Occasionally we encounter a simple tweak in public policy that would be a win-win -— if it weren’t for politicians, bureaucrats and stakeholders zealously guarding their self-interest. An example is a reform that would both help combat shortages of critical drugs and put downward pressure on prices: reciprocity of drug approvals between FDA and certain foreign counterparts.
Because of various incentives created by Congress, Puerto Rico has been home to numerous facilities for manufacturing pharmaceuticals, many of which were damaged or destroyed by Hurricane Maria.
The storm exacerbated or precipitated shortages of critical drugs made there, including IV fluids already in limited supply since 2014. In response, the FDA has permitted the otherwise unlawful importation of unapproved IV fluids from Ireland, Australia, Mexico, Canada and Germany, consistent with its 2013 policy for dealing with drug shortages.
Drug shortages are not new, especially among critical sterile injectables that are routinely used by EMTs and in emergency rooms and ICUs. Their numbers grew rapidly after 2006 and have trended downward since 2011, but the number of ongoing shortages remains in the dozens and is significant, according to the FDA.
Shortages are difficult to predict and control. Supply disruptions are one cause for shortages, due to quality problems, unavailable raw materials, manufacturing site losses/changes, increased demand or permanent product discontinuation. Constrained manufacturing capacity also contributes to shortages because of few manufacturers, increase in the number of generic drugs, large number of drugs on small number of production lines or just-in-time inventory practices.
Various factors create disincentives to invest more in production capacity of these products, including low profit margins related to third party reimbursement, group purchasing arrangements and price competition.
In recent years, FDA has strengthened its early warning system for likely shortages and its ability to respond to them, including importing unapproved products from abroad. However, regulators’ ability to handle drug shortages is limited because of unpredictable events like Hurricane Maria and few mitigation options.
The option to import critical drugs not approved by FDA, but approved by certain foreign regulators, should be expanded and improved by across-the-board-easing of the availability of drugs approved in countries with rigorous drug control regimes comparable to FDA's. The concept of allowing temporary or permanent importation has been proposed by the Senate Committee on Aging and in the Senate’s Reciprocity Ensures Streamlined Use of Lifesaving Treatments (RESULT) Act, which was introduced in the 114th and 115th Congresses.
There are precedents for both Congress and the executive branch using reciprocity to reduce the barriers to international trade in drugs and medical devices. For example, the FDA Export Reform and Enhancement Act of 1996 virtually eliminated the regulatory obstacles previously associated with exporting drug, device and biologics products made in but not approved for sale in the United States to countries where they are approved. Indeed, the act recognizes specific countries that have medical-product regulatory agencies comparable in stringency to the FDA to which the products can be exported.
Reciprocity could have been in place decades ago if only the FDA had met its longstanding commitment to pursue it through the International Conference on Harmonization of Technical Requirements for Registration of Pharmaceuticals for Human Use (ICH).
There has been some progress at the margins: Countries now have a standardized dossier for seeking approval of new drugs, the United States accepts research conducted in other countries to support applications for the approval of new drugs and devices, and the FDA has established Good Manufacturing Practices for foreign production facilities.
The ICH’s agenda supposedly includes reciprocity of drug approvals among certain governments — but generations of FDA officials have resisted any such “delegation” of their responsibilities. When a senior European regulator was asked about the extent of the FDA’s cooperation on this issue, she quipped, “It’s like discussing the Thanksgiving dinner menu with the turkeys.”
Congress will need to authorize reciprocity and to define FDA's gatekeeper role. Under such a new law, companies could obtain marketing approval based on the approval by designated medical-product regulatory agencies deemed comparable to FDA — for example, those already listed in the FDA Export Reform and Enhancement Act. FDA could also be given the statutory authority to rapidly approve importation of critical drugs in short supply even if the foreign manufacturer has not obtained FDA marketing approval via reciprocity.
The introduction of reciprocity would increase the supply of drugs, promote competition and put downward pressure on drug prices. President Trump pledged during the campaign to “remove barriers to entry” of “imported safe and dependable drugs from overseas.” After the election he told Time magazine: “I’m going to bring down drug prices. I don’t like what’s happened with drug prices.” Reciprocity would make good on those promises and be a big win for American consumers and our health care system.
John J. Cohrssen, an attorney, held a number of posts in the executive and legislative branches of government, including associate director of President George H.W. Bush’s Council on Competitiveness.
Henry I. Miller, a physician and molecular biologist, is the Robert Wesson Fellow in Scientific Philosophy and Public Policy at Stanford University’s Hoover Institution. He was the founding director of the FDA’s Office of Biotechnology.