Risky Business: Should the FDA Pay Attention to Drug Prices?

Abstract

The Food and Drug Administration currently does not monitor drug prices. As FDA leaders note, the agency’s responsibility is for drug safety and efficacy, and besides they do not want to become embroiled in drug pricing controversies. However, monitoring drug pricing can be useful beyond any sort of pricing policy. Prices are information, and changes in drug prices can inform the FDA of supply shortages (which may be due to backlogs in FDA approvals), poor government policies (such as the recent Unapproved Drugs Initiative, which resulted in price increases without much safety gain to the public), and mischief on the part of drug makers (such as manipulation of the approval process).

Keywords: Food and Drug Administration, FDA, drug prices, drug safety, FDA approvals, Unapproved Drugs Initiative

JEL Classification: I18,