to be violating U.S. law? Answer: Both.
LEGALITY OF IMPORTING PRESCRIPTION DRUGS
Prescription drugs are heavily regulated in the United States by the Food and Drug Administration (FDA).4 Those drugs which qualify as “controlled substances” are further regulated by the Drug Enforcement Administration (DEA).5 This labyrinth of law includes regulations relating to the importation of prescription drugs.
Importing means introducing a drug from outside the United States into the United States.6 The manner of transmission may be by common carrier (delivery service) or by an individual at the border seeking entry into the United States.
While many medical providers, pharmacies, and individuals are no doubt attracted by the often lower prices of such drug products, and while these products may be of the same quality as domestic drugs, federal law generally prohibits the introduction of these drugs into the United States, unless: (a) the drug was manufactured by a foreign facility registered with the FDA and the foreign version of the drug is specifically FDA-approved, or (b) the drug was manufactured in the United States, is FDA-approved, and is being reintroduced into the United States by the original manufacturer. The legal risk is upon the sender of the drug as well as those involved in causing or facilitating its importation to ensure that the importation is lawful. If not, serious consequences may follow.
Importing Foreign Manufactured Drugs
The federal Food, Drug, and Cosmetic Act (FDCA) prohibits the interstate shipment (which includes importation) of “unapproved new drugs.”7 “Unapproved new drugs” are defined to include any drugs, including foreign-made versions of U.S. approved drugs, which have not been manufactured in accordance with and pursuant to strict FDA approval.8 Obtaining FDA approval is an extensive process requiring submission of material information by the manufacturer establishing the drug’s safety and efficacy, and including information as to method, facilities, and manner of manufacture.9 If not specifically FDA approved, the imported drug is considered legally “misbranded” and subjects all involved in its importation to potential criminal penalty, including fines and imprisonment.10 As stated by the FDA, in commenting on the reasons for the legal framework: “In our experience, many drugs obtained from foreign sources that purport and appear to be the same as U.S.-approved prescription drugs have been of unknown quality. We cannot provide adequate assurance to the American public that the drug products delivered to consumers in the United States from foreign countries are the same products approved by FDA.”11
Importing U.S. Manufactured Drugs
The FDCA also prohibits the re-importation (re-introduction into the United States) of an FDA-approved drug by anyone other than the manufacturer of the drug.12 In other words, if a drug has been lawfully manufactured in the United States, and is then exported to a foreign country, it is a violation of law for anyone other than the FDA-approved manufacturer to re-introduce the drug into this country.13 Although one can argue that it makes no sense to restrict re-introduction of an FDA-approved product into the United States, the FDA maintains that once the product has left the country it is unable to guarantee its safety and therefore importation of the drug is prohibited unless performed by the manufacturer of the drug.14
Determining Whether a Drug is FDA-Approved
FDA approval is manufacturer-specific and product specific, including any foreign version of the drug.15 All FDA-approved human drugs have a New Drug Application (NDA) number, or for generic drugs, an Abbreviated New Drug Application (ANDA) number on file with the FDA.16 These numbers establish that the drug has gone through the FDA approval process. These NDA and ANDA numbers are set forth and searchable on the FDA database (Drugs@FDA).17 By entering the name of the drug, its manufacturer, and other information relating to the drug, one can readily determine whether an NDA/ANDA number exists and whether the version of the drug at issue is therefore FDA-approved.18
Criminal and Other Penalties
The penalty for unlawful importing applies not only to the importer, but to all of those involved in organizing, aiding and abetting, facilitating, or causing the importation, including those involved in the subsequent distribution and dispensing of the drug.19 If the evidence indicates that the act of importation was committed with intent to defraud or mislead, then the offense may be charged as a felony punishable by up to three years imprisonment and a $250,000 fine.20 Otherwise it is typically charged as a misdemeanor punishable by up to one year imprisonment and a $100,000 fine.21 It is important to note that the misdemeanor penalty provision contains no knowledge or intent requirement, and is a strict liability provision.22 In other words, it is not necessary for the person/entity to have known that the drug product was not FDA-approved or that he/she was violating the law. Under the misdemeanor provision, even though it is a crime, no criminal intent is required.
If the offense involved importation of a prescription drug originally manufactured in the United States, and the act is committed knowingly, it is punishable by up to 10 years imprisonment and a $250,000 fine.23 If controlled substances are at issue, the penalties can be even more onerous, including a sentence of up to 20 years imprisonment and $1 million or more in fines when commercial quantities of the drug are involved.24
In addition, effective January 1, 2015, the Drug Supply Chain Security Act (DSCSA) requires all healthcare entities that distribute, dispense, and administer prescription drugs to patients to purchase their prescription drug products only from authorized “trading partners” licensed by or registered with the state or federal government, as applicable. Authorized "trading partners" include wholesale distributors, manufacturers, re-packagers and dispensers licensed in the United States. As a result of this legislation, healthcare providers, including pharmacies and physicians, are now responsible for assuring that their immediate suppliers are "authorized," which means licensed by the appropriate federal or state agency.25 For the reasons set forth above, it is highly unlikely that a foreign supplier would possess any such license unless the products and facility are specifically FDA-approved. Violations of the DSCSA carry the same penalties as offenses under the FDCA.26 This establishes an additional layer of accountability and criminal exposure.27
This myriad of federal legal requirements cannot be waived by the provider or patient. Moreover, one is at extreme risk to rely upon the self-serving statements featured on the many prescription drug websites by those seeking to market to U.S. citizens, which either misleadingly suggest such importation is legal, are silent regarding the legality of importation, or leave all risk to the patient.28 Where United States Customs Enforcement detects these drugs at the border, such items may be seized for forfeiture and additional legal consequences such as those noted above may follow.29
Further, any medical professional or provider entity involved in such importation risks adverse licensing action by a governing state licensing board which becomes aware of the activity, as it is typically regarded as “unprofessional conduct” to violate any federal or state law relating to one’s profession.30
Personal Prescriptions and Enforcement Discretion
Despite the fact that importation of prescription drugs may be illegal, the FDA has indicated in guidance pronouncements that it will not seek enforcement action in regards to individual patients who are filling their own prescriptions abroad at foreign pharmacies and the drugs being imported are the result of those filled prescriptions, or in instances where the patients are importing their own United States procured and prescribed drug medications, as occurs daily at airports across the country. Although the FDA’s public pronouncement limits this exception to no more than a three-month supply, where the product is clearly labelled for the patient, and where the drug is being imported “for a serious condition for which effective treatment may not be available domestically either through commercial or clinical means” in the United States, it is clear that in practice the FDA is allowing such importation even though an equivalent drug is commercially available in the United States.31 In addition, there is a legal exception which allows individuals to carry into and out of the United States their own personal use quantities of controlled substances where it is established that such possession is pursuant to filled prescriptions and intended for personal use.32
However, where business entities are involved, and/or where the drug is being imported for further commercial distribution to others, this “personal use” exception would not apply.
While individuals are permitted in limited circumstances to import their own prescribed drugs, as noted above, there is no “safe harbor” which permits the importation of prescription drugs in violation of federal law where the drugs are being imported for commercial distribution or administration to others. This would include circumstances whereby a pharmacy, clinic, wholesaler, or individual medical provider wishes to procure such drugs for further distribution to others and/or dispensing to patients. It also includes circumstances where businesses in the United States attempt to profit commercially from the importation by helping patients acquire drugs from abroad. Seizure of such drugs and prosecution of those involved in such acts remains a priority of the federal government, as recent examples attest.33
Fact Patterns 1 and 2
Returning to the fact patterns set forth at the outset of this article, one can readily see how both sets of facts raise concern. Under Fact Pattern 1, a U.S. clinic or pharmacy plainly violates U.S. law if it imports a drug for commercial distribution to others, unless the version of the drug being imported has been specifically FDA-approved as reflected on the FDA database. Under Fact Pattern 2, the individual patient who imports his/her own prescription drug for personal use similarly violates the law; however, assuming that only a personal use quantity of the drug is involved, and the patient can establish that the medication is the product of his/her own filled prescription, the FDA is likely to exercise its enforcement discretion to allow the drug into the United States with no adverse consequence to the patient.
It is axiomatic that while the government does not go after everyone for every offense committed, there is currently significant risk in acquiring drugs from a foreign country, especially where such drugs are intended for further distribution to others. Accordingly, healthcare entities and practitioners should avoid becoming involved in importing drugs of any kind unless they have ensured that the drugs are FDA-approved and are being imported in conformity with law. By entering into a contractual arrangement with a source that purchases foreign drugs in contravention of the above laws, a provider entity exposes itself to serious potential liability. Individual patients as well should realize that while enforcement discretion is likely to be exercised in their favor, there is no guarantee that this will be the result, that the drugs will not be seized, and/or that adverse consequences may follow. Any individuals importing even their own prescription should be aware of this risk.
Assuming that "what's past is prologue,"34 and that neither Congress nor the administration step in to resolve or remedy the issue, cheaper foreign drug prices and sources are likely to continue to lure U.S. customers. As a result, media reports and enforcement actions can be expected to continue, and one should be aware of the very real risks which remain.
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Ronald Friedman is a shareholder at Karr Tuttle Campbell in Seattle focusing on regulatory compliance in the food and pharmaceutical sectors. Mr. Friedman regularly represents clients in proceedings before the Food and Drug Administration, Drug Enforcement Administration, and state boards of health. Prior to entering private practice, Mr. Friedman served as a federal prosecutor in Seattle for 22 years. He may be reached at email@example.com.
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