FDA Strangling Consumer Health
by Wyn Snow, Managing Editor
public health costs are bankrupting individual Americans and posing
serious challenges to city, state, and federal budgets. The high
cost of prescription drugs may be only the tip of the icebergbut
it's also the most visible and easiest to attack.
Congress debates legislation, Americans are already voting with
their checkbooksgoing to Canada and Europe to buy prescription
drugs. Increasing numbers of Americans are also choosing lower-priced
supplements rather than expensive prescription drugs as their first
line of defense against illness.
the FDA is fighting both initiativessaying they cannot guarantee
the safety of imported drugs, and challenging both the safety and
effectiveness of many dietary supplements.
high price of drugs in America acts as a defacto subsidy of lower
prices in other countries. Why should Americans carry such a disproportionate
burden? Especially when that burden falls most heavily on the elderly,
many of whom live on fixed incomes and are forced to choose between
pharmaceutical drugs that will prolong their lives and the immediate
necessities of life: rent, food, heat, electric power, telephone
these murky waters, what are the facts about drug prices and safety
risks of imported drugs? How does price regulation affect drug research?
Why are prescription drugs so expensive? What alternatives exist
for reducing their cost? And how do these issues impact dietary
1: Crossing the border
have been crossing the border to Canada for lower-cost prescription
drugs for a decade or more, even though it is illegal to buy drugs
abroad and bring them into the US. Only pharmaceutical manufacturers
may import such products.
FDA has turned a blind eye to busloads of Americans going north.
William Hubbard, FDA associate commissioner, explains "it's so uncompassionate
to go after patients." He says the FDA understands the price concerns,
but says imports expose Americans to potentially counterfeit or
expired drugsand that FDA cannot guarantee the safety of drugs
from foreign countries.
dangerous are these "foreign" drugs?
to William Faloon, director of the Life Extension Foundation, "Many
of the active ingredients for drugs sold in the US are actually
synthesized in the very countries the FDA says you cannot trust.
Drug companies import these active ingredients into the United States
where they wind up in the expensive drugs you buy at the local pharmacy."
Health Minister, Anne McLellan, says that Canada has "some of the
highest drug-safety standards in the world."
is one of the largest exporters of drugs to the US. Their director
of pharmacy, Robert Fraser, echoed the Health Minister's confidence
in the safety of Canadian drugs, saying, "The products we use are
all approved by the Canadian version of the FDA. Anybody can come
and see for themselves. We're very transparent."
seeks to shut down Internet imports
for drugs originally manufactured in the US, the FDA is less tolerant
of citizens using the Internet instead of the highways to reimport
such drugs from abroad. On September 4th, the Justice Department
filed an injunction against Rx Depot, an Oklahoma-based storefront
& Internet business, asking a judge to stop it from importing drugs
Depot owner Carl Moore says he is "on a crusade" to make lower-cost
prescription drugs available, and has vowed to defy the law and
continue business. Moore's lawyer, Fred Stoops, believes the importation
regulations violate both the antitrust laws and the North American
Free Trade Agreement. The first court hearing on this case was held
on October 8th in Tulsa OK; a decision can be expected after October
and governors join the "busloads to Canada"
city of Springfield, Massachusetts has already begun buying drugs
in Canada for city workers and retirees (up to 9,000 are eligible).
Mayor Michael Albano says potential savings could reach $9 million
per year. He characterizes the FDA's talk of health risks as disingenuous,
saying, "How many Canadian citizens have been harmed by counterfeit
medicines? Let's get real here. That's not an issue, and you know
it's not an issue."
grass roots rebellion is spreading. Mayor Albano has received inquiries
from state governments in California, Connecticut, Indiana, Michigan,
Nebraska, North Carolina, as well as other towns in Massachusetts.
Governor Rod Blagojevich has authorized a study on purchasing Canadian
drugs for its 240,000 state employees and retirees. Illinois' drug
budget rose 15% to $340 million this year, and is projected to rise
another 17% next year. Blagojevich says, "It doesn't matter where
you go in our state, you meet people who are struggling with the
cost of prescription drugs. If you can buy the same drug made by
the same company, and it is safe and it costs less, then that makes
two previous years, Congress passed legislation that would allow
re-importation of prescription drugs, but both bills required the
secretary of the Department of Health and Human Services (HHS) to
certify the drugs were safe before proceeding. HHS secretaries in
both the Clinton and Bush administrations (Donna Shalala and Tommy
Thompson respectively) declined to do so.
Gil Gutknecht of Minnesota introduced the Pharmaceutical Marketing
Access Bill (House 2427), which was passed by the House in July
2003. The Senate also passed similar language in an amendment to
the Medicare Bill. A conference committee is now debating how best
to merge the differences into a single piece of legislation, and
the results should become available within a few weeks.
this bill, Gutknecht points out that pharmaceuticals are the only
product in the US to have such strict import limitations and that
closed markets inevitably lead to artificially high prices. Gutknecht
says, "We are a blessed country with a lot of wealth, so we should
help make prescription drugs more affordable for developing countries,
especially Africa. But subsidizing the entire world and 'the starving
Swiss' does not make sense. Americans deserve to have a more fair
system so we're not shouldering the entire burden."
to Gutknecht, "In a day and age when we import millions of pounds
of food daily we certainly can import highly controlled products
such as pharmaceuticals." And on the issue of safety, "Would anyone
at the FDA seriously propose that the only way to ensure the safety
of imported food is to ban importation?"
much lower are foreign drug prices?
bottle of tamoxifen, used to fight breast cancer, costs $360 in
the United States. It costs $60 in Germany," according to Representative
Jo Ann Emerson of Missouri.
US is the only industrialized nation where prices are unaffected
by government regulation. Canada sets a ceiling on the price of
each drug. These caps are linked to European price controls, most
of which are linked to one another. For example, Dutch prices are
an average of those in four other countries, while Greece requires
a drug's price to be the lowest of any other price in Europe.
price controls are not the only reason why prices are lower abroad.
Canada and other single-health-care entities enjoy the economies
of scale that result from buying in massive quantities and negotiating
directly with drug companies.
casual survey by SupplementQuality.com and a more extensive effort
by the Life Extension Foundation indicate that drug prices vary
widely. Searching the Internet is a good strategy for finding the
lowest price, both within the US and overseas. Generally speaking,
the Canadian price of a drug can be as low as one-eighth of US prices,
and European prices as low as one-sixthalthough both can also
be as much as double the US price. (See
detailed price comparison.)
supplements also a cost-effective alternative
health issues where dietary supplements are useful, the daily cost
often runs from 10% to 25% of pharmaceutical alternatives.
are drugs so expensive?
Life Extension Foundation investigated the cost of generic ingredients
in sixteen prescription drugsand discovered they vary from
a few pennies per tablet to a few pennies per hundred tablets. Prices
for these same products range from 2,800% to 570,000% higher (see
real cost of drugs)but drug profits are only about
15% of the purchase price.
is the other 85% going? Some goes into manpower, advertising, and
other ordinary business costsbut the vast majority is spent
on research. The pharmaceutical industry claims that lost revenue
from price reductions would constrict funds available for researchthereby
slowing innovation for new drugs that could help patients with incurable
is pharmaceutical research so expensive?
one successful new drug means investigating roughly 67 to 100 possible
compounds. The following table shows the stages of drug research
and how they winnow the candidates down.
with animals and human cells in test tubes
for safety in healthy people (clinical phase I)
for effectiveness (clinical phase II)
testing for effectiveness (clinical phase III) and FDA approval
from Millennium Pharmaceuticals, 1999.]
estimates for developing a single new drug range from a minimum
of $250M to as much as $900M. The most-often cited cost is $500M.
of embracing cost-regulation
drugs from Canada or Europe can certainly reduce their cost for
individual consumers and health organizations as well as city and
state government, but would have other, more troubling consequences.
Cost-regulation rarely works in the long term. It merely clamps
a lid on burgeoning costs and creates a "pressure cooker" effect.
The steam of rising costs has to go somewhereand companies
are even more likely than consumers to "vote with their feet."
recently, European pharmaceutical companies dominated new drug development.
With the advent of price controls, the leading edge of pharmaceutical
research has shifted to the US. Unfortunately, innovation will suffer
if the US embraces the cost-regulation that is inherent in European
and Canadian drug prices.
innovation is already suffering from the high cost of drug research,
which has two vital ramifications:
large companies with vast resources are able to undertake new
only attractive targets of new drug research are for diseases
or conditions affecting many people, or for maintenance drugs
that patients need to take every day for the rest of their lives
(examples being diabetes and high blood pressure).
other words, the more rare the disease, the lower the likelihood
of ground-breaking drug research to cure it. Even though a single
rare disease affects a small number of people, there are thousands
of such diseases. Taken as a group, the American Medical Association
(AMA) estimates that 10% of the overall population suffers from
the less chronic the disease, the less incentive there is to develop
a "one time cure" pharmaceutical.
troubling trend documented by recent TV exposes is that drug research
increasingly focuses on discovering compounds similar to those that
already existsuch as new statins or new beta-blockersrather
than investigating entirely new fields. Finding a molecule similar
to already proven drugs is easier, cheaper and less risky than finding
altogether new substances.
price regulation is adopted directly or by importing drugs from
countries using regulation, the end result is constrained innovationyet
the continued explosion in the cost of pharmaceuticals is equally
unacceptable to Americans. This lose-lose situation prompts a new
question: Is there another way of reducing the cost of drugs?
2: Reform the FDA approval process
to 1962, the FDA-approval process for a new drug stopped with testing
for safety (phase I clinical research). Restoring this standard
would cut the cost of research roughly in half, thereby cutting
the cost of drugs like tamoxifen from $360 per bottle to somewhere
between $145 and $200without any price regulation whatsoever.
these new drugs be effective?
wants to spend $145 or more for a substance that doesn't work better
than a placebo. So how would we test the effectiveness of new drugs?
One method is to open this phase of clinical research to any patients
who want to try the new drug, and creating a database system to
assist physicians in tracking success versus failure.
current drugs more effective than pre-1962?
least two studies have concluded that drugs introduced before 1962
were, for the most part, as effective as drugs approved after 1962.
In other words, the increased time and cost of research required
for obtaining FDA approval has not resulted in safer or more
private market forces exert a powerful influence on companies in
bringing new drugs to the marketplace: the importance of having
a good reputation (which is harmed by creating either unsafe or
ineffective drugs), and the potential for lawsuits, especially in
these litigious times. These two factors, combined with private
organizations and endeavors that review use of drugssuch as
AMA Drug Evaluations, American Hospital Formulary Service Drug
Information, and U.S. Pharmacopoeia Drug Indicationsworked
to ensure that pre-1962 drugs were roughly as effective as those
consequences of the current FDA approval system
Daniel Klein and Alexander Tabarrok of The Independent Institute
point out that "Even after extensive testing, the safety and effectiveness
of a new drug are always somewhat uncertain." They describe two
kinds of errors that can occur:
approves a drug that is not safe or effective.
rejects or simply delays a drug that would be valuable for patients.
FDA is strongly motivated to avoid type 1 errorsthese deaths
and disabilities get a lot of media attentionbut has no motivation
at all to avoid type 2 errors, which are almost invisible to the
are the consequences of type 2 errors? People die from not having
access to drugs that might save them. The most highly visible example
is delays in processing drugs for treating HIV. Only the well-publicized
protests of HIV patients and activists prodded the FDA into streamlining
its approval process.
many people are dying from lack of access to potentially life saving
invisible epidemic is estimated to number at least hundreds of thousands
of people. Delays in approval for just two beta-blockers (which
were available in Europe several years before the US), probably
led to several tens of thousands of deaths from heart attacks. Other
medicines and devices that were available for at least a year in
Europe before being approved in the US are Ancrod, Citicoline, Ethyol,
Femara, Glucophage, Interleukin-2, Lamictal, Navelbine, Omnicath,
Panorex, Photofrin, Prostar, Rilutek, Taxotere, Transform, and Vasoseal.
these are only for drugs whose names are known because they were
approved. What about type 2 errors where a useful drug was rejected?
Returning to the pre-1962 standard of proof of safety would give
Americans and their doctors wider freedom of choice
in treating life-threatening illnesses, and would hasten vital knowledge
about new approaches and treatments for cancer, heart disease and
strokes, diabetes, and genetic diseases. More lives would be saved
FDA also prevents dying patients from trying new drugs and treatments
that might save them until they have exhausted all currently approved
methodologies. In the case of cancer, however, some chemotherapy
and/or radiation treatments can make a tumor more resistant
to new experimental treatments, thereby affecting the fundamental
research itself and possibly sabotaging a treatment that might save
a patient's life.
does the banner of consumer protection become a garrote?
debate on reforming our health system is framed as runaway prices
versus patient safety, but a far more basic issue is at stakenamely
who decides what treatment a patient will receive?
in 1906 to protect public health from diluted and adulterated foods
and drugs, the FDA is still using nineteenth-century technologybureaucratic
red tapeto attack twenty-first century problems. Today, the
environment is one of increased globalization and vanishing international
trade barriers. Americans are entitled to seek out the best medical
care and the best prices they can find anywhere in the worldboth
inside and outside our borders.
about which drugs and treatments to useincluding new drugs,
off-label uses of existing drugs, and alternative treatments including
supplementsare best placed firmly in the hands of patients
who need them and doctors with expert knowledge about drugs and
treatments. FDA bureaucrats are motivated primarily to keep their
lucrative pharmaceutical industry user fees and to avoid media exposes
and Congressional hearings into type 1 errors.
acting as the sole arbiter on whether a drug is effective and whether
a dying patient can or cannot try a new experimental treatment,
the FDA is saying, in essence, that doctors are not competent to
decide which drugs to recommend for treating a patient, and that
patients are not competent to participate in decisions about which
therapies to choose. The FDA is wrong on both counts.
people let the government decide what foods they eat and what
medicines they take, their bodies will soon be in as sorry a
state as are the souls who live under tyranny." Thomas
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