PPI believes in the importance of smart regulation as part of a well-functioning economy. But we’ve also repeatedly advocated that regulation and legislation should aim to boost innovation, not get in its way.
Unfortunately, not all politicians in DC have gotten the message. Over the next couple of days Congress will be voting to reauthorize the Prescription Drug User Fee Act (PDUFA), which speeds up the process of reviewing new drugs by using fees collected from manufacturers.
On net, this is a pro-innovation bill which is strongly worth supporting. But it’s worth noting that one amendment, submitted by Senator Bernie Sanders (I-VT), would gratuitously undercut the incentives for innovation. The amendment, as I read it, would take away marketing exclusivity for a drug if a company was found guilty of any one of a long list of criminal or civil violations related to the drug, including illegal marketing.
The problem with this amendment is that innovation is already a high-risk activity, rewarded by the promise of good profits for the small number of drugs that are approved and do well. The Sanders Amendment would make the drug development process even riskier by raising the possibility that marketing exclusivity could be taken away because of a relatively small mistake, reducing or eliminating those essential profits.
In the past, PPI has likened the impact of regulation on innovation to throwing small pebbles in a stream. You throw in 1, 2, 10 pebbles and the stream will keep flowing. But throw in a hundred pebbles, and you have blocked the stream.
The Sanders amendment is a clear example of another regulatory pebble that could unnecessarily slow up innovation. Policymakers who favor growth should keep such pebbles out of the innovative stream.
