Ted Cruz’s Life-Saving Legislation Would Reduce FDA’s Monopoly

Justin Haskins Heartland Institute
Published February 17, 2016

Consumer Power Report #494

U.S. Sens. Mike Lee (R-UT) and presidential candidate Ted Cruz (R-TX) proposed legislation in December that, if passed, will save countless lives and reduce unnecessary regulatory costs related to the introduction of new drugs and medical devices.

The Reciprocity Ensures Streamlined Use of Lifesaving Treatments Act of 2015 (RESULT Act) would transform the way drugs and medical devices are approved by the federal government in cases where the new product has already been approved by a similar government agency in an Organization for Economic Cooperation and Development (OECD) nation with a proven track record of providing safe medical devices and pharmaceutical products to their citizens.

Under the current system, drugs and many important medical devices must be approved by the Food and Drug Administration (FDA), a long, costly process that takes many years to complete. According to a study by Forbes, pharmaceutical companies spend about $350 million for a new drug to make its way through the entire development and approval process. Because many drugs fail to ever make it onto store shelves, Forbes estimates it costs drug companies $5 billion per new medicine.

These tremendous costs are then passed on to insurance companies and then directly or indirectly to consumers, creating financial strain on many people who need these drugs to survive or live quality lives. Patients are also often stuck waiting for many years for drugs that could help resolve an ailment – even if patients in many other advanced nations have been enjoying the new drug or medical device for several years without any issues.

Ed Miesta, chief editor of the Clinical Leader, explained the problems with the current FDA monopoly: “If a pharmaceutical company would like to get a drug approval in the U.S., there is but one agency that can do it: the FDA. This set-up is what economists would refer to as a state-sponsored monopoly, where one entity is granted the sole authority to provide a good or service. While multiple producers can promote lower prices, greater efficiencies, and choice, a monopoly has the advantage of being easier to regulate and control. Unfortunately, with only one provider, there can also be delays and shortages.”

The RESULT Act would speed up the drug and medical device approval process by requiring the secretary of the Department of Health and Human Services to approve a new drug or device when it has been established by FDA that the product helps to alleviate a public health need, is approved by a trusted government agency in one of the bill’s listed nations, and is not a banned device by the current FDA requirements.

To address the concern made by some free-market advocates that FDA may work very slowly to determine whether these criteria have been met, the bill requires a decision to be made within 30 days, and Congress has the authority to approve by a majority vote any application rejected by FDA.

Some critics of the RESULT Act have argued FDA is perhaps the best administrative agency in the world when it comes to ensuring a new product is safe for use, so relying on any other government agency, including those in Canada and Europe, would put American lives at risk.

Critics are correct to point out FDA’s success in keeping many dangerous products off of the nation’s store shelves. But the bureaucratic red tape imposed by FDA also has cost many lives, as patients suffer or even die while waiting for new treatments to be approved. If a treatment is completely new to the world, FDA has every right to carefully review that drug or device under the agency’s normal procedures; the RESULT Act does not change how novel products are approved. What the RESULT Act does is ensure that products already proven to be safe are fast-tracked in the United States, so people aren’t left waiting for products millions of other people in nations around the world already have access to.

If FDA is convinced a product approved by another trusted government agency in a different nation is not safe, it could announce its position and leave the trained medical community to decide for itself whether the product is safe for use. Americans are far better off letting their own doctors decide which medical services, devices, and drugs are safe to use and which are not.

The RESULT Act, which has been referred to the Senate Committee on Health, Education, Labor, and Pensions, would be a significant step toward reducing the rising costs of new drugs and medical devices in the United States, allowing patients to have greater access to affordable, life-saving medical products than ever before.

— Justin Haskins



For John Kuhn, a simple X-ray after a snowboarding accident turned into an accounting nightmare when the hospital billed him $20,000 for a surgery he never had.

“So I had to go down in front of the billing department no less and pull up my shirt and show them that I did not have any major scarring on my stomach at all,” Kuhn said.

It turns out the hospital’s hard drive had been stolen along with Kuhn’s medical records.

He’s not alone, experts say health care-record hacking is skyrocketing – up 11,000 percent last year alone.

Roughly one out of every three Americans had their health care records compromised and most are completely unaware. Such hacks give criminals a wealth of personal information that, unlike a credit card number, can last forever.

Kuhn’s records were among the 100 million health care records stolen last year.

Many of those records show up for sale on the “dark web” where hackers openly advertise themselves and what they’ve stolen.

One site offers fresh healthcare profiles stolen last year in California boasting “you can use those profiles for normal fraud stuff or to get a brand new healthcare plan for yourself.”

Etai Maor showed NBC News the type of computer station where such transactions are made.

“This is where information from big data breaches ends up as a commodity and is sold,” he said.

Stolen credit cards go for $1–$3 each. Social Security numbers are $15. But complete health care records are a gold mine, going for $60 each.

SOURCE: By Tom Costello, NBC News


Missouri could be one of the first states in the nation to test a new mental health care program designed to expand access to treatment.

The pilot program was created by the Excellence in Mental Health Care Act, co-sponsored by U.S. Senator Roy Blunt (R-Mo) and signed into law in 2014 as part of a broader Medicare reform measure. It sets quality standards for community mental health centers in participating states and more fully funds treatment for Medicaid patients.

According to Brent McGinty, the president and CEO of the Missouri Coalition for Community Behavioral Healthcare, the program has the potential to transform mental health care by providing a federal designation to apply for grants and switching from a fee-for-service Medicaid model to a prospective payment system that will allow agencies to fully pay for the services they provide Medicaid clients.

“It puts us on par with our friends in primary care who have federal designation and can receive direct federal grants for services,” said McGinty. “For the first time in many, many years, really since laying out the vision of the Community Mental Health Act that President Kennedy signed in 1962, it says to the world that behavioral health belongs at the same level as the physical health care space.”

Missouri is one of 24 states that received an almost $1 million grant in October 2015 to plan how it would implement the program. As it stands now, eight states will be selected to participate in a two-year pilot of the program in January 2017.

But Senator Blunt and Michigan Senator Debbie Stabenow have introduced a new bill to expand funding to all 24 states.

SOURCE: By Susannah Lohr, St. Louis Public Radio


After months of uncertainty, the Legislature appears poised to approve a tax on health care plans that would generate $1.27 billion annually and could substantially boost funding for developmentally disabled Californians for the first time in more than a decade.

If lawmakers approve the tax in a series of votes scheduled for this week, it would replace an existing tax on health care plans that brings in about $270 million less and is set to expire in July because it doesn’t comply with new Obama administration rules dictating how states may levy those types of taxes.

Momentum has been building since Gov. Jerry Brown unveiled the tax proposal early last month, and in recent days it won crucial endorsements from several leading insurers and health plans. Even tax-averse Republican lawmakers had some nice things to say about the proposal during committee meetings last week.

But not everyone is happy. One leading consumer advocate has criticized it as a “valentine” for insurance companies, and the Senate’s highest-ranking Republican is urging her colleagues to reject what she’s calling a tax hike because it will be passed on to consumers through higher premiums.

“Many Californians are struggling to pay their bills, and we should be working toward solutions to make California more affordable, not an even more expensive state to live and work,” said Senate Republican leader Jean Fuller, R-Bakersfield. “We can invest in California’s priorities without increasing taxes.”

SOURCE: By Jessical Calefati and Tracy Seipel, San Jose Mercury News


A political ad is attracting attention in Virginia this week, but not because it’s touting a candidate for public office.

The message on radio and television warns of dire consequences for Virginia hospitals if the General Assembly approves a controversial piece of legislation.

“The General Assembly is voting on legislation that will financially ruin your local hospital,” the narrator says, “putting lives at risk, impacting life-saving medical procedures for young and old.”

The television ad from the Virginia Hospital and Health Care Association urges viewers to call their legislators and tell them to vote no on House Bill 193.

The legislation would change Virginia’s Certificate of Public Need law. That’s the permitting process that requires hospitals and other health care providers to receive approval from the state health commissioner before they can offer many medical services, or build certain facilities.

Republican lawmakers say they want to reform the law to allow more competition in the marketplace.

Opponents say the changes could cause some of the state’s hospitals to close.

“I think the ad is absolutely outrageous,” Delegate Kathy Byron told WDBJ7 in a telephone interview from Richmond. “It’s misleading. They are scare tactics and bullying that’s being used.”

Byron describes the ad as “an insult to the public and legislators.” She said the Certificate of Need law is an outdated policy that stifles competition and drives up the cost of health care.

SOURCE: By Joe Dashiell, WDBJ7 News