Government

Saving the taxpayer money

The user-fee program was cre­ated by Con­gress in 1992 to speed up the approval of new med­i­cines without in­creas­ing the bur­den on tax­pay­ers. For instance, a com­pany that ap­plies for FDA ap­proval for its med­i­cine in the current fis­cal year pays a fee of up to $2.59 mil­lion. Source: Wall Street Journal 1-19-19

Taxpayers save money and patents pay more for their prescriptions?

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4 replies »

  1. It would be interesting to know how other countries such as Germany, United Kingdom and France go about approving drugs. Are they better or worse at it than the U. S. ?

    Would it be possible to have reciprocity agreements with other countries? If it’s good enough for the Danes, is it good enough for us?

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    • Great question.
      https://www.fool.com/investing/2018/05/19/how-drug-approvals-in-europe-are-different-than-in.aspx

      It is a little quicker in the US. Each country has about the basically the same approval rules as the USA. Once one EU countries approves a new drug, they can go to the EU version of the FDA, which is the EMA and get EU wide approval. Since most EU countries provide payment for the socialized medicine, they determine if they will pay the price for the new drug. In the UK, they go to NICE which determines if there is added value compared to the price of the drug. Think of it as if $250k for a drug really worth the extra 3 months of longer life. Or does the UK spend that $250k for blood pressure medicine to keep more of the population alive?

      In the US, once approved, pricing is what the market will bear and there are many laws that restrict insurance companies from not paying for a drug if it is medically necessary.

      This answered so many questions on why drugs are cheaper in other countries.

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  2. I had to read up on the Prescription Drug User Fee Act (PDUFA) to find out what it was. Short story is that the FDA was underfunded and understaffed and taking too long to approve new drugs. During the AIDS epidemic the first version of PDUFA was passed so the the FDA could hire more people and approve drugs faster. PDUFA has been reauthorized 5 times since 1992.

    Today, several government agencies impose user fees. From the the National Park Service to the Nuclear Regulatory Commission, even your local building inspector because this makes sense. The people who use the service should pay for the service.

    The approval time for new drugs went from an average 31 months to a required 6 month under PDUFA (5). Back in 1992 it was estimated that each month delay costed drug companies $10m. I am not sure how they figured that but it seems like a BS number to me even if it was today.

    I can’t speak to what it did to drug costs but have you noticed that everyday on TV there is some lawyer trying to find people harmed by an FDA approved drug? Are they now rushing the reviews to meet the requirements of the law? What is the true costs to the taxpayer in court costs and actual medical treatment for whatever the lawyers are suing for? If the PDUFA was repealed, would new drugs cost more or less?

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