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Published in: PharmacoEconomics 8/2011

01-08-2011 | Editorial

The Case for Less, Not More, US FDA Regulation

Authors: Dr John A. Vernon, Joseph H. Golec

Published in: PharmacoEconomics | Issue 8/2011

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Excerpt

The article by Neumann et al.[1] in this issue is an important contribution to the literature; one that sheds much light on a heretofore largely overlooked aspect of Section 114 of the 1997 Food and Drug Modernization Act (FDMA). The article describes how Section 114 has been interpreted and used by major US pharmaceutical firms with respect to the dissemination and communication of a pharmaceutical product’s economic value to health plans, formulary decision makers and similar organizations. The authors’ argument for greater clarity on the topic by the US FDA deserves to be echoed loudly, as does their appeal for flexibility with respect to its interpretation. The article,[1] which fills a long-standing lacuna in the literature, is particularly timely, as the authors of the article emphasize, because new and evolving comparative effectiveness research (CER) legislation will potentially affect many Section 114 claims. …
Footnotes
1
An economically efficient limited-term patent system would be one that minimized the sum of static and dynamic inefficiency costs. Static inefficiency costs are those associated with the restricted consumer access resulting from monopoly pricing once a new pharmaceutical technology has been discovered and introduced. The efficient price is that which equals the marginal cost of manufacturing and distribution. Of course, at price equals marginal cost, static inefficiency costs are zero but dynamic inefficiency costs are very large because firms have no incentive to invest in R&D and innovate (firms cannot capture economic rents from such activities). Hence, the trade-off between the two types of inefficiency costs, and the societal objective of minimizing their sum.
 
2
Stiglitz[2] has offered compelling arguments for a medical prize fund system.
 
3
The three quotations cited in this commentary were among those in a compilation of quotes by prominent economists regarding the consequences of FDA over-regulation. The compilation of quotes, and much more information on the subject, may be found at the website http://​www.​fdareview.​org, developed by, and based on the extensive survey research by economists Daniel Klein and Alexander Tabarrok.
 
Literature
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go back to reference Vernon JA, Golec JH. Pharmaceutical price regulation: public perceptions, economics realities, and empirical evidence. Washington, DC: American Enterprise Institute for Public Policy Research, 2009 Vernon JA, Golec JH. Pharmaceutical price regulation: public perceptions, economics realities, and empirical evidence. Washington, DC: American Enterprise Institute for Public Policy Research, 2009
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Metadata
Title
The Case for Less, Not More, US FDA Regulation
Authors
Dr John A. Vernon
Joseph H. Golec
Publication date
01-08-2011
Publisher
Springer International Publishing
Published in
PharmacoEconomics / Issue 8/2011
Print ISSN: 1170-7690
Electronic ISSN: 1179-2027
DOI
https://doi.org/10.2165/11585740-000000000-00000

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