THE MISSING PIECE IN FDA DRUG APPROVAL: COST

When most people think of the FDA, they think of safety and efficacy. And that makes sense. The agency’s job is to make sure drugs and medical devices work and that they won’t cause harm. But there’s one factor that doesn’t enter the equation, even though it affects every patient, every provider, and every payer: cost.

In the United States, a drug can be approved based on clinical performance alone. If it’s shown to be safe and effective, it gets the green light. What the FDA doesn’t weigh is whether that same drug is affordable, or whether covering it will strain the healthcare system. That isn’t part of the review. It’s not even allowed to be.

And that’s a structural flaw, not a footnote.

The Legal Blind Spot

The FDA is prohibited by law from factoring in cost when considering approval. This isn’t a loophole. It’s intentional. The Food, Drug, and Cosmetic Act, the foundation of FDA authority, mandates that decisions be made solely on safety and efficacy. The rationale? Keep science pure. Don’t let market dynamics interfere with health protections.

But in practice, this creates a dangerous disconnect.

Once a drug is FDA-approved, the wheels turn quickly. CMS (Centers for Medicare and Medicaid Services) usually follows with coverage approval. Commercial insurers often take that as a cue. At that point, there’s no stopping the economic momentum, regardless of what the drug costs.

That’s how breakthrough therapies, while clinically justified, can financially destabilize the entire system. Gene therapies are priced at $2 million. Rare disease treatments at $500,000 per year. Even more “common” drugs with annual price tags in the tens of thousands.

Who Pays for This Disconnect?

Patients feel it first. Even with insurance, out-of-pocket costs can become insurmountable. Providers see it too, facing difficult decisions when a covered treatment still leaves patients financially exposed. Hospitals absorb the shock when patients can’t pay. Employers feel the squeeze through rising premiums. And public programs like Medicare and Medicaid strain under ballooning budgets.

Everyone is affected. And no one in the approval chain ever asked: Can the system afford this? Should it?

A Parallel Path: FDA + CMS

We need a better process. One that doesn’t compromise safety or innovation, but doesn’t ignore economic reality either. One proposal: run parallel approvals through the FDA and CMS.

That means while the FDA evaluates safety and efficacy, CMS simultaneously assesses potential cost and coverage implications. By the time a drug is ready to go to market, the pricing and reimbursement conversation is already underway, not lagging years behind.

It doesn’t have to be adversarial. It has to be informed.

Would This Stifle Innovation?

That’s the common pushback. But it assumes that today’s system is the most innovation-friendly model possible. It’s not. When cost is left out of the equation, it favors short-term gains over long-term sustainability. It rewards pricing strategies untethered to value. It pressures insurers and governments to react instead of plan.

Requiring cost visibility earlier in the process doesn’t stop innovation. It redirects it toward what matters: accessible, scalable, high-impact treatments.

What Progress Could Look Like

• Transparency requirements during the approval process about anticipated price ranges and economic impact.

• Formal CMS input during FDA review for high-cost therapies.

• Pilot programs where dual-track evaluations are tested on breakthrough drugs.

• Post-approval price audits to ensure consistency between projected and real-world pricing.

  
  

These aren’t radical ideas. They’re overdue.

The Real Definition of Approval

Approval shouldn’t mean a drug is just safe and effective. It should mean it’s ready for the system, for the payers, for the people who need it. Because if no one can access it, it’s not a breakthrough. It’s just a statistic. We’ve ignored this long enough. It’s time we built cost into the foundation of how we regulate medicine, not the fallout.