Are Regulators Responsible for Drug Pricing?

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In May 23, 2016
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Members of the EMA and other European national regulators have been unusually drawn into a debate over drug pricing, with an article published in the New England Journal of Medicine authored by the EMA’s Executive Director Guido Rasi, and Senior Medical Officer Hans-Georg Eichler, alongside representatives from the Dutch and German Institutes.

They state that differing arguments are heard at the EMA; claims that high regulatory standards increase the cost of pharmaceutical R&D, and therefore drug prices, conflict with assertions that regulators licence products even when sufficient data is lacking to efficiently assess their value; demands for more generics and biosimilars to help drive down prices equally conflict with certain beliefs that me-too drugs lead to overutilization and higher spending.

It is because of these discrepancies that the regulators have waded into the ongoing debate over drug pricing.  Traditionally thought of as removed from pricing issues, the EMA’s representatives ask, “are regulators responsible for high drug prices?” and answer their own question with, “yes and no.”

It is inevitable that having regulation is going to increase costs – Rasi, Eichler, Hurts and Broich quote the difference between the historical sales of so-called ‘remedies’ on the street; which were cheap, but entirely ungoverned and therefore often at best ineffectual, at worst positively dangerous, with today’s ‘approved drugs with favourable benefit-risk profiles’.  That there is a cost of governing quality, safety and efficacy is inarguable, with an inevitable knock on to the cost for the end user.  However, the key point is; can the regulator’s seal of approval be seen as an invitation to charge a premium for that product, and is that the EMA’s fault?

One of their main arguments states that, were there no regulations, companies would have no incentive to invest the huge amount needed to efficiently research and develop new products.   They also quote the recent price debate over the hepatitis C drug, Sovaldi, as evidence that there is no direct correlation between R&D costs and market price; “companies tend to charge whatever the market will bear.”

They suggest that to help matters, the regulators could more rapidly approve generics and biosimilars, ensure that me-too products are introduced more efficiently, encourage clinical trials that measure more relevant value for the user, and facilitate the collection of patient-level data that is important to payers.

Even with all of these suggestions put into action, it is inevitable that the drug pricing debate will continue to rage.

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