Call it an October surprise – or just a buried lede – but readers probably missed this news in the pre-election deluge of information and analysis: the White House Council of Economic Advisers (CEA) issued a report in late October that noted price growth for prescription drugs has slowed since January 2017 due to increased competition in the market generated by a surge in generic and branded drug approvals.
Specifically, a graphic on page three of the report shows the price of life-saving medicines relative to other goods has been flat during the last 20 months and that, “as of August 2018, the relative price of prescription drugs was lower than it was in December 2016.” The report also argued “due to the way price inflation for drugs is measured, the actual reduction in inflation after January 2017 may be larger.” The CEA report cites, and follows, a Food and Drug Administration (FDA) report from earlier this year that found generic drug approvals between January 2017 and March 2018 saved American drug buyers $11.8 billion.
The report credits regulatory changes made at the FDA for the achievement and for saving consumers about $26 billion over the last year and a half.
Not only does this study provide additional evidence that spending on life-saving medicines is falling (see our previous post on drug spending), but it also acknowledges the high cost of creating medicines that help Americans live longer or live with chronic diseases. The report clearly states that it takes about 10 years and $2.6 billion to successfully bring a single drug to market. (The White House issued a fact sheet that also notes the cost of gaining FDA drug approval.)
Biospace covered the report’s findings over Thanksgiving. A Wall Street Journal editorial a few days earlier noted the FDA approved 1,617 generic drugs since January 2017, about 81 a month on average and a 17 percent increase over the 20 months before that. The Journal argued the United States’ system for approving generics is “the envy of the world.”
Still, we heard very little about the report in October or since then. (The Wall Street Journal editorial noted the president himself has failed to talk much about the good news that resulted from his own policies.)
The CEA suggested that the Trump White House’s rhetoric on “high drug prices” may have contributed to consumers savings, but it doesn’t offer evidence to support that claim. More likely, that rhetoric is why this report received so little promotion from the White House press shop. It’s difficult to argue for price controls when competition clearly is working for American consumers.