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Prices on generic drugs are getting outrageously expensive as the FDA meddles in the market -- and unfortunately, they almost never come down again.
Generic drug prices go up, up, up
By CARLA KALOGERIDIS • 10/19/15 12:01 AM
Wonder why some generic drug prices are skyrocketing? The blame lies in a few places, said Devon Herrick, a health economist and senior fellow at the National Center for Policy Analysis.
One culprit is the Unapproved Drugs Initiative. Thousands of generic drugs predate the approval required under the 1938 Food, Drug & Cosmetics Act. Many, Herrick said, were grandfathered in, but never officially approved. The FDA wants these cheap drugs off the market and replaced with more costly "approved" versions from drug-makers that are willing to conduct clinical studies to determine the safety and effectiveness of the drugs, the standard for approval under the 1938 act.
"The FDA thinks it is doing the right thing by going back and requiring all these generic drugs to be tested and approved just as new drugs have to be," Herrick said. "But what happens is that a drug company steps up and volunteers to do the testing in exchange for exclusivity to market the drug for a period of years. That kills all the competition, and everyone else who was making the drug drops away. The result is that drugs that used to cost pennies are now suddenly expensive."
The old drug, colchicine, formerly an inexpensive drug used to treat gout and other inflammatory conditions, is a well-known example of a drug the FDA wanted off the market and replaced with a more expensive approved version. "It's a 3,000-year-old remedy that even the ancient Greeks knew about," Herrick said.
Neostigmine, which is routinely used at the end of surgery to reverse the effects of anesthesia, is another. "It, too, had been around for 60 years, but the FDA granted market exclusivity to a new drug-maker that agreed to perform limited clinical trials on it," Herrick said. "Both these drugs were replaced with approved versions more costly than the originals."
Lesser known, he adds, is that the FDA went after the expectorant guaifenesin, or Mucinex. It also took nitroglycerin sublingual tablets for chest pains off the market, which have been in use for more than a century, because it was an "unapproved" generic.
Even worse, Herrick said, is that when the period of exclusivity is up, the former competitors don't bother to come back into the market because they've moved on to other products or it's just too costly to start up the manufacturing again. That means the cheap generic drug that turns expensive during testing never gets back to its original price.
"If a drug has been around for 60 years and is still in use and has had no bad side effects, it probably has some merit," Herrick said. "Why require it to be tested now? Give it a rest."
A second impact on drug prices is the FDA's slug-like pace for approving generic drug applications. Over the last several years, the FDA has approved 400-500 drugs annually, but there's a backlog of about 4,000 applications with a wait time of about two years.
"When your approval times are stretched out over 27 months, it creates an environment for drug companies to manipulate the system for greater profits," Herrick said. "They jack up the prices because competitors can't challenge them for at least two years while the competitor waits for their generic version of the drug to be approved."
The bottom line, Herrick said, is that rising drug prices are the result of a big bureaucracy doing the only thing it knows how to do. "Now they've given drug manufacturers too many hoops to jump through," he said. "It's basic bureaucracy inertia. Requiring drugs to go through the approval process has become more important than the goal."
Carla Kalogeridis is special reports editor for the Washington Examiner.
Prices on generic drugs are getting outrageously expensive as the FDA meddles in the market -- and unfortunately, they almost never come down again.
Generic drug prices go up, up, up
By CARLA KALOGERIDIS • 10/19/15 12:01 AM
Wonder why some generic drug prices are skyrocketing? The blame lies in a few places, said Devon Herrick, a health economist and senior fellow at the National Center for Policy Analysis.
One culprit is the Unapproved Drugs Initiative. Thousands of generic drugs predate the approval required under the 1938 Food, Drug & Cosmetics Act. Many, Herrick said, were grandfathered in, but never officially approved. The FDA wants these cheap drugs off the market and replaced with more costly "approved" versions from drug-makers that are willing to conduct clinical studies to determine the safety and effectiveness of the drugs, the standard for approval under the 1938 act.
"The FDA thinks it is doing the right thing by going back and requiring all these generic drugs to be tested and approved just as new drugs have to be," Herrick said. "But what happens is that a drug company steps up and volunteers to do the testing in exchange for exclusivity to market the drug for a period of years. That kills all the competition, and everyone else who was making the drug drops away. The result is that drugs that used to cost pennies are now suddenly expensive."
The old drug, colchicine, formerly an inexpensive drug used to treat gout and other inflammatory conditions, is a well-known example of a drug the FDA wanted off the market and replaced with a more expensive approved version. "It's a 3,000-year-old remedy that even the ancient Greeks knew about," Herrick said.
Neostigmine, which is routinely used at the end of surgery to reverse the effects of anesthesia, is another. "It, too, had been around for 60 years, but the FDA granted market exclusivity to a new drug-maker that agreed to perform limited clinical trials on it," Herrick said. "Both these drugs were replaced with approved versions more costly than the originals."
Lesser known, he adds, is that the FDA went after the expectorant guaifenesin, or Mucinex. It also took nitroglycerin sublingual tablets for chest pains off the market, which have been in use for more than a century, because it was an "unapproved" generic.
Even worse, Herrick said, is that when the period of exclusivity is up, the former competitors don't bother to come back into the market because they've moved on to other products or it's just too costly to start up the manufacturing again. That means the cheap generic drug that turns expensive during testing never gets back to its original price.
"If a drug has been around for 60 years and is still in use and has had no bad side effects, it probably has some merit," Herrick said. "Why require it to be tested now? Give it a rest."
A second impact on drug prices is the FDA's slug-like pace for approving generic drug applications. Over the last several years, the FDA has approved 400-500 drugs annually, but there's a backlog of about 4,000 applications with a wait time of about two years.
"When your approval times are stretched out over 27 months, it creates an environment for drug companies to manipulate the system for greater profits," Herrick said. "They jack up the prices because competitors can't challenge them for at least two years while the competitor waits for their generic version of the drug to be approved."
The bottom line, Herrick said, is that rising drug prices are the result of a big bureaucracy doing the only thing it knows how to do. "Now they've given drug manufacturers too many hoops to jump through," he said. "It's basic bureaucracy inertia. Requiring drugs to go through the approval process has become more important than the goal."
Carla Kalogeridis is special reports editor for the Washington Examiner.
