Lowering Prescription Drug Prices Means Getting FDA Out of the Way


Many of us require certain prescription drugs to go about our daily lives. Medications for "everyday" disorders like anxiety, sleep apnea, diabetes, etc., are often very expensive. Insurance covers some of the cost, but large out-of-pocket payments are common.

It's enough to cause us to stay awake at night, worrying or stress-eating. How do we afford to get by? How did it get so expensive?

Former congressman Ron Paul, a physician, says the federal government has a lot to do with the price structure of prescription drugs.

The real reason pharmaceutical prices are so high is government policies that allow big pharmaceutical companies to exclude their competitors from the marketplace. Therefore, an effective way to bring down the price of pharmaceuticals and increase access to the drugs is to reform by changing government policies that stifle the development of a competitive market in prescription drugs.

Paul says he's a fan of the CREATES Act, which would make it easier for pharmaceutical companies to make generic brands for drugs whose patents have expired. The bill has a bipartisan coalition of supporters.

This bill is broadly popular because it reforms government policies that allow big drug companies to obtain long-term monopoly protection by keeping their generic competitors out of the marketplace. This is key. Patents grant makers of new drugs temporary monopolies only so they can recoup huge investments in research and development and use some of their profits to chase other cures. Once a patent has expired, other drug manufacturers are supposed to be able to reproduce a "generic" but effectively identical version of that drug so that consumers may purchase quality medicines at lower prices.

Can it become law? Possibly, especially when one of the chief proponents of making generic drugs more available now runs the FDA.

Food and Drug Administrator Scott Gottlieb wrote in 2016 that one of the biggest problems with the FDA in recent years has been the fact that the administration has actively worked to keep generic drugs off the market, creating a monopoly for certain medications.

The 1984 Hatch-Waxman Act attempted to reduce the regulatory burden for companies seeking to create generic alternatives, but the intent of that act has been undermined by the FDA.

[I]n recent years the Food and Drug Administration has imposed on generic firms many of the same costly requirements that the agency applies to branded-drug makers. For example, in a push to reduce the risk of contamination, the agency in 2009 forced generic-drug makers to retool their sterile manufacturing plants and make production lines less intricate. The abruptness of the change caused many facilities to be shut down, creating drug shortages and driving up prices.

Gottlieb suggests that conditions at the FDA need to be modified so that other companies can create generic brands, which, according to the basic law of supply and demand, would cause prices to drop.

The key to the generic-drug economic model is to keep entry prices low enough to attract multiple competitors. One FDA study estimated that consumers pay 94 percent of the branded drug’s price for a generic if there is only one generic entrant. But the price falls to about 40 percent if there are four competitors, and 20 percent when there are eight.

Undoing FDA policies that make it nearly impossible to manufacture generics means more competition among drug makers. More competition means more variety at better prices.