Employers Targeted to Import Drugs for Employees

Self-insured employers are understandably concerned about the costs of pharmacy benefits for their employees. The Midwest Business Group on Health conducted annual research in 2023 on employer health benefits priorities. When asked about top threats to employer-provided benefits, 94% of respondents cited high-cost pharmacy claims, whereas 89% of respondents cited specialty drug spending.¹

Targeting Self-Insured Employers

An increasing number of private vendors are targeting self-insured employers, offering to deliver savings on the cost of selected specialty pharmacy drugs prescribed to the employees insured under the employer health benefit program. While many of these vendors seek to achieve those savings by enrolling those employees in patient assistance programs designed for truly needy patients, several are now promising that drug savings can be achieved by channeling those employees into international drug importation programs. The self-insured employer groups being targeted are often municipalities, academic institutions, unions, school districts, smaller employers, and even some town or state employee or retiree programs. Each of these vendors advertise pharmacy savings, but many use tailored service descriptions making it difficult to research or track them as drug importation vendors.

An AFP by Any Other Name Is Still an AFP

In general, a vendor that generates its own profits through contracts with self-insured employers to carve out selected specialty drugs obtained for free or discounted from alternate sources (thus reducing pharmacy costs normally paid for by the employer in their health benefits program) is referred to as an “alternate funding program” (AFP) by those concerned about the risks and care delays such models create. The vendors do not identify themselves as an AFP but may use terms such as pharmacy consultant, prescription assistance advocacy, pharmacy stewardship program, or healthcare benefits consultant, among many other descriptors. This variation in descriptors internal and external to the vendor programs leads to difficulty in communications regarding these programs to patients, provider communities, employers, and health benefits regulatory and legislative policy leaders. For purposes of this discussion, any vendor contracting with an employer or health benefits manager to isolate specific drugs from coverage under the traditional health benefits package and change the process, source, and patient access to those drugs for individuals otherwise covered for medical care and prescriptions under their health benefits package, will be referred to as an AFP model.

AFP Drug Importation for Employed Individuals Rising

AFP contracts with self-insured employers appear to be growing and are likely to be present in every state of the United States despite significant warnings, concerns, and discussions at the state and federal levels. These issues are related to medical and legal risk, risk to the employer for their own self-insured legal status, disruption to timely patient care and to charitable resources that are targeted and depleted by insured, employed patients, leaving truly needy patients underserved. In the past few years, the AFP vendors that solely or additionally promise drug savings to employers through international drug importation have increased as an alternative to other AFP drug sourcing models. AFP drug importation leads to its own legality challenges and escalates the medical risk to patients and employers through importation of drugs from channels outside of FDA-approved pathways.

The AFP vendors that contract with self-insured employers to source discounted foreign drugs as an alternate to domestically available drugs assure their clients that importing international drugs for their employees is safe and lawful, but the FDA, manufacturers, patient advocates, and providers disagree. State and federal legislators and policymakers are just starting to understand the scope and impact of drug importation for insured, employed individuals for the sole purpose of saving drug costs for US health benefits plans and generating profits for AFP vendors.

AFP Drug Importation—No Legal Pathway Through FDA Despite Claims of Legality

Except for narrow exceptions that do NOT apply to self-insured employers and their employees, importation of drugs from foreign pharmacies is not permitted under current FDA policy.²

1. FDA Policy on Human Drug Imports—“FDA protects public health by promoting supply chain integrity and working to ensure medicines imported to the U.S. comply with applicable legal and regulatory requirements. Imported drugs must meet FDA’s standards for quality, safety and effectiveness. For example, medicines from outside the legitimate U.S. drug supply chain do not have the same assurance of safety, effectiveness and quality as drugs subject to FDA oversight.”²
2. FDA Drug Importation Guidance for Drugs Originally Intended for Foreign Markets – Pathway Guidance for Manufacturers—The FDA allows drug manufacturers to facilitate importation of prescription drugs that are FDA-approved, manufactured abroad, authorized and originally intended for sale in a foreign country. This manufacturer importation pathway is not designed for use for AFP vendors to facilitate importation of drugs to insured, employed individuals so that their self-insured employers can reduce their pharmacy spend on drugs otherwise readily available within the United States.²
3. FDA Drug Importation for Drugs Originally Intended for Foreign Markets Pathway Guidance for States and Tribes—Section 804 Importation Program (SIP)—The FDA allows US states and tribes to develop importation programs in accordance with Section 804 of the Food, Drug and Cosmetic Act and the FDA’s implementation regulations to reduce the cost of covered products to the American consumer without imposing additional risk to public health and safety. Under the SIP pathway, eligible states and tribes must first apply to the FDA for permission to plan to import drugs, and then, if that permission is granted, they must then submit additional applications for permission to import specific drugs on an individual basis.
   
   To date, no state or tribe has successfully completed the full SIP pathway, and not 1 drug has been successfully and legally imported into the United States under the FDA SIP pathway. A number of states hope to develop drug importation programs under the belief that SIP drug importation will lead to drug cost savings—particularly from Canada, while ignoring repeated statements from Canadian officials that mass shipment of Canadian drugs to the United States will not be allowed.³ This SIP pathway is not designed for use for AFP vendors to facilitate importation of drugs to insured, employed individuals so that their self-insured employers can reduce their pharmacy spend on drugs otherwise readily available within the United States.
4. FDA Drug Importation Guidance for Personal Importation Pathway for US Citizens—The FDA allows personal importation of products from foreign sources under very tight parameters. The FDA clearly states: “In most circumstances, it is illegal for individuals to import drugs or devices into the U.S. for personal use because these products purchased from other countries often have not been approved by the FDA for use and sale in the U.S. If a drug is approved for use in another country but is an unapproved new drug in the U.S., it is illegal to import. The FDA cannot ensure the safety and effectiveness of medicine purchased over the Internet from foreign sources, storefront businesses that offer to buy foreign medicine for you, or during trips outside the U.S. For these reasons, the FDA recommends only obtaining medicines from legal sources in the U.S.”⁴

Personal Importation Limitations

• Drugs are not to be further sold or distributed into US commerce
• Product is not for treatment of a serious condition, and there is no known significant health risk; or
• Product is for the treatment of a serious condition (ie, Prescription Drug Products):
  • The product is for a serious condition for which effective treatment may not be available domestically either through commercial or clinical means
  • There is no known commercialization or promotion of the product to persons residing in the United States
  • The product does not represent an unreasonable risk
  • The consumer affirms in writing that the product is for personal use
  • The quantity is generally not more than a 3-month supply and either:
    • Provide the name and address of the doctor licensed in the United States responsible for your treatment with the product, or
    • Provide evidence that the product is for the continuation of treatment begun in a foreign country

This personal importation pathway is not designed for use for AFP vendors to facilitate importation of drugs to insured, employed individuals so that their self-insured employers can reduce their pharmacy spend on drugs otherwise readily available within the United States.

• The drugs being imported by AFP vendor programs are done on a wholesale basis as a billable revenue source for the AFP vendor and for cost savings for the benefit of their contracted self-insured employer client—the drug importation is not the independent decision of the employee for personal importation
• Drugs being imported by AFP vendors are often prescribed for serious conditions, thus outside the parameters of the personal importation parameters
• Drugs being imported by AFP vendor programs are readily available within the United States and covered by health benefits programs by self-insured employers across the country, thus outside the parameters of the personal importation parameters
• Since the AFP vendor charges their self-insured employer client for the AFP importation program, the commercial benefit to the AFP vendor falls outside the allowed parameters of the personal importation pathway
• Drugs imported by AFP vendor programs are de facto obtained outside of the United States for serious conditions from sources that cannot be assured by the FDA to be safe and effective, thus they constitute an unreasonable risk to patients in the United States

How Does Employer Use of AFP Drug Imports Affect Patients?

Oncology practices report patients losing access to prescribed medicines, oral and infused, due to coverage losses under AFP programs contracted with their employers. Visionary practices are developing strategies to identify such affected patients and to advocate with and for their patients if asked. One physician shared the alert his patient received with his imported drugs—a warning that the drug color, shape, and size may differ significantly from the drug versions they have received before. Those warnings are exactly why the FDA challenges the safety and efficacy of foreign medicines.

Imported drugs arranged through AFP vendor contracts can result in delayed patient access for weeks or months due to both the AFP enrollment process and the actual delivery from the foreign source. Drugs imported for serious conditions can greatly increase the medical risk to affected patients if needed medicines are delayed, mishandled, or otherwise adulterated or compromised. Practices should remain alert to the intrusion of AFP vendor programs into patient treatment plans and the increased risk to patient care and outcomes.

Aggressive AFP Vendors on Offensive and Defensive

AFP vendors will go to extreme measures to protect their market niche and revenue stream. AFP vendors target small businesses at local business services fairs. Brokers and pharmacy advocacy consultants are incentivized to recommend AFP vendors to self-insured employer clients. AFP vendors are not only careful to not explain the legal and medical risks of drug importation programs to self-insured employer clients, but they also often offer opaque explanations declaring how the drug importation programs are fully safe and legal, just waiting to be used by employers seeking reduced costs for health benefit drugs.

CNBC aired an expose in November 2025 on the blatant rise in AFP vendors arranging for drug importation on a wholesale basis for their client self-insured employers.⁵ Homeland Security has launched several criminal investigations into AFPs.

AFP Trojan Horse Legislation in Colorado

Recent state legislation (HB26-1056) proposed in Colorado reflects a blatant attempt to use state law to create protection for 1 AFP vendor.⁷ This vendor, under cover of their specialized trademarked self-designation as a “pharmacy stewardship program,” specializes in drug importation to reduce health benefit drug costs of self-insured employers used the proposed Colorado bill to legitimize their business model. The language of the bill repeatedly described the AFP services as legal and lawful, as if saying so would make it true. The bill language did not provide actual justification for the claims of legitimacy, nor disclose that their drug importation program puts those same employers and their employees at heightened legal and medical risk. The bill did not address the AFP vendor’s intent to use the FDA Pathway for Personal Importation on a wholesale basis to the benefit of the AFP vendor and the self-insured employer or how the AFP vendor model would use FDA-prohibited importation of drugs for serious conditions, to replace drugs readily available domestically, and importation of drugs that present a serious risk to the health of the affected patients. Fortunately, the Colorado House Health & Human Services Committee voted 10 to 2 with 1 abstention on February 17, 2026, to postpone the proposed bill indefinitely.⁷ However, this bill represents a cautionary tale for all states, should other AFP programs attempt a similar strategy for legitimization.

What Can Practices Do?

When AFP vendors misinform or underinform the public, potential self-insured employer clients, providers, legislators, policymakers, and the affected employee patients who may not even have a choice about involvement with the AFP vendor, the medical community needs to speak up. If AFP vendors sponsor or support similar misleading legislation in other states, we need to raise our voices to call out misrepresentation or obfuscation of the real impact of drug importation on the health and safety of vulnerable patients and even legal/fiduciary status of their self-insured employer clients.

Practices, whether private or part of a hospital system, should have access to networks to address common advocacy issues and patient access challenges. Those networks could include the state oncology society, or larger networks of independent practices or within a clinically integrated health system. Sharing challenges may lead to revelations that specific drug carveouts for employed, insured individuals are rising in a geographic area or even for specific employers.

Understanding the commonality of the challenge may create opportunities for multiple physicians to raise their concerns in a common voice. When multiple patients are adversely affected by limitations on drug access that may be the result of AFP vendor programs that cross different employers, we must recognize those patterns to be able to address them with regulators or legislators. Many states have insurance and healthcare commissions in their state legislature and governance structure. We need the voice of the medical community in the offices of those commissions, in front of the legislators, state departments and their staff. We need to bring the voice of reason and practicality to these conversations. I testified on the Colorado proposed bill and would be happy to share talking points with anyone considering raising these issues in their own state.

Next Steps for Cancer Practices

• Look for patterns of commonality in insured, employed patient loss of coverage for specific drugs, even across diverse employers
• Collaborate, inform, and join forces with others facing similar challenges
• Comment on and address federal and state legislation and policy that may have a positive or adverse effect on the impact of patient care, coverage, and policies

Share your thoughts and experiences with me at This email address is being protected from spambots. You need JavaScript enabled to view it.. I would be interested in hearing what you have found, or what more you want to know. I can provide additional resources on this topic if you wish.

References

1. Valenz Health. Self-Insured Employers View the Cost of Specialty Drugs as a Major Challenge. Valenz Health Blog. April 17, 2023. Accessed March 26, 2026. https://blog.valenzhealth.com/self-insured-employers-view-the-cost-of-specialty-drugs-as-a-major-challenge
2. US Food and Drug Administration. Human Drug Imports. Updated January 2024. Accessed March 26, 2026. www.fda.gov/drugs/guidance-compliance-regulatory-information/human-drug-imports
3. Health Canada. Statement from Health Canada on FDA decision on Florida bulk drug importation plan. January 8, 2024. Accessed March 27, 2026. www.canada.ca/en/health-canada/news/2024/01/statement-from-health-canada-on-fda-decision-on-florida-bulk-drug-importation-plan.html
4. US Food and Drug Administration. Personal Importation. Updated July 2023. Accessed March 26, 2026. www.fda.gov/industry/import-basics/personal-importation
5. Zamost S, Tortorelli P, Lee M. Cheaper medicines, free beach trips: U.S. health plans tap prescriptions that feds say are illegal. CNBC. November 13, 2025. Accessed March 27, 2026. www.cnbc.com/2025/11/13/employer-health-plans-afp-prescriptions-feds-illegal.html
6. Office of the United States Trade Representative. 2025 Special 301 Report. April 2025. Accessed March 30, 2026. https://ustr.gov/sites/default/files/files/Issue_Areas/Enforcement/2025%20Special%20301%20Report%20(final).pdf
7. Colorado General Assembly. HB26-1056. Prescription Drug Benefit Information Transparency. 2026. Accessed March 26, 2026. https://leg.colorado.gov/bills/HB26-1056