Drug Importation Fails in Boston - Drug Importation Looks Less Appealing

By Raul Reyes, CIS Compliance Specialist
raulreyes@cis-partners.com

In July of 2004, Mayor Thomas Menino began a pilot program for city employees and retirees in Boston, MA. The plan was to offer lower priced brand name pharmaceuticals supplied by Canadian based Total Care Pharmacy, through the “Meds by Mail” program(1). Boston’s contract with Total Care put quality and safety standards into place, and the program focused on maintenance medications that did not require heavy medical management. Canadian pharmacies offer brand name pharmaceuticals at pricing which is generally lower due to national price controls. Considering pricing alone, the plan seemed solid, and Boston hoped to prove that considerable cost savings could be achieved through popular participation by their enrollees paired with the discounted pricing that the Canadian government mandates.

These goals, however, were never truly realized in Boston. One reason for the program’s failure is that cost savings were limited due to a lack of participation. The insured had little incentive to participation since the co-pay difference between using the standard plan pharmacies and Total Care was insignificant. In 2006, only seventy-three prescriptions were being filled by Total Care at a cost savings of $4300 for the city. By July 2008, Total Care terminated its contract with Boston with only 16 retirees still participating in the program(2).

The Canadian importation program has been mirrored in cities and state across the United States and has met with similar results, primarily because people are not interested in receiving Canadian prescription drugs if they can receive the same basic cost savings in an American pharmacy. Usage of generic substitution has become increasingly popular. Studies are also showing that American generic pricing is lower than Canadian brand name pharmaceutical pricing.

The Medicare Prescription Drug Benefit has given senior citizens a domestic option for receiving low cost prescriptions. Seniors were shopping for Canadian pharmacies trying to achieve higher savings for ever increasing prescription costs. Since the Medicare Drug Benefit was introduced, America seniors have been looking to Canada in diminishing numbers(3).

Aside from the cost factors, importation has started to lose favor in the United States. Both Presidential candidates have been reviewing the positions regarding in light of the numerous quality and safety standard issues that have been reported over the last year(4). Although cost savings are enormously important, the Boston model seems to show that with an ever changing market environment, Americans will choose to receive their pharmaceuticals in the United States if they can get similar results at reduced costs to them.

1:City of Boston – Meds by Mail Program description
2: Kaiser Daily Health Policy Report : Boston Ending Canadian Drug Importation Program After Few City Workers Enroll, 9/28/08
3:Drake, Boston Globe, 9/26/08
4: Heavey, Boston Globe, 9/18/2008