FDA Driving Drug Prices into Stratosphere

BloombergBusiness has another story of a jaw-dropping price hike for a very old medicine. In this case,

Colchicine, a gout remedy so old that the ancient Greeks knew about its effects, used to cost about 25 cents per pill in the U.S. Then in 2010 its price suddenly jumped 2,000 percent.

How did this happen? Colchicine is one of a small number of drugs that were marketed before 1938. That year, the Food, Drugs, & Cosmetics Act was passed to require new drugs to be approved for “safety” as well as be “pure” (that is, not adulterated or misbranded as required since 1906).

When the Act was amended to require “efficacy” in 1962, drugs approved since 1938 had to be approved again. However, pre-1938 drugs have never had to be approved. In today’s parlance, they were “grandfathered.”

Or, at least they were grandfathered until 2006, when the FDA decided to cause the makers of those drugs to apply for approval under the 1962 standards of both safety and efficacy. This is called the Marketed, Unapproved Drugs Initiative and Compliance Policy Guide.

Winning approval requires very expensive clinical trials. Pre-1938 drugs are no longer patented. However, forcing them to go through the FDA regulatory gauntlet effectively gives their manufacturers’ exclusivity similar to patents. The FDA asserts the unapproved drugs were unsafe, citing a few examples. Nevertheless, it looks like the cure has serious side effects, suggesting the FDA has overstepped reasonable boundaries by requiring drugs used for almost a century to submit to regulation.

Comments (4)

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  1. Devon Herrick says:

    Another example is neostigmine, which is routinely used at the end of surgery to reverse the effects of anesthesia. It had been used for decades and predated FDA’s approval process. Once the newer version of neostigmine (Bloxiverz) was approved in June 2013, the exclusive manufacturer was able to raise the price by 522 percent.

  2. Devon Herrick says:

    This reflects a bureaucratic mindset. I don’t believe anyone in public health was clamoring for an old gout drug or a drug to revere the effects of certain anesthesia drugs to be clinically tested. If the FDA felt like some drug makers were pushing the limits by creating preparations unlike the originals, the agency still could have intervened in individual cases. This seems like bureaucratic over-reach for the sake of bureaucracy.

  3. Bob Hertz says:

    This is a good post, but the first three words of the title are a little inaccurate. The FDA is not driving anyone to raise prices. They are. at best, ignoring the higher prices, and to some extent, enabling the price hikes.

    I wonder if it is past time to challenge the premise of the American drug industry which expects companies to charge what the market will bear. We see informal restraints and antitrust actions in many other parts of our economy. In the drug industry, stockholders and company executives are allowed to be pigs.