resident Clinton recently vetoed Republican-sponsored tax relief for married couples—the “marriage tax”—saying that he was holding out for a completely unrelated new entititlement benefit that would expand Medicare coverage to prescription drugs. But this action is disingenuous. During his eight years in office, the policies of Mr. Clinton’s Food and Drug Administration (FDA) have pushed the time and costs of drug development to stratospheric levels—costs that have been passed on to patients and had other undesirable effects. It’s past time for reform of the FDA.
Prescription drugs are expensive, to be sure. The days are gone when a vial of antibiotic capsules or a tube of steroid cream cost a few bucks; but drugs remain highly cost-effective, and pharmaceutical advances have made important inroads against a variety of acute and chronic and illnesses.
However, the regulation of these products—which vitally affects the availability of new products to patients in need—is a shambles. Drug regulation, a monopoly of the FDA since the precursor of the present regulatory scheme was established in 1938, has become overkill and actually threatens public health. Regulation by the FDA is slow, overly bureaucratic, and hugely expensive: bringing a single drug to market now requires 12–15 years and costs upward of $500 million, by far the most lengthy and expensive process anywhere in the world. Recent surveys of physicians in various medical specialties reveal that the FDA compromises their ability to give patients the best care and actually costs lives.
Overzealous drug regulation by the FDA actually threatens public health.
Yet during this time, ironically, fundamental changes have taken place in government, industry, medicine, and society that argue for a less costly, imperious, intrusive, and monopolistic system—one that will foster innovation without sacrificing safety. There is a broad consensus among those who study or interact with the FDA that the agency currently imposes more regulation of pharmaceuticals than is necessary and sufficient. Studies over more than 40 years have repeatedly identified the same problems and suggested similar solutions. These remedies include broad, structural changes and specific improvements, all focused on reducing the time, cost, complexity, and unpredictability of the process. But the FDA has been slow and obdurate in implementing such changes, and Congress has not provided aggressive, effective oversight. The net effect has been a deterioration of the system and its ability to meet real public health needs.
A Regulatory Morass
One of economist Milton Friedman’s best-known observations is that individuals and organizations usually act in ways that favor their own self-interest. Certainly the policies and product decisions of the FDA and other regulatory agencies confirm the truth of that insight. Civil servants and political appointees spend a lot of time and energy thinking about simply staying out of trouble and avoiding adverse publicity, and this, combined with the arbitrariness and lack of accountability of the current system, encourages various kinds of behavior that are inimical to the public interest. For example, special interest groups try to gain advantage from the FDA by special pleading; individuals have increasingly found that by forming aggressive advocacy groups—as patients suffering from AIDS have done—they can force the FDA to expedite approval of medications to treat their afflictions. Regulators tend to favor certain groups solely because of their skillful application of political pressure and manipulation of the media. This means that other medications with greater public health impact but less well-organized constituencies might receive less than equal treatment. Such capriciousness and vulnerability to pressure reflect the way that the current system is gamed. Regulators do what is in their own self-interest—in this case, avoiding a thrashing on the evening news for foot-dragging on certain approvals—instead of what is in the overall public interest.
We need a less costly, imperious, intrusive, and monopolistic system of drug regulation—one that will foster innovation without sacrificing safety.
Another aspect of self-interest pertains to regulators’ fear of being perceived as too eager to approve new products. In the early 1980s, when I headed the team at the FDA that was reviewing the NDA, or new drug application (approval of which permits the product to be marketed), for recombinant human insulin, the first drug made with gene-splicing techniques, we were ready to recommend approval a mere four months after the application was submitted. (At that time, the average time for NDA review was more than two and a half years.) With quintessential bureaucratic reasoning, my supervisor refused to sign off on the approval—even though he agreed that the data provided compelling evidence of the drug’s safety and effectiveness. “If anything goes wrong,” he argued, “think how bad it will look that we approved the drug so quickly.” (When the supervisor went on vacation, I convinced his boss to sign off on the approval.) The supervisor was more concerned with not looking bad in case of an unforeseen mishap than with getting an important new product to patients who needed it.
This system lacks predictability, fairness, and integrity, but given the existing incentives and disincentives—risks and rewards—at the FDA, an official’s decision to put self-interest above the public interest is hardly surprising. However, as former FDA commissioner Donald Kennedy has observed, individual regulators are not wholly blameworthy for conforming to a system that rewards certain dubious patterns of decision making.
Type 1 and Type 2 Errors
Regulatory officials’ tendency to maximize their self-interest must be seen in light of the marked asymmetry between the two basic kinds of erroneous decisions that a drug regulator can make: (1) a harmful product is approved for marketing, a type 1 error in the parlance of risk assessment; or (2) a useful product that treats or prevents disease is rejected, delayed, never achieves marketing approval, or is inappropriately withdrawn from the market, a type 2 error. In other words, a regulator commits a type 1 error by permitting something harmful to happen and a type 2 error by preventing something beneficial from becoming available. Both situations have negative consequences for the public, but the outcomes for the regulator are very different.
Regulation by the FDA is slow, overly bureaucratic, and hugely expensive: bringing a single drug to market now requires 12–15 years and costs upward of $500 million, making ours by far the most lengthy and expensive process anywhere in the world.
A classic type 1 error (or what was perceived as a type 1 error, which is much the same thing) was the FDA’s approval in 1976 of the swine flu vaccine. Although the vaccine was effective at preventing influenza (of a strain that, ironically, did not cause an epidemic), it had a major side effect that was unknown at the time of approval: temporary paralysis from Guillain-Barré syndrome in a small number of patients. This kind of mistake is highly visible and has immediate consequences—the media pounces, the public denounces, and Congress pronounces. The developers of the product and the regulators who allowed it to be marketed are excoriated and punished in modern-day pillories: congressional hearings, television news magazines, and newspaper editorials. Because a regulatory official’s career might be damaged irreparably by his good-faith but mistaken approval of a high-profile product, decisions are often made defensively—in other words, to avoid type 1 errors at any cost. This brings to mind, of course, the review of human insulin described above, where the supervisor delayed the approval, not because of any concerns about the quality of the product or the data supporting its approval but only because it would “look bad” if a problem ultimately occurred in a quickly approved drug.
This predilection, or pressure, toward commission of type 2 errors is not the way the system is supposed to operate. Lifetime tenure for civil servants—which itself exacts costs—is supposed to free regulators to consider only the public interest as they render decisions. Instead, it has given us the worst of both worlds: on the one hand, it has become virtually impossible to remove incompetent or adversarial federal civil servants; on the other, we are forced to live with decision making by federal officials that is frequently influenced by perceived risks to their careers.
Given the existing incentives and disincentives at the FDA, it is hardly surprising to find that civil servants and political appointees frequently make decisions that put self-interest above the public interest.
Type 2 errors in the form of unreasonable governmental requirements and decisions can delay the marketing of a new product, lessen competition to produce it, and inflate its ultimate price. They can even prevent marketing of a product entirely. Consider the FDA’s precipitate and inappropriate response to the 1999 death of a patient in a University of Pennsylvania gene-therapy trial for a genetic disease. Within a few months, the FDA had clamped several other kinds of unwarranted controls on gene-therapy investigators, including the requirement for all sponsors of gene-therapy products to submit to the agency substantial additional information—not only about the trials themselves but also about animal studies and materials that may have been intended for use in clinical trials but were not used for one reason or another. Although the cause of the incident had not been identified, and the product class (a preparation of the gene the patient lacked, encased in an enfeebled adenovirus) had been used in a large number of patients with no fatalities and serious side effects in only a small percentage of patients, the FDA reacted disproportionately. The agency not only stopped the trial in which the fatality occurred and all the other gene-therapy studies at the same university but also halted similar studies at other universities as well as experiments using adenovirus being conducted by the drug company Schering-Plough—one for the treatment of liver cancer, the other for colorectal cancer that had metastasized to the liver. In these ways, and by publicly excoriating and humiliating the researchers involved (and halting experiments of theirs that did not even involve adenovirus), the FDA cast a pall over the entire field of gene therapy.
Although they can dramatically compromise public health, type 2 errors caused by regulators’ poor judgment, timidity, or anxiety seldom gain public attention. Usually, only the company that makes the product is likely to be aware. Likewise, if the regulators’ mistake precipitates a corporate decision to abandon the product, cause and effect are seldom connected in the public mind. There may be no direct evidence of the lost societal benefits or of the culpability of regulatory officials. Exceptions exist, of course. A few activists, such as the AIDS advocacy groups that closely monitor the FDA, scrutinize agency review of certain products and aggressively publicize type 2 errors. Congressional oversight should provide a check on regulators’ performance, but only rarely does it focus on their type 2 errors (type 1 errors make for more exciting hearings, with injured patients prominently displayed). Even when such mistakes are exposed, regulators frequently defend type 2 errors as erring on the side of caution, as they did in the Pennsylvania gene-therapy case. Too often this euphemism is accepted uncritically by legislators, the media, and the public, and our system of pharmaceutical oversight becomes progressively less relevant to the public interest.
Self-Interest Defeats the Public Interest
The self-interest of individual officials and the FDA as a whole profoundly affects the agency’s receptivity to and the fate of regulatory reform. During the past 30 years, agency officials have received no bouquets from Congress or the public for attempts to decrease regulatory responsibilities, improve efficiency, and reduce requirements. Quite the opposite—the rewards have gone to those who have succeeded in expanding their responsibilities, budgets, and empires. Moreover, busywork, such as the creation and evaluation of milestones in performance plans, has become a major industry within the FDA.
More than a hundred studies, inquiries, and congressional hearings have documented the negative impacts of the existing system. According to a report from the Tufts Center for the Study of Drug Development, “the regulatory activities of the FDA may constitute the most thoroughly investigated and studied program of government regulation in history.” As early as 1955, the report of the Hoover Commission’s Task Force on Federal Medical Services found that the FDA was outmoded, used punitive methods, and had inadequate staff. In 1976, the President’s Biomedical Panel concluded that the FDA was a “formidable roadblock” and that the agency’s delays and costs constituted a “hazard to public health.” Between 1982 and 1992 alone, the activities and policies of the FDA were the subject of nine major reports or sets of recommendations from government sources and independent commissions. These recommendations, however, just seem to get filed away and forgotten.
At least 29 independent studies have produced recommendations that would transfer some tasks performed internally by the FDA to outside experts. Other oft-repeated recommendations include overarching management and structural reforms and changes in the FDA’s culture that would redress regulators’ single-minded avoidance of type 1 errors (although it has seldom been stated in those terms).
Meaningful change requires congressional action, but Congress’s sporadic interest in drug regulation has usually taken the form of spurious, politically motivated concerns about underregulation. The bottom line is that Congress’s failure to carry out its oversight and legislative responsibilities has permitted the problems to become progressively worse and more entrenched. We face a situation in which neither the FDA nor Congress possesses sufficient commitment to the public interest to undertake true reform.
A Reform Proposal
Three things are clear: reform of drug regulation is necessary, it must be fundamental in nature, and it must come from outside the agency via new legislation. The plan for reform proposed here maintains existing or equivalent standards—and assurance to consumers—of product purity, potency, and quality. It retains the legal requirement for premarket demonstration of new drugs’ safety and effectiveness, the agency’s final sign-off authority for product marketing, and the FDA’s responsibility for overarching safety issues. The seminal change is that day-to-day oversight of drug testing and the initial NDA review will be performed by nongovernmental, FDA-certified entities: drug certifying bodies, or DCBs. The FDA thereby becomes primarily a certifier of certifiers, rather than a certifier of products. The proposed model
Transfers much of the responsibility for oversight of clinical trials and NDA review to nongovernmental experts in the DCBs
Finances DCBs with user fees, via contractual arrangements between sponsors (drug manufacturers) and DCBs
Introduces competition among the DCBs for drug sponsor clients
Introduces competition between DCBs and certain foreign regulatory agencies that are certified to submit an approved registration package directly to the FDA
Delegating a significant portion of the oversight responsibility to nongovernmental entities will simultaneously introduce into the regulation of drug development several positive elements:
Competition among DCBs for drug companies’ business, creating pressure for greater innovativeness and efficiency in the oversight process
Competition between DCBs and the most respected European regulatory agencies (whose recommendation for approval would be tantamount to a positive recommendation from a U.S. DCB)
A more appropriate balance than presently exists between regulators’ own incentives and disincentives, risks and rewards
This potent combination of competition and incentives, which will be more efficient at getting safe, effective drugs to patients, can transform the current or existing drug development process and reverse the upward spiral of increasing time and costs. The public will benefit directly by earlier access to greater numbers of less costly drugs and indirectly by greater robustness and productivity in the pharmaceutical industry.