A Market-Based Solution to Rising Drug Prices: More Competition

President Trump and high-ranking officials in his administration, including Health and Human Services Secretary Alex Azar, Council of Economic Advisers Chairman Kevin Hassett and acting White House chief of staff Mick Mulvaney, are scheduled to meet tomorrow for a strategy session on how to moderate drug prices.

The president is frustrated over recent price increases that have occurred in spite of his publicly pressuring and shaming drug companies. “Drug makers and companies are not living up to their commitments on pricing. Not being fair to the consumer, or to our Country!” he tweeted on January 5th.

Until now, most of the administration’s suggested remedies primarily have consisted of sort of price controls, which seldom work and at best, have unintended consequences.  A far better solution would be congressional authorization of drug-approval reciprocity among select foreign counterparts, giving patients rapid access to drugs that have been already proven to work in countries whose testing and review regimens are similar to our own.

Reciprocal approval would benefit patients directly: The negative effects of FDA delays in approving certain new drugs already available in other industrialized countries are well documented. Meningitis B, for example, is a devastating infectious disease that can become debilitating so quickly that by the time it is recognized, the patient may be too sick for effective treatment. The European Union, Australia, and Canada approved the first MenB vaccine, Bexsero, in January 2013. The FDA did not follow suit until February 2015. Meningitis B outbreaks resulted in deaths and limb amputations during that interval, when federal agencies had to resort to a cumbersome process in order to approve limited usage of Bexsero. The Centers for Disease Control had to apply to the FDA for permission to acquire and distribute the European version of the vaccine.

Reciprocity would also alleviate shortages of critical drugs in the U.S.. Many of the drugs in short supply are generic injectable medications commonly used by EMTs and in hospitals: analgesics, cancer drugs, anesthetics, antipsychotics for psychiatric emergencies, and electrolytes needed for patients on IV supplementation. Hospitals are scrambling to assure adequate supplies of drugs that are in short supply, or to find substitutes for them. Patients sometimes get the second or third choice of medication.

The FDA is severely limited in what it can do to address shortages. The agency’s app to enable health care providers to keep current on shortages informs them about the problem but doesn’t actually remedy it. Reciprocity of approvals would make numerous needed alternative drugs available. It could have been in place decades ago if only the FDA had met its long-standing commitment to pursue it through the International Conference on Harmonization of Technical Requirements for Registration of Pharmaceuticals for Human Use (ICH).

The ICH’s agenda (supposedly) includes reciprocity of drug approvals among certain governments, but generations of FDA officials have resisted any such “delegation” of their responsibilities. When a senior European regulator was asked about the extent of the FDA’s cooperation on this issue, she quipped, “It’s like discussing the Thanksgiving dinner menu with the turkeys.”

Though the FDA has improvised procedures for importing drugs approved and marketed abroad that have not been approved in the U.S., this “enforcement discretion” approach—a kind of ad hoc reciprocity—is legally questionable. In a recent court decision, the FDA was blocked from using enforcement discretion to permit the importation of an unapproved drug for capital punishment, because the law is clear that an unapproved drug cannot come through U.S. Customs. That’s why Congress must step in.

Photo Credit: Getty Images

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About Henry I. Miller and John J. Cohrssen

Henry I. Miller, a physician and molecular biologist, is a senior fellow at the Pacific Research Institute. He was the founding director of the FDA’s Office of Biotechnology. John J. Cohrssen is an attorney who has served in a number of government posts in the executive and legislative branches of the federal government, including as associate director of the President’s Council on Competitiveness (Bush 41), and counsel for the House Energy and Commerce Committee.