Does FDA Support Industry Charging High Prices for New Drugs?
[Thursday, June 6, 2019]

Traditionally FDA officials have avoided directly inserting the Agency in the discussion on the ethics of high drug prices, till this week. This week, the FDA commissioner (acting) made an off-hand comment at a conference that seems to justify the $2.1 million price tag on a recently approved gene therapy from Novartis. He said that the media has unfairly criticized Novartis for affixing a high price tag. By the way, the price is so high that practically no one can afford it without high premium insurance plans. He went on to compare Novartis’ efforts to create gene therapy for a rare pediatric disease to Jesus turning water to wine. Without going into the self-inflicted injury to FDA’s credibility as a neutral party in the drug price debate by its leader, these statements provided credible evidence to FDA critics who say that the Agency supports industry practice for charging high prices for its new drugs. There are a few factors to consider in this unending debate on the role of FDA in drug prices. The commissioner used a much-publicized justification offered by the FDA leaders in the past that the FDA supports industry making a sizable profit from its products. FDA believes such profits create incentives to develop more therapies. Second, FDA is frustrated when news about approval of new products is drowned in the controversy for the price of that drug. FDA would want the media to tout the FDA’s achievement in the successful review of new technologies rather than focus on the cost of such therapies. Third, and probably the most important, FDA has bought into the industry argument that since new innovations cost a lot to develop, it is ok to charge astronomical prices for approved products. While it is true that profits encourage further development, it can be argued that unchecked profits create greed and unfair price gouging. The industry has very successfully justified its profits without caring for the burden these prices place on the healthcare system, at least in the near term, leading to some of the most expensive drugs ever. Each expensive drug in the market encourages the next drug to be even more expensive with no end in sight. It won’t be surprising if a few years hence, we are justifying a treatment that costs tens of millions of dollars. Yes, FDA should get credit for doing its job well to review and approve innovative new technologies that offer treatments to previously incurable diseases. But then it is important that FDA stays out of the price discussion. FDA does not regulate the price of drugs and has practically no say in what price a developer may want to charge for its products. So it should not offer its opinion on the topic to maintain its status as a neutral party whose job is solely to review products based on their clinical merit and not cost to patients. Let the politicians and ethicists deal with that issue. If FDA does want to offer its opinion on the price of new products, it should base it on unbiased facts and not the one peddled by the industry and the groups funded by the industry. The true cost of developing a new drug is a complex topic. There are ample evidence and examples that industry does not price products based on what it cost to develop them but what the market is willing to or can be coerced to pay for them. Let’s have an honest discussion. It’s a pity that the FDA commissioner got himself, and by extension his Agency, tangled in an issue that he has no place to be in the first place. FDA’s traditional stand to encourage innovation only is the best policy. The drug price debate is too toxic for the FDA to get involved.