The role of FDA regulations in the Epipen price hike

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EpiPens contain necessary emergency medication for many people with allergies, but they have become prohibitively expensive. Photo by Paulina Martin.

The drug industry has been under a lot of scrutiny in recent months.

Former CEO of Turing Pharmaceutical’s Martin Shkreli outraged the American public when he raised the price of the life-saving drug, Daraprim, from $13.50 to $750 a tablet.

More recently, the CEO of Mylan pharmaceutical company Heather Bresch, has been criticized for gradually raising the price of the EpiPen, a self-injectable device which treats allergic reactions, from about $50 per shot in 2007 to $304 today. Now, families must pay over $600 for a pack of two Epipens.

Many people, including Hillary Clinton and Bernie Sanders, have railed against Mylan’s actions, but to whom should they really be directing their animosity?

From a public policy standpoint, criticism should not be given to Turing and Mylan, who were acting as any business would do given their environment: a near monopoly created by the federal government.

This criticism would be more aptly directed towards the Federal Drug Administration (FDA), the government entity responsible for creating the monopolistic market in the drug industry.

The FDA erects barriers to entry through regulations requiring an extensive application and testing process for new drugs. In 2014, Tufts Center for the Study of Drug Development estimated that the cost of bringing a new drug to the market costs around $2.6 billion and can take over a decade.

A lot of the time and money goes to passing the FDA’s extensive clinical trials.  According to a study from the Journal of the American Board of Family Medicine, only 1 in 5,000 to 10,000 drugs make it from preclinical testing to the market. Furthermore, according to another study done by the biotech trade group, Biotechnology Industry Organization and BioMedTracker, found that only one in 10 drugs between 2004 and 2010 made it from early stage Phase I clinical trials to FDA approval.

That is a lot of potentially life-saving drugs that are kept from sick people.

If given the opportunity, it is a person’s right to take a drug not approved by the FDA to cure an illness.

Pharmaceutical companies that already own FDA-approved drugs have a large advantage over those competing drugs still in clinical trials. For example, the FDA rejected a generic version of the EpiPen by Teva Pharmaceuticals. Currently, there is one competing drug by the name of Adrenaclick, but it is not covered by many insurance plans, and the FDA made it illegal for pharmacies to substitute Adrenaclick as a generic version of EpiPen.

Instead of protecting the American public, the FDA has stifled innovation and competition in the marketplace to the detriment of the health and pocketbooks of the American people.

To decrease the power that a few pharmaceutical companies have on markets, the FDA should decrease its application and approval requirements to allow other pharmaceutical companies to compete.  If the FDA eliminated its approval requirements, Mylan would be forced to invest to product enhancement and find new ways to cut costs to attract customers instead of using government power to push out competitors.

One might wonder how the safety and effectiveness of certain drugs might be guaranteed without the FDA regulations. If the FDA approval was eliminated, consumers would not stop demanding quality and safety. Private organizations similar to those of the Better Business Bureau (BBB) and the Consumer Technology Association (CTA) would be created to create national standards for drugs, just as the CTA creates standards for consumer electronics. These standards would not be mandatory, and drugs would be able to go from the lab to the pharmacy without meeting these standards, but companies would be incentivized to meet these standards to gain customer confidence.

Although the purpose of the FDA is to protect the health of the American public, it is actually preventing firms from innovating and developing new drugs to cure various illnesses. Those drugs the FDA does approve, like the EpiPen and Daraprim, are given monopolistic advantages to raise their prices to extreme levels, which hurts everyday families trying to keep themselves healthy. The best way to provide the most effective and cheapest drugs is to get rid of FDA regulations.

2 COMMENTS

    • Anthony, I have to disagree. The fda is garbage. The real world is not a college essay. The barriers to distribution, that restrict generics and drive up prices, are clearly created by the FDA, not the companies. What better way to solve the problem than at the root? It’s a perfectly valid conclusion.

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