Can the FDA Help Reduce Drug Prices or the Cost of Medical Care?

Diana Zuckerman, PhD, American Journal of Public Health, November 2017

The new US Food and Drug Administration (FDA) commissioner Scott Gottlieb has worked for pharmaceutical companies for most of his career, so it may have surprised some public health advocates when he responded to congressional pressure by taking on the hot issue of drug pricing as one of his first priorities.

In his blog written for the FDA Web site, Commissioner Gottlieb echoes the view of many public health advocates when he says: “Too many patients are being priced out of the medicines they need. While FDA doesn’t have a direct role in drug pricing, we can take steps to help address this problem by facilitating increased competition in the market for prescription drugs through the approval of lower-cost, generic medicines. […]

I agree with Commissioner Gottlieb that these sound like useful strategies, because generic drugs have been estimated to have saved $1.2 trillion between 2003 and 2012. However, I question how much these strategies can accomplish. Is this a Band-Aid approach to a much more complex problem—and if so, is the FDA part of the problem?

Generic drugs, competition, and drug prices

The Government Accountability Office (GAO) reported in 2016 that the price of 50-milligram capsules of the antidepressant clomipramine HCL, which is used to treat obsessive-–compulsive disorder, increased by more than 2000% in one year: from 34 cents per capsule in 2013 to $8.43 per capsule in 2014.  The 20-milligram capsules of piroxicam, to treat arthritis, increased by more than 2000% from 2010 to 2015: from 9 cents to $1.82 per capsule. The price of digoxin, a commonly prescribed heart medication, increased by 2800% in a single year.  Despite these increases, the GAO found that from 2010 to 2015 the cost of generics decreased by 59%. Nevertheless, the GAO reported that the price of 315 generic drugs went up by 100% or more during those years, causing financial difficulty for many patients. […]

When a large number of generic manufacturers are making the same product, the average price usually falls to 20% of the branded price, or even lower. There are exceptions, however. For example, eight companies make ursodiol, a treatment for gallstones.  In 2013, the cost was 45 cents per capsule, but in May 2014, Lannett increased its price to $5.10 per capsule, and its competitors soon followed.

Is the FDA part of the problem?

The contribution of the FDA to high drug prices was noted recently when the FDA approved an old, commonly used drug for a type of Duchenne muscular dystrophy. Deflazacort had not previously been approved in the United States, but many patients imported generic versions from Europe or Canada for $1000 to $2000 for a year’s supply. When the FDA approved it, a US company gave it a new name, Emflaza, and a new price tag, $89 000 per year (more than a 6000% increase).

Another glaring example of the unpredictable impact of competition involved brand-name drugs for hepatitis C. When Gilead put Sovaldi on the market in late 2013, it cost $1000 per pill: $84 000 for a 12-week course of treatment. The public and policymakers were incensed at what was considered an outrageous cost, but experts assumed the price would soon drop because other similar drugs were in the pipeline. Instead, the official price increased, despite two competing drugs….

FDA drug approval

Clearly, when the FDA approves new drugs that create competition, it does not necessarily lower prices. Congress has passed laws to require the FDA to approve drugs and devices more quickly, which Commissioner Gottlieb also supports. This has resulted in lower standards over the last two decades5 and has contributed to the high cost of medical care.

Read the original article here.