Regulation Causes High Drug Prices: NCPA
The National Center for Policy Analysis (NCPA), which describes itself as a nonprofit, nonpartisan public policy research organization, says that “to a significant degree, over-priced drugs are a problem exacerbated by the regulatory regime at FDA, coupled with a lack of guidance from Congress.” In an issue brief, the group reviews the price increases for EpiPen and the role that generic drugs play in U.S. healthcare. It says that while EpiPen auto-injectors should sell for $30 to $40, based on the cost for auto-injectors for diabetics, EpiPens are only sold in twin-packs at a price of just over $600 per pair. “This kind of pricing power is mostly due to FDA regulations that make it difficult and costly to bring competing products to market,” it says. “For example, the maker of generic auto-injectors cannot sell syringes preloaded with epinephrine (the EpiPen active ingredient) without submitting a New Drug Application to FDA and conducting costly clinical trials.”
The brief reports that generic prescriptions account for about 88% of prescriptions filled, but only 28% of drug spending. By contrast, traditional branded drugs are 11% of prescriptions and 39% of drug expenditures, while the remaining 1% of prescriptions are for specialty drugs and account for more than one-third of drug spending. “Thus, nearly three-fourths of all drug spending is on a mere 12% of the drugs Americans take,” NCPA says.
After reviewing the roles played in drug pricing by drug material suppliers, drug wholesalers, drug retailers, and drug plans, NCPA says that one way to rein in high drug prices is to “inject more competition into the drug market. Costly drugs would face numerous competitors if it did not require $1 billion or more, on average, to bring new products to market. With more competition, it would be difficult for drug makers to maintain high prices.”
While the 21st Century Cures Act aims to streamline the approval process for new drugs by allowing FDA to consider aggregate anecdotal data as evidence and take patient experiences into account, the report says, it “likely will fall short of what needs to be done to streamline the drug approval process.”