There’s a “demotivational” poster that reads, “Mistakes: It could be that the purpose of your life is only to serve as a warning to others.”
That seems to be the takeaway for the FDA, which just quietly changed its rules to approve certain drugs faster. The agency made this change (so they claim) to combat companies like Turing Pharmaceuticals, which became a public enemy number one overnight when it hiked the price of one drug from $13.50 per pill to $750. Turing’s then-CEO Martin Shkreli was called “evil“, “opportunistic“, and “capitalist” when he raised the price of Daraprim, which is often prescribed to HIV/AIDS patients, pregnant women, and babies.
Granted, Shkreli is pretty much a terrible person, and not representative of most of the people in pharma; he’s bad at business and likely very high on most people’s Worst Person of the Year awards. Most people wouldn’t want to do business with him, if only so they wouldn’t have to look at his smug smirk. Those personality traits aren’t something that the FDA should need to change their procedures to cure.
So, is there possibly another reason? Or is the FDA worried that a Trump Presidency will spawn a million new Martin Shkrelis?
Maybe, and more likely, the FDA is attempting to fix its own organizational problems while hiding behind the story of a cartoonish business villain.
Unlike the normal pharma-demagoguery that “patents cause high drug prices,” Daraprim is a 62-year-old drug whose patents had run out a long time ago. The only hurdle left was the FDA. In order to bring a drug to market, the manufacturer needs to not only find out what’s in the drug and how to produce it, but they also to go through the FDA’s onerous approval process.
The FDA has two review levels, Standard and Priority. Standard reviews have a “goal” of being finished in 10 months. Priority reviews, the FDA’s version of the 4 four-minute mile, have a “goal” of six months. That means that if everything goes completely right, then after a generic pharmaceutical company has 1) identified a market opportunity, 2) figured out the recipe and 3) the manufacturing process, the company now 4) has to sit on its hands and investment for six to ten months.
In Martin Shkreli’s case, any entrepreneurial manufacturer that identified the new market that the ridiculous 5000 percent price increase of Daraprim created would have to sit on their business move while Turing Pharmaceuticals raked in the money while also putting people’s lives at risk. That is to say, the FDA was preventing competition that would force a lower price.
Worse, any potential competing pharmaceutical companies would know that when they finally did get to the end of the 10 month FDA slog that Shkreli and his smirk would be sitting there at the end ready to drop the price back down since they already had the distribution channels figured out. Therefore, the FDA’s quiet change was to move orphan drugs into the “Priority” review process instead of the “Standard” review process.
The long lag times between opportunities and distribution – in the Shkreli case the 10 months to get an off-patent, orphan-drug to market – causes companies to make decisions that are bad for business.. A broken down government-approval system is the biggest problem standing between patients and a functional market providing drugs at an affordable price.
Despite the use of the Shkreli cover story to make its move, the FDA is at least moving in the right direction by attempting to approve drugs faster.). However, six months is still a long time and represents a big investment of waiting time – time when people could be receiving affordable, lifesaving treatment.
The real question that we should all be asking of the FDA is why, if it can make this change on its own, had it not made the change previously? How many drugs could the FDA be approving faster? Or, as pointed out by the Journal of American Physicians and Surgeons back in 2010, is this just how the FDA operates?
For all of the vitriol that was rightfully aimed at the Martin Shkreli, the FDA is culpable as well.
Charles Sauer is president of the Market Institute.
