June 26, 2012

A Taste of Government-Run Healthcare

The FDA is a bureaucratic behemoth that threatens public health, stifles drug innovation, and keeps costs high.

In his recent article in National Affairs, “Changing the FDA’s Culture,” Dr. Scott Gottlieb rightly takes the FDA to task for its retrograde attitudes on the approval of new drugs for sale in the United States market. But he is far too kind to the FDA. Its culture is beyond repair by external exhortation. The FDA is a bureaucratic monopolist. Currently, in the name of protecting the American public, the FDA represents a major systematic threat to drug innovation and public health. It should be stripped of its power to block the entry of new drugs and medical devices into general use.

The Case of Elaprase

In making his case for a more modest response, Gottlieb begins with a story of the drug Elaprase, which has been used since 2006 to treat Hunter’s Syndrome, a horrific but rare children’s disease. The disease is caused by the want of a single enzyme needed to break down sugar molecules inside the body. As sugar molecules build up in concentration, the disease cripples and often kills children from a very young age.

 Epstein  
 Illustration by Barbara Kelley

As Gottlieb notes, progress against the disease was slow, and the first signs of real hope appeared in the early 2000s when researchers found a way to develop enzyme replacements in related enzyme deficiency diseases. When Elaprase first became available in 2004, the sensible response for the FDA would have been to ensure that the product did not kill patients at small dosages, and then to let it into the marketplace, with due notification of its experimental nature and any known side effects.

The logic behind this position is as follows: First, the deadly course of Hunter’s syndrome has been well documented; second, there is virtually no downside in giving the drug to afflicted children who have literally no other alternative. The desperate parents were not fools. They were likely advised by the finest doctors. They were able to network with other families to swap information about the course of the disease during treatment. They knew how to calculate the expected value of a new treatment. That ex-ante calculation was strongly positive even if the drug had adverse side effects and did not work in many cases. A ten percent chance of saving a child is greater than no chance at all. Get the drug out there, and if it does not work, it will be rejected by the market. If it does work, it will save dozens or hundreds of lives.

Institutional Blindness Masquerading as Science

But FDA marched to the beat of a different drummer. With total indifference to these brutal background circumstances, the FDA took—and continues to take—refuge in what it sees as the gold standard of the scientific method: the double-blind clinical trial, under which a drug must first be tested against a placebo to see if it is both “safe and effective,” the standard for approval under our food and drug laws. So the FDA ordered a clinical trial of 96 persons—large for a low frequency disease—and divided it into two cohorts, one of which would receive a worthless placebo. In so doing, it added two years to the drug-approval process and imposed massive inconveniences on families that had to travel great distances to participate in a trial that they may have been in the placebo group of. The good news is that two years later, Elaprase gained FDA approval. The bad news is that this ultimate approval came too late for those children who died and suffered in the interim.

Gottlieb rightly deplores the institutional blindness that led the FDA to require a double-blind clinical trial for Elaprase. He traces the blindness to the FDA’s obsession that it not admit any product into the market that might prove to be anything but safe and effective. There is a political cause, of sorts, for this too. As the educated cynic might observe, the FDA’s fingerprints are not on the death certificate of a child who did not take the drug that the FDA refused to approve, but those prints are quite clearly on the death certificate of a child who died from the use of an FDA-approved drug. The result is the same kind of intense political pressure that affects other safety agencies. It leads the FDA to increase one kind of error (the unavailability of drugs) in order to minimize a second (adverse drug reactions).

The correct response would be for the FDA to announce that it will approve drugs that sometimes harm patients because the cost of keeping them off the market is just too high. The FDA could stress that there are inherent limitations to all clinical trials, no matter how large their numbers. That means that some bad drugs inevitably make it to the market. Dangerous side effects often take years to manifest themselves, and it is everyone’s nightmare that a drug that enjoys great success shows these effects only after the drug is on the market. But for Elaprase, this risk does not matter, for in the not-so-short run, all victims of the disease are dead or maimed anyhow.

The FDA, moreover, is equally insistent on the use of double-blind clinical trials for those drugs that have been in use for extensive periods of time. This sorry policy originates with the expanded powers that the FDA received under the 1962 Kefauver-Harris Amendment, passed in the aftermath of the Thalidomide tragedy. (When mothers took Thalidomide, their children were born with birth defects that developed during the first trimester of pregnancy.) The FDA’s Frances Kelsey rightly became a national heroine in 1960 when she refused to allow Thalidomide on the U.S. market as the bad news started to come over from Europe, where the drug was already in common use.  (By way of irony, Thalidomide is back on the market today as Thalomid, a treatment for multiple myeloma, a deadly cancer.)

Unfortunately, as often is the case with regulation, the 1962 amendments extended the FDA’s power in areas where it routinely does far more mischief than good. In particular, the amendments require that a new drug applicant show that its product was not only safe, but also effective. Effectiveness was not, of course, the issue with Thalidomide. Why effectiveness should be an FDA issue was never explained, for it is quite clear that market participants have little desire to purchase drugs that do not treat some clinical condition. There is no reason for a centralized decision on effectiveness when all sorts of downstream actors can demand whatever information they want prior to purchase. Many drugs are withdrawn from the market because they cannot find users even after the FDA has approved them as effective.

More critically, the 1962 act defined a “new drug” as one that qualified experts agree “is generally recognized . . . as safe and effective for use” under its prescribing conditions. The statutory requirement is often abbreviated as GRASE, after its key initials. This provision resulted in the withdrawal of literally hundreds of well-established drugs from the marketplace after 1962.

Deferring to Administrative Expertise Is a Dangerous Game

The sorry situation that arose thereafter is illustrated by an important 1990 decision of then-Circuit Judge Stephen Breyer in United States v. 50 Boxes More or Less. The case arose when the government seized fifty boxes of a prescription drug intended to deal with migraine and similar headaches from the pharmaceutical giant Sandoz. The drug contained two active ingredients designed to stop the nausea-inducing side effects of the headache-suppressing ingredients. Each of the ingredients was separately in common use. The government took the position that the only way these drugs could meet the applicable standard was for Sandoz to go through the full set of double-blind clinical trials. There was no claim that the drug had produced any dangerous effects while in use. Indeed, its long use fills the information gap that no clinical trial can—reliable data freely available to the profession on long-term side effects.

As Breyer recognized, the drug’s history fit to a T the “ordinary English meanings of the statutory words.” But in an early manifestation of his eerie deference to administrative expertise, he held that so long as the FDA insisted on the trials, no pattern of common use, domestic or foreign, could meet the GRASE standard. Quite literally, some 4,000 drugs already on the market in 1962 were now all subject to recall under the GRASE standard because none of them had been subject to the requisite trials. That number included those drugs that had survived years, even decades, of practice, both in the United States and in foreign countries.

Breyer’s decision in the teeth of the statutory language thus legitimated the FDA’s sole authority over the collection of information about all drugs. As Gottlieb rightly notes, the FDA’s ability to keep a new drug off the market allows the incumbent with an inferior product to reap monopoly profits that need not exist. That delicious prospect, moreover, makes incumbent drug manufacturers rationally unwilling to mount a frontal assault on the FDA’s rigid, hierarchical structure. That task is left to the patient groups whose anger and frustration with the FDA know no limits. The FDA’s GRASE jurisprudence remains deeply entrenched today.

So what should be done? Gottlieb, himself a former FDA commissioner and very much the Washington D.C. insider, wimps out by putting his personal influence behind two pieces of legislation designed to expedite FDA drug review. The first is the TREAT Act, which is intended to broaden the type of evidence that is admissible in the drug approval trial. It will not combat the FDA’s obsessive reliance on double-blind trials, and may well give the FDA more tools to slow down the approval process. The second program, Advancing Breakthrough Therapies for Patients Act, is intended to allow the FDA to expedite evaluation for drugs like Elaprase. But again, it is toothless to make the FDA do anything, let alone anything intelligent, about the endlessly rising cost of clinical trials for countless drugs. Consider the drug Replagal, which treats another rare enzyme disorder. Its manufacturer, Shire, has cited the high costs of clinical trials as the reason why it won’t test the drug clinically in the United States.

It’s Time for a Frontal Assault on the FDA

Given the wealth of evidence against the FDA’s dangerous worldview, why does Gottlieb think a gentle prod can change the embedded FDA culture? A frontal assault is needed. The FDA uses the wrong metrics to decide whether to let new drugs on the market. The only way to break its blockade is to strip it of its essential powers. There is no reason to prevent the FDA from requiring Phase I trials, which use small patient samples to test for high levels of toxicity. But once that is done, the FDA should stay out of the way. In some cases, such as those for the next anti-cholesterol drug, a full-scale clinical trial may well make sense. The population of potential users is large. There are many good drug alternatives out there already. The short-term consequences of the ailment are not that severe. And, given the alternatives available, it is unlikely that physicians would prescribe a little-known drug.

But different situations demand a flexibility that the FDA will never have. Remove its power to regulate, and more drugs will reach the market sooner. When they do, there are all sorts of organizations, such as the National Comprehensive Cancer Network, that can evaluate information in real time, taking into account not only national but foreign data. Right now, “off-label” use of approved drugs is common anyhow because rational people would never demand the level of certitude that the FDA requires. Break the monopoly and the FDA may actually reform itself in order to remain relevant as a source of information about drugs for patients. Keep the monopoly in place, and the delays in getting drugs like Elaprase and Replagal onto the market will prolong the suffering of innocent people, young and old alike.


Richard A. Epstein, Peter and Kirsten Bedford Senior Fellow at the Hoover Institution, Laurence A. Tisch Professor of Law at New York University, and senior lecturer at the University of Chicago, researches and writes on a broad range of constitutional, economic, historical, and philosophical subjects. He has taught administrative law, antitrust law, communications law, constitutional law, corporate law, criminal law, employment discrimination law, environmental law, food and drug law, health law, labor law, Roman law, real estate development and finance, and individual and corporate taxation. His publications cover an equally broad range of topics. His most recent book, published in 2013, is The Classical Liberal Constitution: The Uncertain Quest for Limited Government (2013). He is a past editor of the Journal of Legal Studies (1981–91) and the Journal of Law and Economics (1991–2001).


Letters to the editor

Outcomes, Not Science

As one who is embarked on this odyssey through the FDA, your approach is spot on. The phase I ordeal is enough to weed out the bad actors. The current process of such extraordinary cost creates a vested interest in outcome, not science or patient interests.

In a proper role, the FDA regs are well defined technical milestones to meet, not a ritual of obscurantism down a rabbit hole where yet another paradox to solve, a riddle to complete, awaits. In real drug development with a proper FDA role, the chips fall where they may based on technical merit. In this scenario, after the drug developer has proved it up (and if not, innovates in another direction without going bankrupt), it is up to the medical community and its patient population to sort through the data and arrive at a consensus of utility for the individual patient. The medical community has walked away from that traditional role by and large – most doctors haven’t opened a technical journal in years, don’t understand even how to begin to evaluate a drug – they have handed that to the FDA and the result is an approval process that takes a decade for second rate drugs to show up that are more politically vetted than worthwhile.

With a real checklist, the FDA can do a job and the risk is known and the patient chooses it. With commonsense rules by the FDA, there would be an explosion of biotech development – there are so many well qualified people walking the streets right now with great ideas that will go nowhere because of FDA over-reach that feeds only the Big Pharma leviathan and tort lawyers. Meanwhile, patients die.

---Richard Huber, CEO, Avopharm


Letters to the editor may be sent to definingideas@stanford.edu. Editors reserve the right to reject or publish (and edit) letters.