Patient advocacy groups urge U.S. court to halt overseas prescription drug operations

A coalition of patient advocacy groups is urging a federal court to halt the practices of third-party companies that buy drugs from countries outside the FDA-regulated U.S. supply chain, which the groups argue put U.S. patients’ health at risk.

The court filing comes in the wake of a CNBC investigation that documented how these third-parties — commonly referred to as alternative funding programs, or AFPs — have spread across employer-sponsored health plans nationwide. Under the growing business model, AFPs source high-cost specialty drugs from abroad at lower prices and charge employers a fee or a percentage of the savings. The AFPs then provide the medication to patients at little or no cost. 

AFPs are especially appealing to small employers like local school districts, county governments and others who pay their staff’s health-care costs out of pocket. But there’s a trade off: Federal officials at the U.S. Department of Homeland Security and the Food and Drug Administration told CNBC that these medications are illegally imported and put patients’ lives at risk. A Homeland Security Investigations official last year told CNBC that criminal investigations into AFPs were ongoing.

The filing in a U.S. Court of Appeals in Maryland, dated Dec. 26, was led by the HIV+Hepatitis Policy Institute, a nonprofit that advocates for safe and affordable treatment for people living with HIV and viral hepatitis. 

“Forcing a person who has employer-sponsored health insurance to sign up with an unknown third-party vendor to receive their life-saving drug supplied by a foreign country not only is illegal but jeopardizes the health and safety of patients,” wrote Carl Schmid, executive director of the HIV+Hepatitis Policy Institute, in a press release. “While federal regulators should be shutting them down, in the meantime, the courts must step in to protect patients.” 

In the court filing, the patient groups said the arrangements can delay treatment, confuse patients and expose them to drugs that differ from those distributed through the tightly regulated U.S. system. They warned that patients with chronic and life-threatening illnesses should not be forced to trade the safety and certainty of approved U.S. supply chains for lower costs to employers.

The amicus brief filing was submitted in a case brought by Gilead Sciences after the company learned that an HIV patient received Gilead medication with labeling written in Turkish. Gilead alleges the drug traveled through an unsecured supply chain that does not comply with U.S. law. Turkey is a known hotbed for counterfeit drugs, according to U.S. officials.

Gilead sued several companies involved in administering employer health plans, including the alternative funding program Rx Valet.

Greg Santulli, the CEO of the Georgia-based AFP, told CNBC last year that he’s confident in the safety of the medications his company sources, adding that Turkey is a “modern, sophisticated country” capable of tracking medications through its supply chain.

The lawsuit also named Meritain Health, which managed the patient’s employee health plan and is owned by CVS Health.

A spokesperson for CVS Health told CNBC last year that it “has long maintained a policy that it does not support programs for non-FDA-approved medications sourced from outside the United States and does not contract with companies to facilitate the importation of non-FDA-approved medications” from overseas.

A federal judge issued a preliminary injunction blocking all parties in the case from importing Gilead medications from overseas. The defendants are appealing the ruling, with Meritain arguing the injunction is not necessary and would adversely affect its business. Rx Valet in a court filing said the injunction undermines access to safe medications, adding that Gilead’s HIV drug shipped from Turkey was the same as what is sold in the U.S. at a much higher cost.