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New Law Will Raise Drug Prices

Written by Gary North on July 3, 2012

Most Americans are unaware that the pharmaceutical companies that are regulated by the Food and Drug Administration are required to pay for this regulation.

The FDA negotiates these fees.

Does this sound like a system of payoffs?  It does to me. But Congress thinks it’s business as usual.

Now Congress is united. The law must extend to generic drugs. These are not new drugs that require extensive testing. They are drugs whose patent protection has run out.

The new law will bring in an extra $6 billion over the next five years.

The old law was set to expire. So, Congress passed a new one.

It took key lawmakers a year to draft this law.

Think of this. Nobody in Congress was allowed read Obamacare’s 2,700 pages before the vote. Not enough time, Pelosi said. But a $1 billion a year bill took a year to draft.

The Washington Post describes the arrangement.

Traditionally, the FDA has collected most of its fees from companies that make brand-name drugs, and it will continue to do so under this bill, starting with $693 million through next year. Medical-device manufacturers will kick in $595 million total through 2017. The funds will enable the agency to more quickly review those industries’ products.

Makers of generic drugs will pay about $300 million annually. In return, the FDA has committed to speed approval of generic drugs and more closely scrutinize imported generics.

Let me understand this. The FDA demands that the regulated forms pay money to speed up the regulatory process.

What happens if a firm does not pay? Delays?

But this system is not an aspect of coercion. It does not lead to a system of bribery. No, no, no. It is just a way to help reduce costs to government.

The Congressional Budget Office projects that the legislation will reduce federal spending by $311 million over 10 years, mostly by helping generic drugs reach the market faster. That would slash federal drug expenditures for Medicare and similar programs.

Let’s see: that’s about $31 million a year.

It took a year for key lawmakers to hammer out.

But Obamacare was too detailed to let Congress read in advance.

Also included is this sweet deal. Big Pharma gets an extra five years of patent protection before generics can enter the market. What will that cost users? Sorry; no figures were supplied.

Obama will sign the bill soon.

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4 thoughts on “New Law Will Raise Drug Prices

  1. […] Gary North form The Tea Party Economist explains further here […]

  2. […] New Law Will Raise Drug Prices Most Americans are unaware that the pharmaceutical companies that are regulated by the Food and Drug Administration are required to pay for this regulation. The FDA negotiates these fees. Does this sound like a system of payoffs? It does to me. But Congress thinks it’s business as usual. Now Congress is united. The law must… READ MORE […]

  3. AD Roberts says:

    It seems to make no difference which party you are talking to. They ALL just raise taxes a little here and a little there, knowing that the American people are going to PAY IT ALL and figuring rightly so that they aren't smart enough to see just how much the elite are costing every man woman, and child.

    Was this not the way the Revolutionary War started?

  4. One more illustration that most of our problems are directly related to TOO MUCH GOVERNMENT!!