One of the most pressing questions of modern biomedical research asks what the relationship between government regulation and scientific innovation is. Nothing is more common today than the plea that extensive government regulation, at every stage of the development process, is needed to protect innocent and uninformed patients and their families from exploitation by pharmaceutical companies, hospitals, and physicians. The underlying assumption is that good-faith government regulators can fill the void between ordinary people and the self-interested institutions that dominate our private lives. Indeed, filling this void is the purpose of the Food and Drug Administration (FDA), which supervises pharmaceutical companies.
It was not always thus. Recently, I had occasion to visit the New York City Historical Society , which is featuring an excellent exhibit on the 1921 discovery of insulin by scientists Frederick Banting and Charles Best at the University of Toronto. That exhibit displayed a superb book by Thea Cooper and Arthur Ainsberg called "Breakthrough: Elizabeth Hughes, the Discovery of Insulin, and the Making of a Medical Miracle." The title is not hyperbole. In fact, it behooves us to ask: could the same miracle be achieved today under the weight of our heavy system of regulation?
The Strange Path to Discovery
In 1920, diabetes was a condition ripe for research. For reasons that are not fully understood, some people from an early age find themselves unable to synthesize insulin, the hormone that breaks down a sugar called glucose. The result is the build-up of glucose in the bloodstream, which, if left unchecked, results in a grim death by diabetic coma.
Prior to the heroic work by Banting and Best, the standard treatment for diabetes was a relentless form of slow starvation that had been pioneered by one of the unsung early heroes of modern medicine, Dr. Frederick Allen. Around 1915, Allen discovered how to reduce the intake of food to levels so low that individuals could forestall an immediate death by diabetes for a slower death by starvation. Why make this grim choice? Allen realized that the ability to isolate and purify insulin was very much on the horizon. Diabetic children who might live just a few years longer could find themselves the recipient of a far better cure.
One child who won that bet was Elizabeth Hughes, daughter of Charles Evans Hughes. The senior Hughes sported an impressive resume that included items like Governor of New York, two terms as a Supreme Court Justice (the second as its Chief Justice), Secretary of State under Warren Harding and Calvin Coolidge, and much more besides.Diagnosed with a serious case of diabetes in 1918 when she was eleven years old, Elizabeth endured 40 months of strict and unflagging adherence to the Allen diet until she was raised from the near dead in 1922, when she began to receive regular insulin shots that allowed her to live a normal life. She died, with her diabetes kept secret from the world, in 1981 at 73 years old.
Today, thanks to government regulators, the thought that the next insulin could move from successful synthesis to initial marketing in about a year’s time is a pipe dream.
If today’s regulatory rules were in place, Elizabeth would have died a horrific death before her sixteenth birthday. There are two truly impressive features about the discovery and commercialization of insulin: the speed of its discovery and the rapidity of its successful commercialization by Eli Lilly and Company.
As to the former, Frederick Banting, the driving force behind insulin, was something of a head case. In October 1920, as he was desultorily practicing medicine in London, Ontario, and in the midst of one of his chronic depressions, he dreamed up a way to isolate and purify insulin. By the spring of 1921, he was holed up in a ratty laboratory at the University of Toronto that the head of the Department of Physiology, John Macleod, had offered him. Macleod had mixed feelings, to say the least, about entrusting this project to so unstable a human being. But Banting enlisted the assistance of a young medical student, Charles Best, and together they went through a series of calamitous ups and downs, technical dead ends, and outright blunders, before they finally developed a method to isolate insulin. Amid the stench and the filth of the lab, the two men engaged in nonstop experiments to isolate insulin from the pancreas of dogs. Their grizzled experiments required that they kill one dog for its supply of insulin, which they promptly injected into a second dog whose pancreas had been removed.
Notwithstanding innumerable mistakes, frustrations, and setbacks, by the late summer of 1921, Banting and Best had progressed far enough in their work to produce a prototype of insulin that might work for human beings. As far as one can tell, their work was done without any government oversight. Two years later that work would garner Banting and Macleod a Nobel Prize for Medicine. Best was excluded because no one saw fit to nominate him. Macleod was a dubious winner given his indifference, which bordered on hostility, to the project.
Then lay the challenge of commercializing this new drug. Here, a stroke of good fortune brought Dr. George Clowes, head of research at Eli Lilly and Company, together with Banting. In December 1921, Clowes chose to attend a meeting of the American Physiology Society in New Haven. There, Banting made a ham-handed presentation of his basic research on insulin. With the blessing of the far-sighted and humane Josiah Lilly, President of Eli Lilly, Clowes made aggressive overtures to the University of Toronto to gain the rights to produce insulin for the United States market.
But there was a complication. The university’s own Cannaught Antitoxin Laboratories was pushing for the same rights, but without the resources or equipment that Lilly could bring to the venture. Eventually, though, a deal was struck where Lilly supplied the Canadian lab with a large fraction of its output, while also furnishing it with the state-of-the-art equipment it needed for key stages of the purification process.
Left to its own devices, Lilly put on a full court press to manufacture and market insulin, which it promoted under its brand name of Iletin. It achieved this feat astonishingly rapidly, given the logistical and technical obstacles that blocked its path. The only federal government involvement in this venture was, ironically, a temporary government order forbidding the use of pure alcohol in the company’s research—an offshoot of the Prohibition era. Fortunately, that order was lifted, allowing the remaining work, which was formidable, to go on.
In the days before gene cloning, insulin had to be isolated from countless pig pancreases, which necessitated a long-term supply contract with the Chicago-based Swift & Co., a meat packaging company. Once obtained, Lilly faced the major challenge of isolating insulin of sufficient purity and consistency for injection into human beings. They made lots of mistakes and some children died. No one sued.
In the beginning, there was barely enough insulin available to supply it to prominent diabetes specialists and the University of Toronto labs. It was there, at the University of Toronto, that Elizabeth Hughes began her recovery from the dead in August 1922. Her recovery was virtually complete by November of that same year.
Shortly thereafter, insulin took off in the market. As Cooper and Ainsberg report,
In January 1923 Eli Lilly and Company began to sell limited quantities of insulin to physicians through retail druggists. In June 1923, the Rockefeller Foundation chipped in $150,000 dollars to let 15 American and Canadian hospitals help spread the use of insulin. In October of the same year, Iletin was released for distribution directly through physician prescription. At that time it was estimated that 7,500 physicians were treating 25,000 diabetic patients with Iletin.
Lilly also took steps to ensure that in the early stages of commercializing the drug, physicians received free supplies of insulin for their patients. By 1924, an internal Lilly publication, which is currently on exhibit at the New York City Historical Society, shows Lilly reminding its sales agents to stress the company’s good works in the face of impending competition.
For its efforts, the company’s initial sales came to about $1,110,000, which is a tiny figure compared to the ultimate human benefit from the drug.
Today’s constant denunciation of pharmaceutical companies looks weirdly out of place, considering this story.
From start to finish, it took about three years for the conception and commercialization of insulin to occur. The painful question is whether that track record could be repeated today. In one sense, it is impossible. The near-eradication of major scourges, like diphtheria and smallpox, in the first decades of the 20th century means that thankfully we do not have the same major opportunities for medical innovation today as we once did.
Beyond that, the thought that the next insulin could move from successful synthesis to initial marketing in about a year’s time is a pipe dream. Today, before a drug is released for general use, there is an endless cycle of FDA reviews that can take years to complete. Clinical trials, for instance, are a legal necessity. All sorts of animal studies, three stages of trials, strict warnings, and market restrictions both raise the price of treatment and slow down the process of introducing the drug to the market.
The uniform view among doctors and research scientists is that the FDA slows down medical progress by about three to five years.
Fortunately, the FDA of 1923 only had power to remove contaminated batches of drugs from the channels of interstate commerce and could do absolutely nothing to regulate the way in which Lilly ran its laboratories or production lines. But today, the FDA prohibits new and untested therapies on the market, even when a compassionate exception could be made, as in the case of desperate parents who are willing to try an untested cancer drug on their child.
It was, of course, just that frustration that led to the formation of the Abigail Alliance for Better Access to Developmental Drugs. In 2001, Frank Burroughs, who would later found the Abigail Alliance, could not secure the experimental use of Erbitux or Iressa in time for his cancer-stricken daughter Abigail, as advised by her team of oncologists at Johns Hopkins. The drugs did not come until she had already died.
The Abigail Alliance’s website notes that every drug for which it has sought approval in the past eight years is now on the market, which shows that the FDA’s risk aversion can kill thousands of people in the name of protecting them against "quack" treatment. The statist mentality that created and expanded the FDA is still very much in play in the courts, as the judicial effort of the Abigail Alliance to claim a constitutional right to receive experimental therapies was roundly rejected in the Circuit Court for the District of Columbia. Once again, state power dominates individual choice.
In a larger sense, the sorry role of the FDA is an outgrowth of the misguided progressive belief that benign government expertise can save ordinary citizens from abuse and misfortune. Unfortunately, it does not seem to work out that way.
I have attended countless meetings of doctors and research scientists in which the role of the FDA was discussed. The uniform view is that the FDA slows down medical progress by about three to five years. These doctors, however, are not willing to state this publicly for fear of administrative revenge. All of their simmering resentment travels below the radar for a simple reason. The best way to throttle free speech is not through punitive or criminal measures, but to ensure that individuals and firms who take on the government find that their FDA submissions are subject to innumerable administrative delays that are effectively unreviewable in court, except at the cost of still further delays. These regulators hold monopoly power, and they know it. They can use their routine power to stifle their critics.
The current regulatory regime needs a prompt reversal to the earlier status quo. If the comparisons between Abigail’s Erbitux and Lilly’s insulin tell us anything, it is that medical progress and innovation take place not because of government regulation, but in spite of it. It is time to change that mindset and that institutional reality.
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).