• Decrease font size
  • Return font size to normal
  • Increase font size
U.S. Department of Health and Human Services

News & Events

  • Print
  • Share
  • E-mail

Mark B. McClellan, M.D., Ph.D. - Drug Information Association

This text contains Dr. McClellan's prepared remarks. It should be used with the understanding that some material may have been added or deleted during actual delivery.

Speech before
Drug Information Association, Ottawa, Canada

Remarks by
Mark B. McClellan, M.D., Ph.D.

Commissioner, Food and Drug Administration

November 18, 2003

It’s a great pleasure to be here in Ottawa, and it’s especially nice to be here with my friend Diane Gorman. Just this morning, we signed a new memorandum of understanding between our two nations. This document represents a step on the long road toward better international collaboration for better world health. Sharing information is the first step toward working together, effectively, to address our shared public health goals: how we can assure access to safe and innovative medical products on both sides of our border.

My remarks today are focused on this topic: why we need to take constructive steps like this one, steps that even if small individually, are increasingly important to our shared goal of promoting the public health in both of our citizens. We’re taking similar steps with other nations, including a similar agreement with the European Union and with SwissMedic, our counterparts in Switzerland, earlier this year. I am confident that Diane shares my view that effective international collaboration is increasingly important to all of us.

One of the greatest global challenges we face is providing access to high-quality, safe medicines for all of our citizens who can benefit from them. Disease and the suffering it creates do not respect international boundary lines. And as our nations are more interconnected than ever through travel and trade, our response to the public health challenges must be increasingly coordinated as well.

In particular, we can’t afford to have an “every country for itself” policy any more when it comes to protecting the public from unsafe medicines. For example, we’re facing more serious international threats from criminals and profiteers who are trying to make a fast buck by going where the money is – which increasingly means prescription drugs and other medical products. We’re seeing international counterfeit drug operations that are increasingly sophisticated and criminal networks that are better organized than ever before. And we’re being called upon to police a growing illegal trade in dangerous drugs including controlled substances and unsafe knockoffs dispensed without proper medical oversight, all just an Internet click away from anyone in the world.

These criminal problems, illegal in every developed country, simply cannot be solved by countries acting alone. In fact, the criminals are increasingly taking their operations across borders, because they are counting on our not working together internationally with the same vigor we work to enforce the laws within our own countries.

We also cannot afford an “every country for itself ” policy when it comes to improving the health of our citizens through access to new and better medicines. As health care costs keep rising, every country in the world is struggling with a fundamental and growing problem: how can we possibly afford these new products? We should be answering this question together, because new drugs and devices are and should be global products -- products that should provide similar benefits for everyone, regardless of where they live.

No one disputes that the worldwide benefits of better medicines have been tremendous. In recent decades, life expectancies have been increasing steadily around the world, in no small part due to the worldwide application of better biomedical knowledge. To give you just a few examples, over the last 40 years, early infancy diseases have declined by 80 percent worldwide, ischemic heart disease by 68 percent and hypertensive heart disease by 67 percent. According to data from the Organization for Economic Cooperation and Development, over the past 40 years the use of medicines has helped halve the number of hospital admissions for 12 major diseases including mental illness, infectious diseases, and ulcers.

New drugs allow children with rheumatoid arthritis to walk and to go to school. New drugs shrink cancerous tumors and they control the advance of HIV. They prevent or halt heart disease, slow the progression of multiple sclerosis, and cure infectious diseases. In addition, new drugs often help reduce overall health costs. For example, for ulcers, a few pills have replaced major surgery. New drugs also shorten hospitalizations, help people avoid costly complications after a heart attack, help them avoid costly and debilitating hip fractures, and prevent the expensive complications of chronic diseases such as diabetes and high blood pressure.

But there is no question about it: nations around the world are finding it increasingly difficult to afford these improvements in health. Health care costs have been rising, as the costs of developing and providing these treatments has been escalating. Today, by some estimates, it costs more than $800 million U.S. dollars in private spending to develop a new drug and demonstrate its safety and effectiveness, to bring it to market in the United States. And by all estimates, the costs of developing new treatments have increased greatly in recent years, more than doubling over the past ten years, with “success rates” of new products still just as low as they’ve ever been.

There are also significant additional costs of bringing the same or a similar drug to market in other countries, with many countries asking for their own unique clinical trials or different tests and standards that add more to the total costs. And so the process for developing these new medicines – of turning sound ideas from insights made inside biomedical laboratories into safe and effective treatments – has steadily become more costly, more financially risky, and more difficult.

What this means is that we are all in a difficult and challenging situation worldwide. With unprecedented levels of concern about rising health care costs, it’s harder than ever for all of us to afford these potentially valuable new medicines. Right now, because of the budget pressures, most countries have one pressing problem in mind. They ask, “How do we keep the costs of new drugs down in our country?” And so they negotiate, or set a strict price based on what they think the cost of the new drug should be. Some of the world’s richest nations are driving the world’s hardest bargains. In fact, many developed countries are in effect banding together to get the same low price. For example, many high-income countries regulate their prices for new drugs by setting them equal to those in other countries that already have rigid price controls. This system is used here in Canada, as well as in some countries in Europe. By joining forces, they may get even more power to only pay for the cost of making additional pills. As a result, many relatively wealthy countries are moving away from covering any significant part of the costs of research and development. They are leaving development costs for others to pay.

Despite what you may read in the papers, America is not altogether different from other nations in this respect. We don’t have one price for each drug set by our national government. But our states, our large government programs, and our large employers who pay for drug insurance are all engaged in the same kind of negotiations. One important difference from many countries is that we don’t have the option to fall back on so-called “compulsory licensing” -- that is, literally taking away the drug patent if you can’t get a price you like. Nor do we turn a blind eye to those who violate the intellectual properties on new drugs by making copies, essentially stealing their patents. But as I understand it, even though Canada has used or threatened compulsory licensing in the past, Canada has largely rescinded this authority. I think countries should avoid taking or threatening to take patents away to get better prices. As I will discuss, there are better solutions. And without strong protections for intellectual property, so that people who invent better products can be rewarded for doing so, the better products won’t come along.

The problem is, if all we do is focus our efforts on getting lower prices, then all that we will end up paying for is the cost of making and distributing the pills themselves. But these costs only account for about 25 to 50 percent of the total cost of developing and providing a new medicine for a particular country. Obviously, each country would like to pay only this incremental cost to obtain the drug for their citizens. I don’t blame them. Nobody wants to pay for all the rest of the costs – all the money that has already been spent researching and developing a new medicine, researching and developing its production and labeling, and conducting post-market studies to enable the drug to be used even more effectively. But somebody has to, if we want better treatments.

In the U.S., I think there is increasing public anxiety about drug costs and anger about price differences between the United States and other countries that have almost the same ability to pay as Americans do. Although many Americans are able to get price discounts through their insurance plans that are much better than the prices you read about in the newspapers, millions of Americans do not have good prescription drug coverage. These patients, often seniors with limited means and great needs, get no help at all when they walk into an American drug store and face the highest retail drug prices in the world. When these people look around the world and see drug prices much lower elsewhere, including in Canada, they get very angry – and I don’t blame them.

Our Congress is closer than ever to passing legislation to address this problem. Legislation to improve Medicare will not only provide prescription drug coverage for America’s seniors. It will also enable them to band together to get much lower prices. But I don’t think any of us should believe that will solve the problem of sharing fairly the worldwide burden of developing new drugs.

This year, Americans, who account for a fraction of prescription drug use worldwide, will pay for about half of all pharmaceutical spending worldwide -- half of the spending, even though modern medicines can bring benefits to all of the world’s population. I’ve talked before about how this isn’t a sustainable situation. We need fairer and better ways to encourage the development of better medicines to help the people of the world. And as I’ve said before, we need to work together on this problem urgently. Unless someone covers the cost of R&D investment, which accounts for a substantial part of the revenue from pharmaceuticals, the investment we need in new medicines will slow or stop, and so will the continuing improvements in health that we’ve come to expect from modern medicine.

We couldn’t be facing this global challenge in affording new medicines at a more critical time. Today, there is an unprecedented level of R&D spending – well over $100 billion worldwide in U.S. dollars, most of it from the private sector, but primed by spending from the U.S. National Institutes of Health (over $27 billion in U.S. Dollars) and other sources. This unprecedented spending on research and development is appropriate, because despite all of the achievements of recent decades in improving world health, the potential for new breakthroughs to improve our health has never been greater. We’re at a stage when a large range of new technologies such as genomics and proteomics and modern information technology are now becoming widely used in the development of new treatments, and in finding better ways to use existing treatments to get the most value. Many new drugs currently in clinical trials are no longer scattershot one-size-fits-all treatments, but are carefully targeted to be highly effective given the molecular features of a disease in a particular type of patient. And there are more opportunities than ever for learning more through post-approval R&D.

These same new sciences may also hold promise for making the process for developing new medical technologies faster and more predictable, and, we hope, less expensive. But that hasn’t happened yet. In fact, last year, despite the unprecedented R&D investment, the number of truly new drugs FDA approved was at the lowest level in the past two decades. This decline in approvals was directly related to a decline in the number of submissions of new drug applications. And the number of new biologic applications was down too. So the fact is that all of these new sciences are not yet having a substantial impact on the care of patients. And it’s clear that this is a global pattern: fewer innovative treatments reaching patients worldwide.

Now, I’m an optimist, and I think this downturn and the extremely low “productivity” from all the spending to develop better medicines is temporary. After all, it takes a long time for new biomedical ideas to make their way down the difficult and uncertain path to safe, effective, and reliable treatments. And this year in the U.S., we’ve seen a bit of an upturn in the number of new drugs and biologics approved. But far better treatments for many more illnesses – the promise of the new biomedical sciences of the 21st century – is by no means a sure thing.

It may not happen. We may not get these improvements in health. With rising pressures in all countries to keep drug costs down, and with each country seeing no way out than to keep trying to squeeze prices down toward the cost of copying a few more pills, it is getting increasingly difficult to cover the costs of developing the new treatments. And if the needed R&D investments can’t be covered or made less risky, they will slow down. Many European leaders are concerned – I think appropriately – that this slowdown in the development of drugs and biologics by medical companies is occurring already in Europe. At this critical time for progress in medical care, that’s not a good situation for public health worldwide.

Now, those of us in government can’t solve these problems alone. Others need to help more as well, to find better ways to bring affordable medicines to the public, including product developers and drug companies. But I think we too can take some critical steps. And for the sake of our shared public health goals, we need to do it together. If we succeed in realizing these better treatments, all nations can benefit. If we fail, we are all worse off, fated to suffer more deaths and disabilities from diseases that could have been prevented if we had just found better ways to work together.

That’s why the agreement we signed today, and others like it, matter so much.

I am confident that, together, we can respond effectively to the global public health challenges we face. Canada demonstrated first hand how international disease control organizations can work side by side to find new ways, together, to push back SARS this year. We need to find the same kinds of international collaborative solutions to the problem of improving our ability to push back diseases through new drugs and medical technologies. But meeting this challenge together means we need to get off of the paths that too many countries are on now, each working hard to shift costs elsewhere instead of finding more fair solutions to both share the burden and to reduce it. In both the United States and Canada, we’ve seen some concerning trends, and we need to work together to keep them from continuing.

In the United States, a lot of public attention has focused on drug importation recently. For many Americans who are left on their own when it comes to prescription drugs, who don’t have insurance coverage and who receive little or no assistance in getting lower prices, the only alternative to high domestic prices seems to be buying cheap medicines elsewhere – often by going to companies on the Canadian side of our shared border. I’ve said repeatedly that this isn’t an acceptable solution. With FDA’s resources and authorities, it is a “buyer beware” situation, and I don’t think Americans should – or will -- settle for that. Americans, like everyone else in the world, deserve affordability and safety when it comes to their drugs.

Sometimes, people have taken this to mean that we in the United States don’t think the Canadian system is safe. Let me be clear: when you go into a well-regulated Canadian pharmacy, just like when you go into a well-regulated U.S. pharmacy, you can be very confident that you are getting the right treatment, the right guidance, and that what you buy is going to be safe and effective. It’s when you go outside of the comprehensive safety systems created within the U.S. and Canadian regulatory umbrellas that there are serious safety gaps.

I’d like to give you four examples of those gaps.

First, in both undercover purchases and sweeps of our airports, FDA has found thousands of examples of unapproved and potentially unsafe medicines coming into the country from many countries, including from Canada. These potentially unsafe medicines include drugs that are improperly labeled and shipped (for example, containers intended for pharmacists with no patient labeling, and drugs past their expiration dates); drugs that are not approved in the United States; or drugs that carry special warnings or have interactions that require close management. Earlier this month, after looking closely at the facts involving a “storefront” company that imported Canadian drugs for profit, a U.S. Federal judge concluded decisively that this is why Congress explicitly made illegal the importation of drugs not approved by the FDA. In her own words, the quality of these drugs “is less predictable than drugs obtained in the United States,” and they “do not have the same safety and efficacy” as drugs regulated by FDA. “For instance, the drugs may be contaminated, counterfeit, or contain erratic amounts of the active ingredient or different excipients,” and “they may have been held under uncertain storage conditions, and therefore be outdated or subpotent.” She is requiring the so-called “storefront” company involved to notify its customers that the safety, purity, and efficacy of their drugs cannot be assured, and to cease operations.

Second, many Canadian health officials at both the provincial and national level have pointed out real safety concern resulting from improper and illegal prescribing behavior by health professionals, and from non-health professionals engaging in providing what are essentially pharmacy services. The Manitoba College of Physicians & Surgeons recently sanctioned four doctors for such unsafe prescribing practices. Health Canada indicated that it “regards this as a very serious matter due to the inherent risk to Canadians’ health.”

For all of these reasons, working with many states, the FDA has taken action against companies in the United States that are trying to make a fast buck by going outside of professional medical practices. Although some companies have now relocated to Canada because they know their practices are clearly unsafe and illegal in the U.S., I am confident that Health Canada will help address the problems described by Canadian health officials on this side of the border as well.

Third, we’ve also seen an increasing number of websites based in Canada that promote the uncontrolled use of controlled substances for profit. It’s clearly illegal to get a prescription for a controlled substance under these circumstances, we’ve taken aggressive steps to shut down these sites when they operate in the United States, and we are taking more steps at the border as well. Not quite as disturbing, but still unsafe, are sites that purport to be Canadian pharmacies but may only have Canadian Internet Service Providers, and are actually providing drugs from elsewhere in the world. We’ve turned over information on some of these sites to Health Canada, and we stand ready to help them take action. And we’re also worried about the increasing number of truly unscrupulous Internet peddlers from all over the world, who are trying to catch a free ride on the flow of drugs moving though Canada to the United States.

Fourth, to the extent that Americans are purchasing Canadian drugs that are supposed to be under Health Canada’s regulation, we are facing new challenges in protecting consumers from product defects. When a need for a drug recall arises in the United States because of a potentially serious safety problem, we work with the manufacturer to make sure that patients are notified through the U.S. media, and even to make sure that steps are in place to trace prescriptions through the U.S. pharmacies where they were purchased so that patients know to get a new product. There aren’t systems in place to do this in the international context, when the Canadian drug involved was not intended to be exported to the United States.

And the safety problem is exacerbated by possible diversion of drugs from Canadian pharmacies to international operations in ways that can’t be easily tracked and that internet pharmacies are refusing to divulge. As Health Canada warned recently, this practice is against Canadian law because it undermines the ability to track products through the supply chain to the pharmacy level. Specifically, “establishments engaged in wholesale transfer without an establishment license for wholesaling will be considered to be in violation of the Food and Drug Regulations.” Simply put, diversion is unsafe and it is against the law. I’m glad that Health Canada is willing to address this safety gap.

In all of these cases, we’ve started sharing information with our counterparts in Health Canada in recent months, including at my face-to-face meeting with Diane Gorman a month ago in Baltimore, as well as through ongoing staff contacts. Our new memorandum of understanding begins to formalize this process of cooperating on effective and timely enforcement, so that we can assure safety not only within our own systems, but also address the important gaps between our systems.

I’m confident that we can respond together to these new safety challenges, as we have already done in other cross-border contexts. For one, there is a real threat of counterfeit drugs in both of our nations. We have three open criminal investigations of counterfeit activities that we are conducting with the Royal Canadian Mounted Police. Our criminal investigators have been very pleased with the high degree of cooperation and professionalism in these important international law enforcement operations.

For another, I am very pleased with the result of our joint efforts to implement our new legislation to improve the security of the food supply. Historically, our food safety mission in both the United States and Canada was focused on what can go wrong. Now, unfortunately, we also need to worry about deliberate efforts to harm our citizens through the foods they eat. This led to bipartisan legislation in the United States and new collaborations with Canada. The U.S. Congress came together to give FDA important new authorities – as well as one hundred million dollars in new resources – to help us keep imported foods safe and secure. For higher risk foods like meats, our Department of Agriculture has the ability to inspect the plants where the foods exported from Canada are processed, and to track the products reliably. We’ve worked closely with Health Canada and the Canadian Food Inspection Agency to make the most effective use of our new capabilities – so we can promote safe food trade among our countries. Our new collaboration is paying off with greater safety and economic benefits for both of our countries.

Until the many problems I’ve identified with drug safety can be addressed, however, it’s “buyer beware” when Americans purchase drugs long-distance from for-profit, illegal internet sites or poorly-regulated storefront operations with untrained staff. FDA has said this consistently, for many years, through many different administrations. In an era when powerful medicines can do more than ever before to improve health, but when the risks are greater than ever from unsafe or improperly-used medicines, I don’t think Americans or anyone in the world should have to settle for “buyer beware” drugs.

The current situation is creating safety and access problems for Canadians as well. Sure, the status quo may provide some short-term economic gains to some entrepreneurs looking for a fast buck – many of whom have no professional medical or pharmaceutical training. But the obvious fact is, Canada’s health care system simply isn’t designed to supply a large volume of safe prescription drugs for Americans. As Canadian drugs and other resources are redirected to the United States, the system here will face increasing strains, with the potential for adverse consequences for the health of Canadians.

Last week, the National Association of Pharmacy Regulatory Authorities – which consists of all of the provincial pharmacy regulators in the country - said that the export of drugs from Canada to the U.S. for the purpose of economic development was directly in conflict with the public policy objective of Canadians' access to safe drugs and pharmacy services. The pharmacy regulators called on the Canadian government to take responsibility to address this public health threat. They noted, for example, that efforts to integrate pharmacist and physician care were being undermined by what they view as the wrong model of medical services: long-distance prescribing without seeing a patient in clear violation of the laws of most provinces. And in some areas, pharmacist positions are going unfilled because the pharmacists have been diverted to the international internet operations. In fact, the regulatory authorities believe the situation is so extreme that they urged the Canadian government to ban the exporting of drugs from Canadian pharmacies until the government can implement systems that will ensure the effective regulation of these practices for public safety.

Health Canada officials have stated that they are watching closely for drug shortages. While there have been a number of spot reports in the press and from provincial authorities, I am told by Health Canada they don’t see any significant problems at this point. But it’s pretty obvious that very large volumes of prescription drugs won’t be reliably supplied to Canada at the prices that the Canadian government has negotiated. And so, many Canadian papers such as the Globe & Mail, The National Post, and the Winnipeg Free Press have each run stories recently, quoting Canadian health officials openly fretting that the importation of drugs from Canada into the U.S. may lead to drug shortages in Canada. The result, again, would be a safety gap that our current regulatory systems were not designed to handle, one in which people looking to make a fast buck by skirting regulations will be all too willing to fill in when the safe drug supplies run short, even if there are safety consequences.

The bottom line is that, if we don’t work together effectively, we are headed toward an international situation that increasingly threatens the health of both Canadians and Americans. But current policies are also causing other kinds of patient safety problems – problems of access to needed treatments in Canada that are just going to get worse if current trends continue.

For example, for many breast cancer patients, a drug called Faslodex is the only estrogen receptor blocker proven to be effective if Tamoxifen doesn’t work. It’s not available in Canada even though it was approved in the U.S. in April of 2002. The drug Pegasys, a drug FDA approved last year for hepatitis C, was recently approved in the U.S. in a new and more powerful combination treatment but it isn’t yet available in this improved formulation to Canadians. And FDA approved the AIDS drug Reyataz earlier this year, but the drug has not really begun the approval process in Canada.

The same things are happening in Europe as well, where some countries have even stricter controls on prices. The process by which European governments set reimbursement rates can take up to a year, delaying patients’ access until the government makes the reimbursement determination. It should be no surprise, then, that a report by the G10 Medicines Group, which reviewed the impact of governmental pharmaceutical, health and enterprise policies in Europe, recommended reducing the time between granting a marketing authorization and pricing and reimbursement decisions. According to the report, “The price negotiating systems and reimbursement structures in a number of Member states can lead to significant delays.” And as a recent [February 2003] article in the magazine Business Week put it, in their words, “European consumers are heading toward second-class citizenship when it comes to access to medicine.”

These are exceptions right now, another form of spot shortages. But I worry that they won’t continue to be. If we keep trying to force national solutions on global problems, we will keep going right on down this path -- toward medicines that are less affordable, less accessible, and ultimately less safe. Instead, we need to work together to implement far better policies to assure safety and access to innovative, affordable medicines. The current system is not sustainable. In a world in which our well-being is increasingly linked, no country can really close its doors to what is going on in the world around it. These are global problems, and they require global solutions.

I want to be clear that a better global solution to this problem doesn’t mean that medical spending needs to go up. I did not come to Canada to ask you to increase your spending on medicines. The fact that the U.S. is covering a disproportionate share of the bill for R&D into new drugs doesn’t mean that other countries aren’t spending a lot of money on their medications – or that Canada and many European Union countries need to increase their spending on drugs substantially in order to share the costs of better medicines drugs more fairly. Rather, I came to ask you to work together to find better ways to make better medicines more affordable and accessible worldwide.

It’s how we spend our money and whether we work together that matters. To begin with, many countries could do more to encourage innovation in health care by changing the way their dollars are being spent, to get more value for their citizens Let me explain. First, most countries need wider usage and more competition when it comes to generic drugs, which should be made available quickly and used widely as soon as legitimate drug patents expire. Today, Canadians as well as citizens of many other developed countries are paying significantly higher prices than Americans for many generic drugs.

For example, when we look carefully at good data, we have found that some important U.S. generic drugs are far cheaper than their Canadian equivalents. We looked particularly closely at the price retailers pay (per milligram) for the active ingredients that go into seven top generic drugs used to treat chronic conditions. These are widely-used drugs that have all lost patent protection in the last ten years. [Alprazolam, clonazepam, enalapril, fluoxetine, lisinopril, metformin, and metoprolol]. In only one case was the Canadian generic cheaper than in the US. In another case, the generic version was not yet available in Canada, and for 4 of the remaining 5 drugs, the US generic was half the price, if not cheaper, than the Canadian generic. In other countries, the overpayments for generic drugs appear to be even worse: in Italy, for example, a recent study revealed that generic drugs cost almost twice as much as those in the U.S. Furthermore, when looking at unbranded generics specifically, data from this study revealed that prices of U.S. drugs range from a third lower in France and Canada to almost half as much in both Italy and Germany.

Price controls may help reduce the prices of new medicines – but as I’ve described, they also threaten the development and availability of new medicines. But regulation of prices, rather than regulation focusing on promoting free and fair generic drug competition, appears to be getting in the way of saving money worldwide when it comes to generic drugs.

Not only are generic drugs too expensive in most countries. They are not used enough. In the United States today, more than half of all prescriptions are for generic drugs. That’s because there are effective, low-cost generic treatments available for more health problems than ever. But they are much less used in virtually all other countries, once again leading to unnecessary drug expenses. For example, in Canada, only about 40 percent of prescriptions are generic; and in some countries like France, fewer than 10 percent are. This is another case where education and effective competition can help. Giving generic drugs the opportunity to save consumers real money, and educating doctors and patients about the fact that (when properly regulated) they are just as safe and effective as brand-name drugs, can reduce medical costs significantly.

The bottom line: It’s possible to redirect billions of dollars in drug spending, through greater use of less expensive generic drugs, permitting greater financial rewards for developing and providing access to valuable new drugs quickly. This approach encourages innovation, because more generic competition means that you can’t keep making money on the same old drug for many many years. This approach could reduce the inequities in new drug prices across countries, without reducing the global incentives to develop better drugs. And it would do so without increasing costs in countries that currently rely too much on price regulation, and without creating the same pressures toward unsafe drug purchases, shortages, and access problems that current policies in Canada and other nations are causing.

Taking steps to correct these pricing problems would help achieve the goal of sharing the burden for improving medical care more fairly worldwide, and helping to make sure that all patients who can benefit from new medicines can get access to them. It would help make it possible for countries like Canada to do more to pay for new drugs based on their ability to pay, not based on their ability to extract the lowest possible prices for some pills.

I’m encouraged that some prominent health officials in Europe are also talking about the need to change the current, flawed, unsustainable system. This goes for drug and biologic companies too: if they don’t want countries acting in their own short-term interest with price controls, then they too need to work harder in the international context to get prices that share the burden fairly according to the different incomes of different nations, rather than simply putting the greatest burden on those people who are least able or willing to protect themselves against higher prices.

In addition to making sure that safer and more effective new treatments get appropriate financial rewards, so that they can bring the most benefits to the most people, we need to do more to work together to reduce the costs and the uncertainty of developing and using these treatments. At FDA, we are already taking many steps to reduce the high cost of developing medications. A key element of our new planning is what we call “efficient risk management.” We are using the latest science to try to make the process for developing new medicines less costly. We are also working to reduce the costs of manufacturing products, and the costs and complications associated with using them effectively – all without compromising FDA’s gold standards of safety and effectiveness. In fact, according to a recent study, our new “fast-tracking” of promising new drugs has shaved nearly three years off the time it takes to get potentially life-saving medicines to market.

In all of these areas, we are working with international organizations and our counterpart agencies in other nations, because improvements must be shared across nations to have a real impact on the cost of developing new medicines globally. For example, we have been working in international forums like the International Committee on Harmonization to develop better, more consistent ways to report adverse events involving medical products around the world. The goal is one up-to-date adverse event reporting system, so any significant event anywhere in the world can be reported with greater accuracy and completeness and lower cost to all of the world’s major regulatory agencies. We’re working with other nations to explore new ideas in the regulation of good manufacturing practices, to not only harmonize but modernize our regulation of pharmaceutical manufacturing and significantly reduce the costs of making high-quality drugs reliably worldwide. And we are working on steps to improve competition, availability, and education about generic drugs, which as I’ve said are an underused resource for cost savings among developed nations after legitimate patents have expired.

We need to do even more to harmonize our regulations based on the best and latest science, and the best ideas for regulatory practices from around the world. For example, there is more that we can do on harmonizing the steps required to demonstrate that treatments are safe and effective for our populations. And there’s more we can do to protect research subjects without imposing unnecessary research costs and delays.

This is another reason I’m pleased with our memorandum of understanding with Health Canada. We’ve already been working to develop consistent methods for our regulation of active pharmaceutical ingredients, and we are extending that harmonization to other areas. We have a long way to go, but through this increased collaboration, we have taken the important step of starting to build a bridge to span the regulatory gaps that separate us.

And so I reject that the future must be an either-or choice between each country doing the best it can on its own to lower drug prices, and choking off medical innovation in the process, or raising health care costs still further to pay for medical innovation that our countries cannot easily afford when they act alone. Instead, I’ve outlined today how we can build on initial steps to work together to develop global solutions to rising spending for better medicines. With more promising new treatments in the pipeline than ever, I don’t believe the billions of people around the world who are suffering from diseases today that may be treatable in the near future can wait. It is time for developed nations, recognizing their shared interest in bringing better treatments to market, to work together to find ways to fairly share the cost – not just the benefits -- of new drugs.

Surely, given the great potential for worldwide improvements in medical care in the coming years if we all work together, surely we can find ways to both bring safe new cures to patients, while making medicines more affordable. Building on the agreement we signed here today, we can begin to do that together on both sides of our shared border. We can set an example for a world that is getting smaller every day, and that should be getting healthier every day as well. Thank you.