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What You Need to Know About Parallel Importation

Posted By Administration, Wednesday, May 22, 2019

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By Alex R. Thiersch, JD, CEO of the American Med Spa Association (AmSpa)

In June 2018, Oregon-based physician Brenda Roberts had her medical license revoked for obtaining and using prescription medication from foreign countries. Roberts was a family practice doctor who was administering Botox treatments at her home on the side. She wasn’t necessarily doing anything inappropriate in terms of patient care, and she kept detailed records on her patients, but she was buying Botox from United Pharmacies—a “rogue pharmacy” that operates outside of U.S. Food and Drug Administration (FDA) governance—because Allergan noticed it was sending Botox to her home and cut off her account. FDA agents went through her trash and found that the Botox she used was intended for sale in Europe.

Roberts was participating in a practice called parallel importation, and while it is extremely enticing for medical spa owners looking after their bottom lines, it should be avoided at all costs, as Roberts’ case demonstrates.

A Controversial Practice

In countries such as the United Kingdom, Germany, France, Sweden and Canada, governments regulate the cost of pharmaceuticals. These measures are ostensibly designed to prevent drug manufacturers from charging excessive prices for essential medicine, but they also apply to pharmaceuticals used for elective procedures, including Botox.

In the U.S., however, FDA does not regulate drug prices, so drug manufacturers essentially can charge whatever they feel the market will bear for their products; that price is invariably much higher than what is charged in countries that have cost controls.

Because of this, it has become somewhat common for U.S.-based providers to buy drugs from licensed dealers in countries where cost controls are enforced. The prices are up to 50% lower than what the buyers would have to pay if they were purchasing the drugs directly from the manufacturer.

Both parties benefit from this arrangement. The buyers get legitimate pharmaceuticals for much less than they would pay if they bought directly from the manufacturers, and the dealers can make their money simply by marking the product up slightly. These are not counterfeit pharmaceuticals like the ones that are typically manufactured in China that have flooded the market in recent years—these are almost invariably the same drugs that are approved by the FDA and sold in the U.S.

Understanding the Rules

While parallel importation of consumer goods is broadly legal in the U.S.—the Supreme Court ruled that to be the case in a 2013 case involving textbooks—Roberts’ case demonstrates that the distribution of drugs that are not explicitly intended for use in the U.S. is absolutely illegal, and that FDA and the U.S. Drug Enforcement Agency (which also participated in the investigation) are taking cases such as this extremely seriously. There hasn’t been much enforcement yet, but this demonstrates that the issue is definitely on the agencies’ radars.

Despite the relatively low risk of being caught, ByrdAdatto and AmSpa steadfastly believe that medical aesthetics practices should not participate in parallel importation. The potential consequences definitely outweigh the cost savings. If your practice’s profitability depends on buying cheap drugs, you need to re-evaluate the way you do business. Practices should remain compliant with FDA and other regulatory agencies, regardless of whether they think a drug is overpriced. It is absolutely possible to run a medical aesthetic practice that is both very profitable and compliant with all laws and regulations.

If you need more information about parallel importation, consult with your healthcare attorney. AmSpa members can take advantage of their annual compliance consultation with ByrdAdatto. You can also learn the keys to running a medical spa practice profitably and compliantly at an AmSpa Medical Spa & Aesthetic Boot Camp.

Tags:  AmSpa's Med Spa & Aesthetic Boot Camps  Business and Financials  ByrdAdatto  Med Spa Law 

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Mary B. Hagen (Hagen) says...
Posted Wednesday, May 29, 2019
Thank you, Alex, for highlighting an importation issue. One additional point to note is that many of the products that are involved in "parallel importation" are actually therapeutic products that are regulated or subsidized by foreign governments and not the Cosmetic versions sold abroad. In most of Europe, BOTOX Cosmetic is sold as Vistabel. The cosmetic version of Dysport is called Azzalure and the Cosmetic version of Xeomin is BoCouture. If you want to ensure that you are using product that is FDA -approved for use in the United States, look for 3 things on the BOTOX Cosmetic box or vial: 1. the box and vial will include the U.S. generic name - OnabotulinuntoxinA. 2. The box will include the U.S. FDA package insert with indications for the cosmetic uses of the product and the FDA approved dosing. 3. The vial and the box will show the U.S. License number. If you don't find these three things, buyer beware. And the illegal entities selling the imported product are very sneaky and have no problem lying to potential purchasers. Finally, know that it is not Allergan, Galderma or Merz that sends investigators to offices - it is the Office of Criminal Investigations. Several people in the United States have gone to jail for participating in this practice, so know it is definitely not worth the risk to your license or your business to try to save a few dollars. Be safe - for you and your patients!
Mary Beth Hagen
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