Strout: How To Lower Prescription Drug Costs


When purchasing prescription drugs, most consumers just accept that they’re expensive.  But what if I were to tell you that the price of prescription drugs differs wildly between countries, and are often far cheaper outside the US?

Humira, a common arthritus drug, costs $2,246 in the U.S.  In Sweden, the same drug costs only $881.  This kind of shocking price difference is actually quite common—Americans can expect to pay 2-6 times more for brand name prescription drugs.  These are the exact same drugs, so Americans aren’t paying for quality.  What is driving these higher prices?

There’s no simple answer to that question.  There are a multitude of factors that drive up prices, but I want to address one major one here—the Food and Drug Administration’s (FDA) approval process.

If a pharmaceutical company wants to bring a new drug to market, they must first get FDA approval.  While most Americans like the idea of a government agency making sure our drugs are safe to use, what they often don’t realize is how time consuming and expensive it is to get FDA approval.  It takes years of excessive testing and millions, if not billions, of dollars to earn FDA approval on a new drug, and those substantial costs are reflected in the drugs price.  Getting a new drug approved in America is an expensive endeavor, and drug companies don’t want to lose money on it.  Much of the cost of gaining FDA approval is pushed onto the eventual consumer.

Even generic drugs that have already been approved can be costly to make, as manufacturers have to be individually approved in order to produce generic drugs.  The FDA approval process not only drives up the cost of making a drug, but it also disincentivizes companies from competing in new markets.  Is it really a surprise that prices are soaring?

If you thought all of that was insane, just wait.  The FDA requires that all drugs sold in the US go through its approval process.  This means that drugs that have already gone through an approval process for use in Canada cannot be sold or used in the US until they also go through the multi-year FDA approval process.  Even though Canada, England, and a number of other developed countries have similar drug standards, the US still requires all drugs to be approved by the FDA.  This is absurd—is anyone really worried that Canadian drugs aren’t up to snuff?

While complete reform of the FDA may be a long way off, a bill introduced by Senators Ted Cruz and Mike Lee could address this last problem.  According to their new bill, any drugs or medical devices approved in a “trusted” country, like Canada or England, would be automatically approved in America.

This common-sense solution could drastically reduce prescription drug costs, and it would also open the American market to a number of drugs that have been in use in Europe for years, but still face a long and arduous FDA approval process.  The FDA is keeping drugs off the market that could help save lives that have already been approved by dozens of other countries.

The FDA approval process is long, expensive, and unpredictable.  While most Americans believe that we need to make sure drugs are safe before putting them on the market, it’s time we acknowledge that there are other organizations than the FDA that are doing the job in a more efficient way.

One of America’s greatest strengths has been our acceptance and encouragement of innovation.  Unfortunately, the FDA stands in the way of innovation in our health care system.  The FDA needs a more complete reform in order to allow American innovation to thrive.  Until that happens, this bill would allow Americans to benefit from innovation created, approved, and used around the world.





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