Drug Importation Law

On May 16, 2018, Gov. Scott signed S 175 to facilitate the state's importation of prescription drugs from Canada. The new law directs the Vermont Agency of Human Services (VAHS) to design a wholesale prescription drug importation program that complies with existing federal drug importation laws. To take effect, the VAHS must submit the program to the HHS for certification by July 2019.

As background, the FDA provides that a state program of importation of drugs from foreign countries is effective only if HHS certifies to Congress that the program will pose no additional risk to public health and safety and will result in a significant reduction in the cost of covered products to the American consumer. The HHS has yet to certify an importation program.

It's unclear whether this law will bring down drug costs, but the idea is that importation will increase competition to bring down costs. There are also concerns about drug safety when not taken through FDA channels. Vermont is the first such state to pass a drug importation law. This law builds upon a previously enacted state law that requires drug manufacturers to submit reports to the state justifying their price increases for certain drugs.

The new Vermont law contains no new employer obligations. But employers should be interested in the law as it relates to drug prices, which could impact their plan costs. We'll continue to monitor the progress of this Vermont law and other states' efforts that try to counter rising drug prices. Employers should work with their carriers or TPAs to address specific questions related to prescription coverage and cost.

S 175 »