From Bloomberg Law
A small but growing number of employers are finding they can save money on high-priced pharmaceuticals by flying their workers to Mexico, Canada, and the Cayman Islands to buy those same drugs at a fraction of the cost.
The practice joins the more established trend of Americans going abroad for dental work and surgery. Only a relative smattering of employers have embraced what is known as “pharmacy tourism,” but state governments are intrigued by it, and it looks likely to grow as specialty drug prices put financial pressure on employers.
Retail prescription drug costs totaled $335 billion in 2018, 2.5% above the 2017 total, according to the Centers for Medicare & Medicaid Services.
But the retail drug figures don’t include most specialty drugs, which are usually administered in doctors’ offices or in hospital settings. Novartis’s Zolgensma, a one-time gene therapy used to treat a rare condition in babies called spinal muscular astrophy, costs $2.1 million.
Some specialty drugs can be purchased from drug stores, and that’s where pharmacy tourism programs come in. The programs have been around for several years, but Utah brought greater awareness to the concept when it started its program for public employees in 2018.
The Utah Experience
The Utah program covers all travel costs to Mexico for the patient and a companion, and patients have no out-of-pocket costs for the drugs, Travis Tolley, clinical operations director of Utah’s Public Employees Health Program, said in an interview.
In addition, patients receive $500 each time they travel to Tijuana to pick up a 90-day supply of a covered drug, making it possible for employees to pocket as much as $2,000 a year, he said.
Ten Utah public employees participated in the program in 2019, although almost 400 are eligible to buy the 14 drugs covered by the program, Tolley said.
The program has saved the state between $225,000 and $250,000, Tolley said.
That’s less than the $1 million a year that some state officials had hoped for.
“We’ve seen slow growth over time,” Tolley said. “As the word continues to get out and as more people try it out, we think it will continue to grow.”
In October 2019 the state expanded the program to include Canada. No one has yet gone to Canada, but that may prove to be a more popular destination than Mexico, he said.
Following Utah’s example, the Washington state legislature is considering a bill that would allow the state employee health plan to set up a pharmaceutical tourism program in Vancouver, British Columbia, for the approximately 500,000 employees and family members the state covers.
State Sen. Karen Keiser (D), sponsor of the legislation, said in an interview that it could take several years for the bill to be approved, but “it’s brought forward a lot of interest,” including from state employees who are looking to save money for high-cost drugs.
Among private-sector employers, Wagstaff Inc., a manufacturer of aluminum casting equipment with just under 500 employees based in Spokane Valley, Wash., began its pharmacy tourism program to Mexico in 2018, Wade Larson, director of human resources, said in an interview. Wagstaff works with Medical Travel Option in Dallas, which administers the program and makes the travel arrangements.
Seven Wagstaff employees used the program in 2019, saving the company $200,000, Larson said. The employees, who participate voluntarily, receive $500 each time they make the trip to Tijuana for 90 days of drug supplies, he said.
Most Popular Prescriptions
Utah is one of 12 U.S. employers with self-insured plans that work with Provide Rx Pharma, a Tijuana pharmacy program that operates in conjunction with the local Hospital Angeles. Provide Rx has a nondisclosure agreement with most of the employers.
AbbVie Inc.’s Humira and Amgen Inc.’s Enbrel, both used to treat rheumatoid arthritis, were the most common medications bought by the U.S. employers’ 63 patients who traveled to Tijuana in 2019, general manager Javier Ojeda, the pharmacy program’s general manager, said in an interview.
The cost for six pens for self-injection of Humira would be $16,464 in the U.S., compared with $5,820 in Mexico, Ojeda said.
The drugs chosen for the program are specialty drugs for chronic conditions such as arthritis and multiple sclerosis, based on whether the savings are enough to justify the cost of funding the trip and payments to employees, Ojeda said.
A representative of Provide Rx, which works through health insurance brokers with the 12 employers, typically meets patients at the San Diego airport and drives them 20 minutes across the border to Hospital Angeles in Tijuana.
Patients meet there with a Mexican doctor who authorizes a 90-day supply of the drug, and the drug is delivered to the patient at the hospital. The patient then returns to the U.S.
“The first time they are nervous,” Ojeda said of participants. “But we guide them. We have U.S. drivers and case managers” who stay with patients the entire trip. Eighty percent of the U.S. patients come back, he said.
Savings of 50% to 60%
ScriptSourcing LLC in Baltimore arranges pharmacy travel for three or four people a month who work for the same number of companies, Zachary Jones, senior sales executive said in an interview. Patients usually travel to either the Cayman Islands or Mexico, he said.
Patients can go on an employer-sponsored “mini-vacation” during which they get their medications, Jones said.
Savings for the employers are 50% to 60% of what they would have paid for high-dollar specialty medications, Jones said. The savings for Humira could be $50,000 a year, he said.
If there are other ways for employers to save money on drug costs that don’t involve travel, those options are examined first, he said. “Financially, it doesn’t make sense unless that’s the only option on the table,” he said.
Brokers who work with the employers say the drugs are the same as those made by U.S. manufacturers and are approved for sale in the U.S. by the FDA.
“We’re doing everything in compliance with the FDA rules,” said Curry Willix, founder and chief executive officer of Medical Travel Option in Dallas, which administers the program for five U.S. employers.
Individuals are legally able to bring 90-day supplies of medicines for their own use into the U.S., she said.
Still, the Food and Drug Administration said in an email that it “cannot ensure the safety and effectiveness of medicine purchased outside the U.S. For these reasons, the FDA recommends only obtaining medicines from legal sources in the U.S.”
The Pharmaceutical Research and Manufacturers of America doesn’t have a position on pharmaceutical tourism, a spokesman for the organization said in an email.
A Case for Importing Drugs
Utah state Rep. Norm Thurston (R) sponsored the legislation that led to creation of his state’s program.
“It’s a fabulous idea,” Thurston said. But, he added, “it’s ridiculous that we have to do it to save money.”
A better approach would be to import the drugs from Mexico, he said. But, “For the time being we’ll live within the constraints of federal law.”
Drug importation is authorized by the Federal Food, Drug, and Cosmetic Act for drugs that don’t post a risk to public health, but the federal government so far has not approved it.
The Trump administration in December 2019 proposed allowing states to work with wholesalers or pharmacies to import certain drugs from Canada. Colorado, Florida, Maine, New Hampshire, and Vermont have expressed interest in the idea.
By Sara Hansard