Healthy Skepticism Library item: 92

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: news

Swartz S.
FDA Big Factor Behind High US Drug Costs
Reuters 2004 Jan 28
http://www.biotechblog.com/2004/01/30/107549363617383245/

Full text:

The U.S. Food and Drug Administration, with its costly and time-consuming drug approval process, is a big reason Americans pay far more for medicine than consumers in the rest of the world, U.S. Nobel laureate Milton Friedman said on Tuesday.

“The FDA is the most serious situation regarding the high costs of prescription drugs in this country,” Friedman told a San Francisco forum on U.S. importation of Canadian drugs.

“Their (the FDA’s) whole incentive is to be ultra-careful, to not make a mistake … but that’s where the problem starts,” said the economist, one of the most prominent free market advocates of the past century.

Drug-import supporters say medicines from countries like Canada can be as much as two-thirds cheaper than U.S. drugs because of the role many governments play in setting prices.

Some of those supporters – who believe the FDA should err on the side of caution in approving new drugs – believe U.S. drug prices are simply overpriced by the pharmaceutical industry, which also vigorously opposes importation.

The forum, held by free-market think-tank Pacific Research Institute, coincides with a growing number of proposals by states from California to Massachusetts to make it easier to buy Canadian drugs.

Friedman opposes Canadian drug imports – after originally being sympathetic to the idea – because of the damage he believes it poses to patent rights.

CHEAPER CANADIAN DRUGS

U.S-produced drugs sold to markets abroad are often sent back to the United States from places such as Canada at cheaper prices, a practice that drug companies say undercuts drug patents and domestic sales of the same drugs.

The pharmaceutical industry estimates it typically costs about $800 million to bring a new drug to market, although U.S. drug-price critics say that number is inflated by high marketing costs companies run up promoting their drugs.

Friedman said he believed higher U.S. prices allowed more access to new medicines because drug companies – supported by strictly applied patent laws – could make better returns on investments, enabling them to fund future drug development.

But drug-import supporters said there was no reason why cheaper medicines should not flow between Canada and the United States, as is already case for many other goods covered under the North American Free Trade Agreement between Canada, the United States, and Mexico.

Rep. Gil Gutknecht, a Republican from the border state of Minnesota, told the forum it was “indefensible” that many American seniors did not refill prescriptions because of high costs. He cited data showing 29 percent of seniors’ drug prescriptions went unfilled because of high prices.

Gutknecht has helped lead a fight in Congress to allow Americans to import drugs from 25 industrialized nations.

Forum attendees said U.S. tort reform could also help lower drug costs by lowering liability costs.

Gutknecht said a U.S. drug liability case costing a company $100 million could be dealt with in Europe for $100,000.