How the FDA Helps Big Pharma Keep Drug Prices High

The Obama administration and members of Congress are gnashing their teeth over the price tag for health care reform, and the White House has launched a commission to cut Medicaid, Medicare, and Social Security–the “entitlements” that are supposedly bankrupting the country. But why does health care cost so much in this United States? We find one clue buried in Saturday’s papers–and it’s got nothing to do with old people or poor people.

Here, in a speech reported by the New York Times, Dr. Margaret A. Hamburg, the head of the FDA, describes how the government participates in running up Big Pharma’s profits by slowing approval of generic drugs. These delays give the brand name manufacturers more time to sell their more expensive versions. Over the last year, prices of brand name drugs have been rising sharply, keeping Big Pharma’s profits high. The Times reports:

The delays, caused by a growing backlog of applications at the Food and Drug Administration may be costing consumers and the federal government hundreds of millions of dollars a year as they continue in some cases to pay for name-brand drugs even after their patents expire, industry analysts said.

The new head of the F.D.A. says she means to speed up the process.

“It’s a real problem,” Dr. Margaret A. Hamburg, the F.D.A. commissioner, told an audience this week at the annual meeting here of the Generic Pharmaceutical Association ,an industry trade group. “I don’t pretend to believe that the status quo is acceptable.”

Saying the F.D.A.’s generic drugs department was underfunded, Dr. Hamburg noted a potential remedy: placing application fees on companies seeking approval for generic drugs.

Five years ago, the F.D.A. typically approved a new generic drug within 16.3 months of the application’s filing, according to a report from the agency on Tuesday. But by last year, with limited staff to review an increasing number of applications, approvals for new generic drugs were taking 26.7 months, the report said.

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