President Trump has often criticized what he considers to be excessively high drug prices, castigating drug companies and accusing them of "getting away with murder." He was scheduled to give a major speech on April 26 about initiatives intended to lower prescription drug prices, but it has been postponed until today.
Various proposals from the administration for controlling prices have included capping out-of-pocket drug costs for low-income seniors enrolled in Medicare and ensuring that they don't pay for generics; the creation of a five-state pilot project to allow state Medicaid programs to negotiate prices with manufacturers; limiting the growth of certain Medicare drug payments to the rate of inflation; and requiring insurers to pass drug discounts on to patients.
Count us skeptical, especially of price caps. Price controls in the United States have an extensive and dubious history. At various times the federal government, states, and even localities have imposed various price controls on items such as oil, electricity, apartment rents, food, and plane fares, but the benefits tended to be short-term at best. Unintended consequences have included consumer dissatisfaction from shortages and curtailed industrial production, investment and innovation.
We have a better suggestion: Regulatory reforms to lower development costs and increase corporate competition and the number of innovative drugs and medical devices on the market in the United States.
The detrimental effects of FDA delays in approving certain new drugs already available in other industrialized countries are well documented and deserve as much attention as drugs' high costs. If over-regulation prevents a drug from being available at all, its cost is moot.
An example was the FDA's approval in 2015 of Fluad, a flu vaccine that contains an adjuvant that boosts the immune response. It is intended for use in the elderly, whose immune response to flu vaccines is typically poor. (People over age 64 account for 80–90 percent of seasonal flu-related deaths and 50–70 percent of flu-related hospitalizations in the United States.) Fluad had been in use in Italy since 1997 and approved in more than three dozen countries. That 18-year delay in availability in the United States surely resulted in thousands of avoidable deaths.
Conspicuously absent from the White House's past proposals are ways to lower prices by increasing competition. Therefore, we propose a change in policy that would address both drugs' availability and also the redundant, time consuming, expensive, and duplicative reviews by the FDA and its foreign counterparts: "reciprocity" of drug and medical-device approvals with certain of the U.S. FDA's foreign counterparts, so that an approval in one country would be reciprocated automatically (subject to the creation of approved labeling in appropriate format, etc.) by the others.
That would make more drugs available sooner in the United States (and other participating countries), increase competition, and put downward pressure on prices.
Reciprocity of approvals would also help to alleviate the pressing problem in this country of shortages of certain critical drugs, many of which have been essential in medical practice for decades. The majority are generic injectable medications commonly used in hospitals, including 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. 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 really 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).
There has been some progress on harmonization at the margins. A number of countries now have a standardized dossier for seeking approval of new drugs, the United States accepts research conducted in other countries to support applications for the approval of new drugs and devices, and the FDA has established Good Manufacturing Practices for foreign production facilities.
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."
The FDA has improvised procedures for importing drugs approved and marketed abroad that have not been approved in the U.S., but that "enforcement discretion" approach – a kind of ad hoc, unidirectional "reciprocity" -- is legally questionable. In a footnote to the agency's October 2013 Strategic Plan for Preventing and Mitigating Drug Shortages, FDA acknowledged its awareness of a relevant recent court decision, Cook v. FDA, in which the D.C. circuit court prohibited FDA from using enforcement discretion to permit the importation of an unapproved drug for capital punishment execution. The law is clear that an unapproved drug cannot come through U.S. Customs for marketing. The FDA's terse comment, "We are currently reviewing the decision in the context of our drug shortages program," understates the existential importance of that decision.
The bottom line is that we need more competition – not more government involvement – and reciprocity of medical-product regulatory decisions would be an important advance. The White House and Congress should embrace it, encourage other governments to participate, and take a pass on proposals for more intrusive government involvement in drug research, development, and pricing.
Henry I. Miller, the founding director of the FDA's Office of Biotechnology, is a physician and molecular biologist. He is the Robert Wesson Fellow in Scientific Philosophy and Public Policy at Stanford University's Hoover Institution. John J. Cohrssen served as associate director of the President's Council on Competitiveness under George W. Bush, and as counsel for the House Energy and Commerce Committee.