With an average starting price of $329, millions of Apple Watches have been purchased by Americans since the product was released. If you knew that you could buy the same Apple Watch for $23 from Canada, would you? I’m not talking about a counterfeit, or a generic knock-off, but the same genuine Apple Watch, manufactured in America and simply sold in Canada.
Of course you would! And, if so, would you perhaps question the ethics of a company that could get away with charging Americans roughly 14 times more for the same product than it was charging Canadians?
Though this question may sound hypothetical, it is not. It is precisely what occurs in the complex world of pharmaceuticals. Take a 10 ml vial of Humalog, a drug that people with diabetes use to treat blood sugar spikes. The U.S. list price is $329 — the same as the starting price of an Apple Watch. That same vial of Humalog in Canada has a list price of only $23.
Keep in mind that we are not talking about a cheaper generic version being sold in Canada, or even the same drug being manufactured by someone else. The $329 American vial and the $23 Canadian vial are identical — manufactured by the exact same pharmaceutical company here in the U.S.
As absurd as this sounds, this is exactly the problem that vexes the director of PEHP, the agency that provides health care benefits to all of Utah’s public employees and their families. He stated, “Rising pharmaceutical costs continue to be the most volatile part of the state budget in providing health care to its employees.”
As a member of the Utah House of Representatives, one of my most important tasks is to develop and pass a state budget that will accurately address our state’s financial needs for the upcoming year. Volatility is the greatest threat to that process.
In an effort to reduce volatility in the health care market, and bring down prescription drug costs, I have introduced House Bill 163, which will help create a process for Utah’s pharmacies to sell Canadian drugs at Canadian prices. Many of these are the very same drugs, in fact, that are manufactured here in America and shipped to Canadian facilities.
If successful, Utah’s government-funded health care plans would see millions of dollars of reduced expenditures — money that could be spent on educating children. The fiscal analyst who reviewed this bill estimated that “privately funded health insurance plans may see reduced spending on prescription drugs of around $70 million beginning in FY 2019.”
Of course, there are many hurdles to clear, not the least of which is getting approval from the Secretary of Health and Human Services (HHS). My bill would simply be the first step in this approval — giving marching orders to the Utah Department of Health to design a plan for Utah to import prescription drugs from Canada. All stakeholders in Utah — providers, insurers, manufacturers — would be invited to give input in developing this plan. We would then create a “Utah Solution” that addresses all of the safety concerns, which are a critical part of this proposal, and require Utah state officials to take this solution to the secretary of HHS for approval.
If approved by HHS, health care costs would immediately decrease, and Utah will have successfully started a national conversation on this difficult issue. If not, Utah could rework its plan to address the secretary’s concerns, and other states might follow. In the end, Utah could start the conversation toward a national solution to rising drug costs. Either way, it is a win for Utah.
Virtually every organization with a vested interest in lowering health care costs is rallying behind my effort. Not surprisingly, those organizations with vested interest in higher drug prices are opposing the effort, citing “health and safety” concerns. Under Utah’s plan, concerns would be fully addressed. And, if it cannot be resolved, the plan would never be approved, so why not try?
In the end, HB163 is about starting the conversation. Not surprisingly, there are some who would prefer we simply not have the conversation. However, with drug costs on the rise, we can no longer let certain industry groups chill the conversation. It’s time to have a national conversation about prescription drug prices. It’s time for Utah to lead the way.
Rep. Norm Thurston, a Republican, lives in Provo and represents House District 64. A professional health economist for the state of Utah, he holds a Ph.D. from Princeton University.