Can Dr. McClellan Cure the FDA?

Friday, January 30, 2004

The first anniversary of Mark McClellan’s appointment as head of the FDA is a good time to ask about the health of the nation’s most ubiquitous, omni-present regulatory agency. The question is, Can Commissioner McClellan cure what ails the agency—and industry?

The FDA regulates products that account for about 25 cents of every consumer dollar, more than a trillion dollars worth annually, and excessive or ill-conceived regulation is detrimental both to innovation and to public health.

Drug development is particularly unwell.

The total time required to bring a single drug to market, from synthesis of the molecule to marketing approval, has more than doubled (from 6.5 to about 15 years) since 1964. In spite of more powerful and precise technologies for drug discovery, purification, and production, development costs have skyrocketed. According to the Tufts Center for the Study of Drug Development, between 1970 and 2003 a company’s average expenditure to develop a single new drug increased from $138 million to more than $800 million. And although between 1970 and 2000 research-based companies’ R&D outlays soared from about $2 billion to $30 billion, the number of new drug approvals barely budged.

An important reason is that the highly risk-averse FDA keeps raising the bar for approval, especially for innovative high-tech products. Human gene therapy and other treatments tailored to individual patients have been hit especially hard. Americans are, literally, dying for regulatory reform.

Mark McClellan is an economist as well as a physician. His problem-solving approach and personal integrity are refreshing after the two preceding FDA commissioners. There is no longer undue politicization at the agency, no hint of White House influence over which product approvals are accelerated or retarded. (This is ironic, inasmuch as McClellan’s links to the White House are tight: His brother Scott McClellan is President Bush’s press spokesman.)

Dr. McClellan recognizes that the FDA’s raison d’être must no longer be to meet arbitrary, internal performance milestones but actually to reduce the time and costs of clinical testing: for example, by working with companies early on to maximize the chances of ultimate (and early) approval. He put an end to a trick that FDA reviewing divisions played to “game” their perform-ance numbers: Often they would stop the time clock for reviewing New Drug Applications (which are submitted by companies to the agency in order to obtain marketing approval) by asking for additional information at the eleventh hour of the time allotted for FDA review. This helped to create a paradox: FDA officials were meeting their performance goals, but few new drugs were being approved and the costs and overall (calendar) time required for drug development were soaring.

Dr. McClellan has expanded the use of therapeutic “surrogate end points”—laboratory tests or physical findings that one would expect to predict a drug’s efficacy—in lieu of more clinically definitive criteria such as prolonged survival. Such surrogate end points might include, for example, scans or blood tests that could demonstrate a drug’s ability to shrink a tumor or affect Alzheimer’s disease. And the FDA has announced that it will join with the National Cancer Institute to form an Oncology Task Force charged with identifying novel markers, or indicators, of efficacy in cancer trials.

The past year has seen a flurry of drug approvals, several of which have been impressively aggressive. For example, Millennium Pharmaceuticals’ Velcade was approved for the treatment of multiple myeloma, a blood cancer, on the basis of improvement in laboratory tests in a relatively early-stage clinical study. (Usually, the FDA requires evidence of actual increased
survival, a policy that gave rise to a wonderfully illustrative cartoon: Two scientists are in the laboratory, going over their results. One of them holds up a test tube and says to the other, “It looks as though this compound will confer immortality, but it will take forever to test it.”)

Although the marketing approvals during Dr. McClellan’s first year offer reason for optimism, they should not give rise to over-interpretation. The rash of approvals is at least in part a variation on the well-known “December effect” at the FDA—so-called because as regulators attempt to improve their annual statistics with the year drawing to an end, a hugely disproportionate fraction of FDA approvals are made in December. During the past year, the reviewing divisions have been trying to impress the new commissioner with their “born again” commitment to moving products through the approval process.

But this fervor is likely to wane because Commissioner McClellan has done little to reform the culture of risk aversion and the fear of innovation that are pervasive at the FDA—reform that is essential to effect meaningful change. The hidden agenda of regulatory agencies—not just the FDA—is that career bureaucrats generally care more about staying out of trouble than about public health. That biases them against innovation.

A regulator can commit an error by permitting something bad to happen (approving a harmful product) or by preventing something good from becoming available (delaying or denying approval of a beneficial product). Both outcomes are bad for the public, but the consequences for the regulator are very different. The first kind of error is highly visible and causes regulators to be assailed by the media and patient groups and investigated by politicians. But the second kind of error—which keeps a potentially important product out of consumers’ hands—is usually invisible, a non-event. Many senior FDA officials, therefore, make decisions defensively, avoiding the first kind of error at all costs, even at the expense of committing egregious errors of the second kind.

The FDA is an agency of approximately 9,000 employees, only a handful of whom are political appointees. Career employees tend to favor the status quo, and they are adept at resisting reform, especially if it requires them to undertake complicated rule making. Further complicating efforts at significant reform, the FDA commissioner is relatively far removed from routine product review and approval, most of which occurs largely autonomously within the agency’s product-specific “centers,” which are focused on drugs, medical devices, and so on. The entities that regulate food, veterinary drugs, and biologicals (blood products, vaccines, and gene therapy), in particular, are plagued with senior officials who have shown themselves to be overly timid, risk averse, or simply incompetent. One prominent drug industry leader has complained about FDA officials continually playing “guess what I’m thinking,” instead of negotiating forthrightly with company officials. Another favorite game is “gotcha,” in which FDA staff look for reasons not to approve products, instead of working constructively and in good faith to get safe, effective products to patients who need them.

FDA reviewers and managers freely express their contempt toward companies that question or complain about FDA decisions, and companies are justly fearful of reprisals. (Retribution by a regulator can result in the delay of an approval by months or even years and the loss of hundreds of millions of dollars.) And even in the absence of serious, specific points of disagreement, the atmosphere faced by industry is sometimes contentious. A now-retired director of the neuropharmacology division of the FDA’s Center for Drug Evaluation and Review warned representatives of one company that he considered them “the enemy,” that there exists a fundamental conflict between the interests of industry and the FDA, and that he intended to treat the company accordingly.

Yet no senior civil servant has been removed.

On Dr. McClellan’s watch, the FDA continues to throw rigid, one-size-fits-all solutions at non-problems and to arrogate ever-greater control over drug development and testing. An example is the agency’s recent decision to deny any drug company the ability to obtain multiple trademarks for the same drug—for example, Sarafem/Prozac and Propecia/Proscar—even if they are different formulations for different ailments in different patient populations. Although the adoption of multiple trademarks entails some added manufacturing and packaging expense, drug companies favor them because they make it easier to market products from distinct therapeutic classes to different groups of consumers. Moreover, multiple trademarks enable patients to avoid the stigma of taking a drug widely known to treat an ailment that is regarded as somehow ignominious or humiliating, such as AIDS, schizophrenia, sexual dysfunction, or leprosy.

In the absence of demonstrable safety or efficacy issues, this decision appears to lie outside the FDA’s mandate, a disturbing example of Big Brother dictating corporate strategy. More important, it may exceed the agency’s legal authority. Attorney Marc J. Scheineson, former FDA associate commissioner for legislative affairs, argues that the agency’s policy toward multiple trademarks is possibly illegal under several theories, including the absence of required formal notice-and-comment rule making, interference with constitutionally protected commercial speech, impermissible “taking” of corporate “property,” and arbitrary and capricious action.

Another example is the agency’s support for legislation that requires pediatric testing of drugs in development. (The FDA tried to impose this requirement by rule making, but the courts found that it exceeded the agency’s mandate.) Passed by Congress and signed by President Bush in December, it permits the agency to demand that drug manufacturers perform pediatric testing on adult drugs that are used “off label” for children. Even if a drug is intended to be labeled for use by adults only, it will have to be tested on children if there were a chance that pediatricians would use it. The agency claims that the new requirement will protect children, but it will likely lengthen the drug approval process, resulting in fewer new drugs overall.

A bad idea on its merits, the pediatric rule is another example of the FDA meddling in companies’ prerogatives and could be the start of a slide down a slippery slope to requiring testing in other groups, such as the elderly and pregnant women. The result? Even greater costs and prolongation of clinical testing and delays in the availability of new drugs.

Dr. McClellan has also failed to modernize the FDA’s bureaucratic, risk-averse approach to regulating old drugs that have been on the market for decades without specific FDA approvals—although no significant concerns have been raised about their safety or efficacy. The FDA has said that if the manufacturer of one of these drugs expends the effort and expense to obtain an approval, all of its competitors will be forced off the market until they also obtain approvals. In other words, in order to establish an incentive for manufacturers to obtain approvals, the FDA promises to grant a regulatory monopoly to the first manufacturer to obtain approval, until competitors can gain approval.

This recently occurred with extended-release guaifenesin, a well-known cough suppressant. The FDA rationalized forcing competitors off the market as necessary to “protect the integrity of the drug approval process.” Arguably, the outcome has been exactly the opposite: With no incremental protection of public health, the approved product now sells for 700 percent of the price of comparable products prior to the FDA’s action. Once again, the government has provided us a hugely expensive solution to a non-problem.

Finally, Dr. McClellan is a strong proponent of levying discriminatory taxes—euphemistically called “user fees”—on FDA-regulated industries. Recently, he endorsed their expansion from drugs and biologics to medical devices. These user fees are equivalent to the chickens paying protection money to the foxes.

Even granting Dr. McClellan the benefit of the doubt—a year is, after all, not terribly long—his best efforts at reform ultimately may be frustrated by history. The FDA’s long-standing hostility and regulatory excesses toward drug companies have caused the number of submissions for marketing approval to decline steadily since 1995, so there is now relatively little in the pipeline awaiting approval. Not even the most highly motivated bureaucrats can approve applications that haven’t been submitted.

Thus, even if Dr. McClellan is able to make good on his promise to improve the agency’s efficiency, it is unlikely that in the near future we’ll see a marked increase in the number of drugs approved. But if he is able to begin in a serious way the process of reforming the infrastructure, internal performance standards, and attitudes at the FDA, Dr. McClellan will have left a valuable legacy.