Soaring healthcare prices currently threaten the viability of our healthcare system and the overall economy. U.S. healthcare spending, both per capita and as a percentage of GDP, far outpaces spending by any other high-income country, without corresponding increases in quality or access to care. Pharmaceutical drug prices, a component of overall healthcare spending, have dramatically increased in recent years, dominating the news cycles and politicians’ agendas. Until the mid-1990s, the U.S. spent similar amounts per capita to other industrialized nations on pharmaceuticals, and then our path began to dramatically diverge. The question is why.
Professor Robin Feldman has dedicated much of her time in recent years to answering this question in an effort to help the U.S. reclaim reasonable prices for pharmaceutical drugs. In her recent article, Empirical Evidence of Drug Pricing Games – A Citizen’s Pathway Gone Astray, 20 Stan. Tech. L. Rev. 39 (2017), Professor Feldman and her coauthors, Evan Frondorf, Andrew K. Cordova, and Connie Wang, provide essential empirical evidence of abuses of the citizen-petition process, one of the many strategies pharmaceutical companies use to diminish competition from lower-priced generic drugs and to artificially prop up brand-name drug prices in the United States. In the Administrative Procedure Act, Congress created citizen petitions to provide a formal pathway for the public to challenge a rule, procedure, or decision issued by an administrative agency or express concern about a particular product regulated by the agency. Professor Feldman and her coauthors suspected that pharmaceutical companies were manipulating this administrative pathway to increase their revenues.
To test their hypothesis, Professor Feldman and her coauthors painstakingly collected and analyzed all of the citizen petitions filed with the FDA between 2000 and 2012. The authors examined when citizens petitions were filed in the generic-approval process, as well as the evolution of citizen-petition filing practices over time. The picture that emerged was unequivocal: citizen petitions provide a key pathway for brand-name pharmaceutical companies to delay market entry by generic competitors that costs American consumers and businesses hundreds of millions of dollars each year. Since 2003, citizen petitions from competitor pharmaceutical companies have “essentially doubled,” despite an attempt by Congress in 2007 to remedy abuses of such petitions.
The article analyzes three potential approaches to address the abuses of the FDA’s citizen-petition process: (1) a simple prohibition to avoid any possibility of manipulation; (2) procedural blocks to ensure that the behavior cannot create suboptimal results; and (3) punitive measures. In the end, the authors appear to favor the use of procedural blocks to limit the ability of citizen petitions to delay generic entry by requiring that all competitors file petitions within one year of when the generic company files for FDA approval.
This work follows upon Professor Feldman’s other ground-breaking work in this area that is leading the way for policymakers and antitrust enforcers. It is well worth a read by anyone concerned by our ever-increasing drug prices.