How FDA Rules Made a $15 Drug Cost $400: For many older medicines, government forces the original, name-brand version off the market

From the WSJ.

"All these prescription drugs fall under a category known as DESI drugs, named for their inclusion in an FDA program called Drug Efficacy Study Implementation. These drugs came to market before 1962, when getting FDA approval for a drug required proving its safety but not its efficacy. Such drugs, manufactured under expired patents, are used by millions of Americans today.

But once the FDA approves a new-drug application for a DESI drug, the existing drug can be pulled from the market. The “new” drug is treated as a material advance because it underwent testing for safety and efficacy—even though the DESI version was proved safe and effective over decades of actual use. The developer of the new drug may also get a new period of market exclusivity that lasts three years.

This makes little sense. Market exclusivity should let pharmaceutical companies recoup their often enormous investments in genuinely new drugs. Giving monopoly protection for what is essentially a generic version of a DESI drug merely enriches sharp-dealing companies while injuring patients."

"a generic-drug application can cost as much as $15 million. This high upfront cost is part of why would-be manufacturers of generics often pass on the opportunity to compete against branded drugs with smaller markets. This has allowed many pharmaceutical companies to raise prices with impunity.

"The Drug Quality and Security Act of 2013 was designed to ensure that companies can quickly respond to a drug shortage by allowing a new type of drug maker, called an “outsourcing facility,” to enter the market. It copies an FDA-approved product, regardless of exclusivity, provided that it manufactures the drug in an FDA-registered and -inspected facility using FDA-approved ingredients. American companies, including mine, have invested in such facilities.

Yet the potential of this legislation remains untapped. The FDA should clearly define “drug shortage” to include a lack of access due to abnormally high prices. With this simple change, FDA-registered outsourcing facilities could quickly bring sky-high prices for monopoly generics with expired patents back to earth."

"the Trump administration should authorize Medicare and Medicaid to pay for compounded drugs made in outsourcing facilities, which currently aren’t covered. Right now government policy forces Medicare to pay Turing Pharmaceuticals, the brainchild of the notorious “pharma bro” Martin Shkreli, $750 for a single Daraprim pill."