Should we be able to pay for different levels of quality in our medicines?

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  • Consumers, patients and doctors should be able to specify what generic they wanted based on their tolerance for risk.

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With most product lines everyone is used to the idea that the more we pay the better the product. A $40,000 Cadillac is probably better in every way than a $10,000 Honda. The Honda gets you from points A to B adequately, but few would consider their quality to be the same. But what about medicines? Some patients may well suspect that the brand name original will be better made and, hence, maybe work better than a generic version. But I suspect most people do not assume this, or at least never even think about it. When they get a doctor’s prescription, they don’t ask which generic? Or what is the evidence that it works as well as the branded original?

They may well compare car performance figures before buying, but I doubt many patients even think of doing so when it comes to medicines and drugs. The reason is that they trust, directly or tacitly, the regulators (and their doctor) to ensure that all products work properly on the market. But why should a regulator of medicines be better than any other bureaucrat in any other field? Maybe we trust the companies making the products -- assuming that both their desire to please customers, and the fear of the loss of business, or even the prospect of facing jail if they poison customers, mean the products will work.

Part of my latest research shows that chain pharmacies in the emerging markets have higher quality medicines than stand-alone pharmacies. The assumption is that they take greater care over the sourcing of their products, and discover problems more easily than their independent counterparts. Perhaps one would find the same effect in the U.S. But since the vast majority of medicines are assumed to work, undertaking such an exercise would be a waste of money – for example, it could cost hundreds of thousands of dollars to find any samples that don’t work.

But maybe that assumption is no longer correct. The U.S. Food and Drug Administration spends the vast majority of its time overseeing new products. Monitoring clinical trial data and approvals of exciting new products is where their attention is focused. They conduct site inspections on plants selling “old” products, both innovator and generic, and occasionally find problems, issue warnings, levy fines, sometimes recall products and occasionally prosecute producers. This is assumed to ensure safety. The weighting of their efforts towards new products was based on productions systems of the 1980s and 1990s, where the vast majority of final medicines, and intermediate chemical products, came from the U.S. and Europe. But for the past twenty years more and more products are being made in Asia, notably in India and China. Today, well over half the ingredients for our medicines, and maybe one-third of the medicines themselves, come from these two countries.

Asian production is far cheaper than in the West, so all the major pharmaceutical corporations looking to cut costs have located plants there. More and more local Indian and Chinese producers are exporting to the West as well. The problem is this. The regulators in these countries are corrupt, understaffed, underfunded and not particularly competent. Just as bad, the businesses in these locations haven’t gone through decades of iterative discussions and legal fights with regulators about quality control. The result is that their quality is not uniformly good. Most of the worst products find their way into Africa and other emerging markets, but according to evidence from U.S. scientists and doctors, like Harvard University’s R. Preston Mason, and Harry Lever, of the prestigious Cleveland Clinic, some of these drugs may be finding their way into the wealthier markets, too.

I chaired a Congressional briefing in February on this topic, and the FDA reacted very aggressively towards both Drs. Mason and Lever. It seems that the FDA does not want the U.S. public scared (I would say ‘made aware’) that the quality of imported medicines is not always good. In any other market, it would be simple to deal with this issue. Generics from India would not be expected to perform as well as products made in the U.S. (even if American producers have Chinese or Indian ingredients due to the assumption of better oversight by U.S. firms), and would be priced at a discount as a result.

Consumers, patients and doctors would be able to specify what generic they wanted based on their tolerance for risk (understanding that risk is currently hard to determine because quality data is rarely made public). But with the fiction that all products are equal in quality, value and efficacy, and little choice in what generics one can take, there is no viable market response. This status quo will probably continue until some tragedy occurs, when heavy-handed legislation will likely demand changes in labeling and drug-sourcing. Till then, buyers should beware.

Roger Bate runs the website which houses much of the sources of information discussed in this article, and is adjunct scholar at the American Enterprise Institute.

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