Forget Trump, Here’s what Congress and the FDA can do to lower drug prices
Brian C Joondeph
President Trump recently announced his plan to lower prescription drug prices to, “bring soaring drug prices back down to earth.” He acknowledges that the current pricing scheme is, “a total rip off, and we are ending it.”
Trump’s blueprint focuses on pharmacy benefit managers, generic drug patents, and drug prices negotiated by foreign countries.
Conspicuously absent is one of his campaign promises of changing the 2003 pre-Obamacare law forbidding Medicare from negotiating drug prices with pharmaceutical companies. Interestingly Bernie Sanders and Hillary Clinton also spoke of changing this law.
This seems like a simple solution and it’s surprising that President Trump didn’t mention it in his recent proposal. Yet it may not be practical or useful to take this approach.
In practical terms, it won’t happen. Big Pharma is the largest Congressional lobbying group, spending over a quarter of a billion dollars in 2017 lobbying for their interests, which would not include lower drug prices. With money like that flowing into Congressional reelection war chests, don’t expect Congress to change the law.
Medicare negotiating prices with Big Pharma won’t be useful either since this doesn’t address the root cause of high drug prices, namely research and development costs. Despite occasional news reports of some pharma company jacking up prices unreasonably, most companies set prices to recoup their R&D costs, provide shareholder return, and fund their drug development pipeline.
This business model is not unique to pharma – it’s no different in the automobile, computer, or movie industry. Why does Apple charge $1000 for an iPhone X? For the above reasons. The difference is that a particular drug may be lifesaving whereas a smart phone is not.
What does it cost to bring a new drug to market?
The Tufts Center for the Study of Drug Development pegs the cost at $2.6 billion, from the laboratory to the pharmacy shelf. Not only is the approval costly, but it is also long, 12 years on average. This alone justifies high prices simply to recoup these costs.
How many drugs actually make it from the test tube to the medicine cabinet? Of drugs being tested in the laboratory or in animals, only 1 in 1000 make it to human testing. The other 999 are scuttled to the ash heap, despite the money spent on their early R&D. Of those that reach human testing, only 1 out of 5 will eventually be approved and make it to market, with 4 out 5 being all cost and no return.
Human testing is expensive and time consuming with three phases of FDA trials required as well of years spent working through the approval process. The vast majority of drugs never receive FDA approval and the money spent is lost. It’s no wonder why the drugs that are finally approved are so expensive, given the costs of non-approved drug failures and funding for the next generation of medications.
The FDA is not acting on a whim. Instead the agency was formed by Congressional legislation nearly a hundred years ago. Their mandate is ensuring that drugs are “safe and effective”. What if the emphasis shifted more toward safety and less toward effectiveness?
Safety is paramount as in “first do no harm”. Effectiveness is harder to measure.
Clinical trials report efficacy as an average response for hundreds of patients. If a third of patients in a clinical trial respond favorably to a new drug, but two-thirds don’t, the average result will be that the drug doesn’t work. If it is safe, why not let physicians decide when to use the drug based on their clinical experience and judgement? After all, plenty of approved drugs don’t work for particular patients.
Lowering the bar for drug approval would lower the time and cost for pharma companies bringing drugs to market, and their ultimate sticker price. Price controls via Medicare will slow or stop the pipeline for the next generation of drugs as companies will have no way of recouping their costs to fund further research. Comparative effectiveness research is an excellent means of comparing treatments, but after these drugs and treatments are approved.
Making other countries pay more for US drugs will lead these countries to purchase less or none, limiting the drugs they use. Government run healthcare programs are quite adept at rationing care.
Instead Congress should look at the drug approval process and how it is contributing to the unaffordability of prescription medications in this country. This is an opportunity to make a dent in prices rather than putting another band aid on a problem of Congress’s own creation.
Brian C Joondeph, MD, MPS, a Denver based physician and writer. Follow him on Facebook, LinkedIn and Twitter.