It’s been an eventful week in the world of pharmaceutical pricing. On Monday, news broke that Pfizer had secured approval from the Food and Drug Administration (FDA) to sell its generic equivalent of Viagra, the blue pill that treats erectile dysfunction. Pfizer’s new drug, named Sildenafil Citrate, will be sold under the brand name Revatio and is expected to go on sale next year. The approval was sought and gained in response to an EU infringement case launched last year by the drug company against the Irish government for prescribing cheaper versions of the medication.
Then, on Tuesday, the same day Pfizer won the FDA approval, India’s Ministry of Health and Family Welfare notified pharmaceutical companies that they would henceforth be required to list the price of each medicine they sell in the country. The policy is aimed at combating the rampant sale of low-quality and substandard pharmaceuticals, which often come from poor countries and are stocked at corner pharmacies across the country.
Together, these two events mean that all drug prices are set to rise in a monumental way. But why? How did we get here and what will happen next? Let’s take a step back and examine how this all came about.
Prices On The Rise
The simple answer is the EU Pricing Directive. Passed in 2014, the law essentially requires member states to implement policies that prevent the over-prescription of medicines and the resulting inflation of prices. For reference, the average cost of a year’s supply of generic Viagra is now approximately £170.
In addition to the increased competition that comes with more affordable generics, the EU pricing law also implements a floor for medicines prices. There are currently no permits to sell lower-cost medicines in the EU, which does not mean that all prices are now set to rise. However, it’s a fundamental shift in the way pharmaceuticals are priced in the bloc. By preventing price decreases through the implementation of sustainability policies, the EU is driving a sustainable and significant increase in drug costs.
Why The FDA Approved Pfizer’s New Drug
In the U.S., the Food and Drug Administration (FDA) regulates the manufacturing, marketing, and importing of all pharmaceuticals. The agency frequently evaluates new drug applications and decides which ones to approve and which to decline. As a general rule, the FDA tends to be more stringent when evaluating generic applications due to the significant price savings that come with generics. In this particular case, Pfizer’s new drug application was successful and the company was able to secure approval to sell its Sildenafil Citrate medication to treat erectile dysfunction.
Sildenafil Citrate is a type of medication known as a PDE5 inhibitor. This class of drugs prevents an enzyme called phosphodiesterase 5 from breaking down a molecule called cyclic guanosine monophospate (cGMP), which increases the blood flow to the penis and results in an erection. The substance is manufactured in a laboratory and its efficacy has been established in numerous clinical trials. When compared to Viagra, the drug’s active ingredient, Sildenafil Citrate is much weaker and less effective. Nevertheless, it is a major step forward for Pfizer and, more broadly, for all generic manufacturers. In the coming months, as more and more medications enter the competitive landscape, generic drug prices are going to keep rising.
What Comes Next?
For those readers not familiar with the EU, the law does not stop once drug prices begin increasing. Instead, it sets a time frame during which pharmaceutical companies must continue to charge the market price for their drugs. The law also provides a mechanism for patients and citizens to request rebates from pharmaceutical companies that have overcharged due to the increased cost of raw materials. In most cases, the reimbursement process is relatively straightforward, but it does require a legal battle royal that spans multiple continents and multiple years. In the meantime, the only way to secure a discount on a pharmaceutical is to enter a global code that grants you access to special sales and promotions from pharmaceutical companies.
For now, the EU’s pricing directive has dramatically altered the landscape of pharmaceuticals by increasing prices and driving more competition. However, as more and more medications enter the market, it would not be a surprise if the law is updated to reflect the shift in dynamics. For instance, it is currently unknown whether or not the agency will eventually allow generic competitors to sell their medication at a discount.
Regardless, for now, all we know for sure is that prices are going up and it’s not going to be easy to secure a rebate when you’ve been overcharged in the first place.