EMPIRICAL EVIDENCE OF DRUG PRICING GAMES—A CITIZEN’S PATHWAY GONE ASTRAY

  • January 2017
  • 20 Stan. Tech. L. Rev. 39
  • Article

The Food and Drug Administration’s citizen petition process was created in the 1970s as part of an effort to fashion more participatory regimes, and was intended as a mechanism for ordinary citizens to raise concerns about food, drugs, and FDA regulations. Anecdotal evidence suggests, however, that the citizen petition process may have taken a different turn. This empirical study explores whether pharmaceutical companies are systematically using citizen petitions to try to delay the approval of generic competitors. Delaying generic entry of a drug—even by a few months—can be worth hundreds of millions of dollars of additional revenue, a cost ultimately borne by consumers and government agencies in the form of high drug prices.

This Article provides empirical evidence that the citizen petition process at the FDA has now become a key avenue for strategic behavior by pharmaceutical companies to delay entry of generic competition. It is a far cry from the “participatory citizen” notion that fueled the creation of such avenues at regulatory agencies. Not only has the number of citizen petitions with the potential to delay generic entry dramatically increased over the past decade, but the timing of citizen petitions indicates that they are being filed late in the game as a last-ditch effort to hold off competition. Congressional reforms enacted in 2007 aimed to stem the tide of citizen petition abuse, but our analysis of the data indicates that those reforms have not succeeded in doing so. This Article concludes by examining the nature of the problem and exploring the feasibility of three types of approaches to curb the behavior. These include: 1) a simple prohibition, if one were to conclude that most behavior in the category is likely to be inappropriate; 2) procedural blocks to ensure that the behavior cannot create suboptimal results; or 3) punitive measures as a deterrent. 

Add new comment

Filtered HTML

  • Web page addresses and e-mail addresses turn into links automatically.
  • Allowed HTML tags: <a> <em> <strong> <cite> <blockquote> <code> <ul> <ol> <li> <dl> <dt> <dd>
  • Lines and paragraphs break automatically.

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
CAPTCHA
This question is for testing whether you are a human visitor and to prevent automated spam submissions.