Top Stories
Top Stories
Health and Science

FDA commissioner takes on Martin Shkreli-wannabes over huge drug price hikes

Key Points
  • "We don't play a role in drug pricing, but we do affect drug competition," Dr. Scott Gottlieb says.
  • The FDA wants to focus on getting more low-cost generic drugs on the market faster to help ease the financial burden on Americans, the commissioner says.
FDA's Scott Gottlieb on generic drug competition

The Food and Drug Administration will try to prevent major pharmaceutical companies from playing "regulatory arbitrage" in the generic drug business, the agency's commissioner, Dr. Scott Gottlieb, told CNBC on Wednesday.

"We don't play a role in drug pricing, but we do affect drug competition in terms of getting new drugs on to the market, and create competition to older drugs, particularly with generic drugs," Gottlieb said on "Squawk Box. "

When asked directly how the FDA plans to deal with situations like ex-pharma CEO Martin Shkreli's raising of a lifesaving drug by 5,000 percent, Gottlieb said, "There's a second set of policies ... that I think would prevent the ability of people to come in and pick off low-volume generic drugs, where there might not be a lot of competitors because they're just not used a lot, and raise the price and basically take advantage of regulatory arbitrage, where it might take a year or more to get another generic copy to the market."

Major drugmakers have been scrutinized for hefty price increases, especially after the outrage that stemmed from Shkreli's 2015 hike of the cost of Daraprim, a drug used to treat a certain kind of infection that's particularly dangerous for people who have weakened immune systems, such as AIDS patients and pregnant women. He later walked back the price increase.

Shkreli is currently standing trial, with jury selection underway this week, on charges of securities fraud unrelated to the Daraprim scandal. He has pleaded not guilty.

Gottlieb spoke to CNBC as Republican lawmakers are focused on trying to replace the Affordable Care Act, better known as Obamacare. But he said the FDA wants to focus on getting more low-cost generic drugs on the market faster to help ease the financial burden on American consumers.

According to the FDA, not every drug has a generic. Most drug companies have a patent on their medications, and once that patent expires, competitors can start selling a generic version of the drug.

"There are various techniques branded companies sometimes employ to block the generic companies from getting access to the samples that they need. One of them is taking advantage of certain rules the FDA puts in place to manage the risk of drugs in the post market, so-called risk management plans," he said.

Gottlieb said the FDA is publishing a list of where there is only one drug on the market. He said the agency is also going to prioritize the entry of new generic drugs into each category until there are three competitors.

"We really don't see the big price breaks for consumers until there are three competitors in the marketplace," the commissioner said. "We have to facilitate competition."

— Reuters contributed to this report.

Sign Up for Our Newsletter Morning Squawk

CNBC's before the bell news roundup
Get this delivered to your inbox, and more info about about our products and services.
By signing up for newsletters, you are agreeing to our Terms of Use and Privacy Policy.