For years, muscular dystrophy patients in the United States have been purchasing the drug deflazacort — used to stabilize muscle strength and keep patients mobile for a period of time — from companies in the United Kingdom at a manageable price of $1,600 a year.
But because an American company just got approval from the Food and Drug Administration to sell the drug in the United States, the price of the drug will soar to a staggering $89,000 annually, the Wall Street Journal reported last week.
Because the FDA restricts the importing of drugs from overseas if a version is available domestically, patients are stuck with the new, expensive version. This makes deflazacort the perfect case for advocates of international drug reciprocity — a reform that would make it easier for consumers to buy drugs that have been approved in other developed countries.
Alex Tabarrok, an economics professor at George Mason University, has long supported doing just that. Under reciprocity agreements, drugs that are approved in Europe or other developed countries such as Japan would also be approved for and available to patients in the United States. Below is an interview with Tabarrok on the potential of such reforms, lightly edited for clarity.
In Theory: You’ve been a vocal advocate for making it easier to have access to drugs approved in other countries. Why should this reform be on the agenda of health policymakers?
Alex Tabarrok: Reciprocity is what I call a no-brainer. If you were in Germany, and your doctor prescribed you a medicine, would you ask her, “Has this medicine been approved in the U.S. by the FDA?” Of course not. You would trust your German physician and the European Medicines Agency. The same thing is true if you were in Canada or Japan. So if you would trust the EMA when in Germany, why not trust them when you are in the United States? Reciprocity isn’t a panacea — sometimes the EMA approves more quickly than the FDA, and sometimes the FDA approves more quickly than the EMA — but it is a relatively simply change that would help some people.
It would also mean that we would very quickly have much better sunscreen. As The Washington Post pointed out a few years ago:
“American beach goers will have to make do with sunscreens that dermatologists and cancer-research groups say are less effective and have changed little over the past decade. That’s because applications for the newer sunscreen ingredients have languished for years in the bureaucracy of the Food and Drug Administration, which must approve the products before they reach consumers.”
As someone who is currently traveling in India, I’d also appreciate better medicine for traveler’s diarrhea — such medicine is available in Canada over the counter but not in the United States. Luckily for me, my mother [who lives in Canada] is bringing me some.
IT: It seems that every time reciprocity comes up for drug markets, opponents are quick to mention the thalidomide crisis of the 1960s. Back then, German drug manufacturers gave the sedative to pregnant women to alleviate morning sickness, but it ended up causing a lot of damage to infants and fetuses across Europe. The FDA kept the drug from entering our markets, preventing the same tragedy here. How do we make sure that reciprocity agreements don’t result in the importation of harmful drugs approved elsewhere in the world?
AT: The thalidomide tragedy happened over 50 years ago, causing about 10,000 deformities and deaths worldwide. It’s my belief, however, that the thalidomide tragedy killed many more people by raising the costs of drug development [due to more burdensome regulation]. More expensive drug development caused drug lag and drug loss, leading to untold deaths of people who would have lived had new drugs been available sooner. Unfortunately, the thalidomide tragedy created very visible deaths while the people who died because new drugs were not available were buried in an invisible graveyard.
IT: This debate gets at a more general criticism of globalism — that international markets create a “race to the bottom” effect. As the argument goes, drug manufacturers will choose to create their products in the least regulated economy. What are your thoughts on that?
AT: It costs well over a billion dollars to develop the average new drug. That’s not a race to the bottom — that’s a deadly cost disease. There might be something to the race-to-the-bottom argument if I advocated accepting drug approvals from Tuvalu, but we are talking about say the European Union, Japan, Canada and Australia. The drug authorities and politicians in these countries are still responsible to the patients and voters in these countries, and they are not going to start approving arbitrarily. Indeed, many small countries in the world already look to the FDA, so this is not a new idea. It’s only new for the FDA.
IT: Reciprocity agreements for pharmaceuticals would essentially be trade agreements for drugs. But we’ve seen a lot of backlash to trade agreements throughout the campaign. How do you convince people that these sorts of agreements are in their self-interest?
AT: Nothing is being dictated. All that would happen is that U.S. patients would be offered more options than are available now.
IT: Part of the reason why this sort of a debate is so difficult is because the results are always going to be so extreme. Overly lax rules mean some people will die from bad drugs; overly stringent rules result in, as you say, “invisible graveyards.” What do you think is the best way to strike a balance here? How should we perform cost-benefit analyses when people’s lives are at stake?
AT: The question is not the best way to strike a balance — there is no one best way. The question is: Who should strike the balance? The FDA, or patients and their physicians? My own approach would be to model the FDA less as a paternalistic organization and more like Consumer Reports. Consumer Reports doesn’t ban products. It evaluates products and helps people to make better choices given their constraints and preferences.
Unfortunately, people want the illusion of safety even if that illusion is bought by reducing real safety. Nevertheless, there are things we can do. The central problem is that the graveyards on one side of the trade-off are visible and on the other side, invisible — which is why I think the FDA is too conservative. There are better statistical techniques, however, that can make the invisible graveyard more visible, at least to statisticians. Andrew Lo at MIT has done excellent work on this issue.
One of the things that the public can do to push things in the right direction is to go easier on the FDA when a bad drug is approved, as inevitably does and will happen. We have trained the FDA to be extremely risk-averse by punishing them more for approving a bad drug than for failing to approve a good drug. We need to adjust on both margins.
IT: Do you have any thoughts about the potential for FDA reform under this new administration and Congress?
AT: Peter Thiel’s speech at the Republican National Convention reminded us that we used to take big, bold risks — like going to the moon. Today, to say a project is a “moon shot” is almost a put-down, as if going to the moon never happened. We have become risk-averse and complacent, to borrow a term from my colleague Tyler Cowen. The result of the incessant focus on safety is playgrounds without teeter totters, armed guards at our schools and national monuments, infrastructure projects that no longer get built, and pharmaceutical breakthroughs that never happen.
The new administration is unpredictable, but when it comes to the FDA, unpredictable is better than business as usual.