The
Prescription Drug Pricing Pathfinder
Who Has the Power to Regulate Drugs?
1. Federal Regulation
Congress has the ability to pass legislation regulating drugs and drug pricing
because Congress has the ability to regulate interstate commerce.
Pursuant to Congressional legislation, drugs are regulated at the federal level
by two executive agencies: The Food and Drug Administration (FDA) and the Federal
Trade Commission (FTC). These agencies regulate drug safety, efficacy, and labeling
and advertising.
a. FDA
The federal Food and Drug Administration (FDA)
is primarily responsible for implementing the Food, Drug and Cosmetic Act of
1938 (52 Stat. 1040), the law governing safety and efficacy of prescription
drugs. The Act was passed in 1938 in response to a drug disaster that killed
over a hundred children, and requires drugs to be approved as safe by the FDA
before being introduced into interstate commerce. FDA's Center for Drug Evaluation
and Research (CDER)
approves drug applications. A full explanation of the process is beyond the
scope of this Pathfinder, but CDER's page has a wonderful amount of information
on it for those who are looking. Click here for CDER's introduction to the Drug
Application Process.
In 1962, the Act was amended by Public Law (P.L.) 87-781 (76 Stat. 780), to require that the drug not only pass safety testing before being introduced, but also that it pass efficacy testing. That is, it has to be proven to work before being introduced to the market. The 1962 amendments added significantly to the time required for FDA approval.
The Food, Drug and Cosmetic Act is codified as amended at 21 U.S.C. Sec. 301
et seq. The section on drugs starts at Sec. 351.
Source note: Why there are no links to the laws.
- The U.S. Code (U.S.C.) is available on line from Cornell University's Legal
Information Institute, but laws really are much easier to read in hard copy,
if you have access to one, because you can flip back and forth between sections
easily. On-line versions only let you view one small section at a time. Of the
two available annotated codes, U.S.C.A. and U.S.C.S., I prefer the latter. U.S.C.S.
Is laid out much more clearly, and if you are going to attack a large law like
the Food, Drug and Cosmetic Act it is easier to read. The amendments are listed
in chronological order in the front of the statute, which is extremely helpful.
- The 1938 and 1962 laws are not available on-line because they are relatively
old, so you must consult a volume of the Statutes at Large in your local law
library. To find the law, read the citation as follows: the first number is
the volume number and the second is the page number on which the law begins.
So the 1962 Amendments, 76 Stat. 780, are found in volume 76 and begin on page
780.
b. FTC
The Federal Trade Commission (FTC) exercises jurisdiction over drug labeling and advertising concurrently with the FDA. FTC is responsible for deceptive and unfair advertising, while FDA handles false or misleading advertisements. The FTC's antitrust arm, the Bureau of Competition, has been active in monitoring drug company mergers for possible antitrust violations, and also cracking down on drug makers for alleged attempts to keep generic rivals off the market in order to boost sales of brand name drugs.
See the FTC's December, 1999 report, "FTC Antitrust Actions in Pharmaceutical Services and Products," for examples of actions taken by the FTC to combat price-fixing and other anticompetitive activity in the pharmaceutical industry.
The report is also available from:
Bureau of Competition
Federal Trade Commission
Washington DC 20580