Because these accounts are governed by federal law – by Code Section 213(d) – they generally cannot be used to purchase foreign drugs, according to EBIA. Medicine and drugs must be “legally procured” by holders of such accounts, and thus Canadian drugs, which most often are not allowed to be imported under federal law, would not qualify.
In the 2004 version of IRS Publication 502 , it was stated that “in general, you cannot include in your medical expenses the cost of a prescribed drug brought in (or ordered shipped) from another country, because you can only include the cost of a drug that was imported legally.” Two exceptions were noted, however: drugs that the FDA considers to be legal imports can be bought with such accounts and drugs that are bought and used in another country – and are legal in the US – can be purchased with such accounts.
The FDA has also made its position clear on consumer-directed health plan usage for foreign drugs in a letter posted on its Web site. “virtually all shipments of prescription drugs imported from a Canadian pharmacy will run afoul of the [Federal Food, Drug, and Cosmetic] Act,” according to the letter, implying that health accounts can not be used for such illegal purchases.
Canadian drug importation has been a hot topic as of late, with multiple states instituting policies that allow for drug importation. Rhode Island, Illinois and a spate of other states have put in place such programs. Rhode Island has gone as far as licensing Canadian pharmacies in the same manner as any other out-of-state pharmacy, the first such policy of its kind in the US(See RI First to License Canadian Pharmacies ).