Regulation-Induced Drug Shortage Update

Almost exactly two years ago, I ran across Derek Lowe's explanation of the government's role in causing high prices for or shortages of some off-patent drugs. A recent story in the New York Times -- about hospitals manufacturing their own drugs -- reminded me of his explanation of how perverse regulatory incentives were distorting this market. Unsurprisingly, and as I hoped he might, the pharma blogger weighed in soon after the Gray Lady:

Without government meddling in the economy, cronyism such as his wouldn't be possible. (Image via Wikipedia)

... if you're going to start your own generic manufacturing effort, you have to get in line for the FDA to review your application to sell the compound(s). And that's one of the logjams -- one that will not be fixed by jamming another log into it. The article, though, mixes several problems together. You have the not-enough-players-making-cheap-drugs problem (which can happen through several means, regulatory approval not least among them), and you also have the only-one-manufacturer-eat-my-dust problem, which also takes many forms.

In some cases of the latter, you have old, off-patent, formerly cheap compounds where one supplier has been granted market exclusivity (and the ability to raise prices and drive everyone else out of the market). How does this happen? Deliberately by design of the FDA: there are incentives to bring older drugs into the modern regulatory framework, and if you do the tests needed, you get a very, very nice reward. Too nice, from my point of view, but that's how the law is written. In other one-manufacturer cases, people have bought up the only supplier of a small drug and then taken it into "restricted distribution", which basically keeps any other potential competitor from running the comparison trials needed to even get in line at the FDA to sell the drug, too. That's the Martin Shkreli playbook (although he's not the only one), and it also takes advantage of FDA regulations about how and why distribution of a drug can be so restricted. Want to change these? Change the law. [emphasis in original]

Lowe mentions that eliminating the "logjam" is a high priority of the current head of the FDA, and that is potentially good news in the short term.

But I cannot agree more with Lowe's last sentence, although I know I would take it much farther than he would. We must ultimately abolish the FDA, devolving whatever legitimate functions it performs either to legitimate governmental agencies or to non-governmental watchdog groups (depending on whether these are the business of the government) and altogether ending its innovation-killing, health-threatening stranglehold on the drug market. The FDA prevents desperate patients from trying new drugs even when they have nothing to lose, slows down or stops the introduction of even less speculative or cutting-edge drugs, and, as we see again here, threatens the availability of familiar drugs.

-- CAV