A case for using drug labels to curb health care costs

Image by © Lawrence Manning/CORBIS

In an essay published in this week's issue of the New England Journal of Medicine, a trio of medical researchers team up to propose a novel way to trim some of the nation's ballooning health care costs: require FDA labeling to include information on how new drugs compare to existing remedies. Not exactly clear how that will save money? Dr. Randall S. Stafford, one of the essay's authors and an associate professor of medicine at the Stanford Prevention Research Center, explains.

The way that FDA labeling for pharmaceuticals and medical devices works now, Stafford says, manufacturers are only required to run a placebo-controlled trial, ensuring that the new therapy in fact works better than if people are just led to believe they're being treated. Yet, what that requirement doesn't do is see how favorably the new treatments compare with drugs that are already on the market—drugs that are likely already available in cheaper, generic form. By requiring information to be included on labels about how new therapies compare to already existing ones, you empower physicians and patients to better understand their treatment options, and you also provide an incentive for pharmaceutical companies developing new drugs to run trials that can prove their products are better than others, Stafford says.

This can slow the inflation of pharmaceutical costs, he says, because it makes people really consider what is the best option, as opposed to always assuming that new equates with more effective. Currently, when a drug emerges onto the market physicians and patients alike can feel compelled to opt for the latest treatment—which is likely also more costly than older ones or generics. It's what Stafford and his colleagues refer to as "me-too drugs," or, basically, medical treatment on the bandwagon. "It's essentially a drug that enters the market without necessarily any objective superiority to existing products," Stafford says. Even if drug labels merely stated something along the lines of "while this new pill has been proved more effective than a placebo there is no proof that it works any better than those old pills," it would help people realize they may not need to pay for the brand name novelty.

But, why not take it one step further, and instead of asking the FDA to require more information on labels, campaign for them to require not only placebo-controlled trials, but comparison trials against existing drugs? Stafford said that question inspired some spirited debate among the authors, but ultimately they decided to "specifically stop short of suggesting that the FDA mandate these active comparisons." The reason? The trials, in that case, would likely favor the existing drugs, and because comparison studies are harder to design, require larger sample sizes and cost more, requiring them across the board could have a chilling effect on innovation. Instead, Stafford says, putting the information out there for all to see provides a free market incentive for not only developing higher quality drugs, but proving that you've done so through comparison studies. "Accepting the fact that we do have a capitalist market for drug development, this tries to bolster [incentives for manufacturers]," Stafford says. And, by deterring people from choosing newer (more expensive) drugs as a matter of course, there would be the added bonus of saving patients some money too.