FDA Distorts Generic Drug Market

Monday, January 18, 2016

Pharmaceuticals blogger Derek Lowe recently pointed to an interesting article detailing how an FDA drug approval process is causing generic drugs to increase in price, sometimes dramatically. Lowe quotes from the Journal of the American Medical Association:

In a competitive market, when a price is too high, another manufacturer could begin to produce and offer the product at a lower price. However, because there is an approval process to ensure bioequivalence and quality manufacturing, this self-correction can happen only at the speed of FDA review. FDA is now working on reducing a massive backlog of thousands of generic applications from prior to 2013. The agency's fiscal year 2014 performance report noted that none of the approximately 1500 applications for generic drugs submitted in fiscal year 2014 had been approved by the end of that year. Even with greater resources as a result of the Generic Drug User Fee Act, FDA will still take years to review these applications. [Lowe's emphasis]
Those of you who frequent this neck of the woods will doubtless be familiar with the FDA's practice of denying patients access to experimental drugs even when they might represent a last hope. But one clearly needn't be terminally ill or in need of cutting-edge medication to be concerned about this agency's interference with the economy. Lowe mentions a past drug shortage (and I remember another) that could quite feasibly have been at least partially the result of this problem.

-- CAV


Anonymous said...

Hi Gus,

Along the same lines, and facilitated by the ban on drug imports, the FDA has been handing out what amounts to patent renewals on drugs that have been in the public domain for years and sometimes decades. The fig leaf covering this little bit of rent-seeking is that they're required to run 'clinical trials' which don't turn up anything new in regard to a drug that has been in clinical use for decades, but results in a bogus intellectual property claim, higher margins for the FDA crony company, and, because of the ban on imports, much higher prices for the consumer.

Most consumers don't care because the insurance companies pick up the tab.

I, however, am one of those who can only afford the catastrophic coverage. Before curing myself of a disease that presented as auto-immune, I saw the 3 drugs I was taking increase in price 3-fold, 7-fold, and 10-fold. All of them were available as generics before the FDA started granting these renewals and given that it followed upon G.W. Bush's Medicare Part D, I'm wondering if this wasn't one of the quid pro quos that got that atrocity into law. So, instead of paying $17, $75, and $100 per month, I was expected to pay $54, $550, and just over $1000 per month. I was only able to afford the first 2 and that only because I began patronizing the Canadian pharmacies whose prices were only 2-fold and 4-fold respectively.

The thing that infuriated me is that the tech for manufacturing these drugs has long been exported to other countries. The Pharmacronologists were arguing that the drugs were being 're-imported'; this was only true of a very limited number that were still under patent. The vast majority excluded by the FDA and available via the Canadian pharmacies were generics. The Canadians tested them for viability and added on a guarantee that if the busybodies at US Customs confiscated the shipment, they would re-ship for free. And they still came in at slightly over half the price of the American Crony Pharms.

One of the other rent-seeking tactics is that the FDA is playing is granting 'orphan drug' authority to certain connected companies who then issue "cease and desist" letters to their erstwhile competitors. (If other people are making the drug, then it's NOT an 'orphan drug'.) Then they jack the price up 10-fold and preen about their incredible moral goodness. I have an excellent example of both the rent-seeking and the moral preening.

The price of preventing preterm labor is about to go through the roof.
A drug for high-risk pregnant women has cost about $10 to $20 per injection. Next week, the price shoots up to $1,500 a dose, meaning the total cost during a pregnancy could be as much as $30,000. That's because the drug, a form of progesterone given as a weekly shot, has been made cheaply for years, mixed in special pharmacies that custom-compound treatments that are not federally approved.
"Makena can help offset some of those costs," Divis told The Associated Press. "These moms deserve the opportunity to have the benefits of an FDA-approved Makena."

And here's the crowning fatuity from the FDA: "The U.S. Food and Drug Administration is not involved in setting the price for the drugs it approves."

Nope. They just hand out monopoly status and let their rent-seeking cronies do that on their own.

c. andrew

Gus Van Horn said...


Thanks for the examples, which are truly sickening. I didn't realize the problem was already this bad.