April 29, 2004
Less Regulation Would Increase Number Of Drugs Developed

Alex Tabarrok of Marginal Revolution draws attention to a paper by Nobel Prize winning economist Gary Becker of the Milken Institute’s Center for Accelerating Medical Solutions on the desirability of removing the US Food and Drug Administration's (FDA) power to hold off drug approval until efficacy is demonstrated. (PDF format)

Treatment of serious diseases usually offers options that trade off various risks, for example, forcing comparisons between the likely quality of life and its expected length. No one is really able to read the thoughts of others well enough to make informed decisions on their behalf. This is why patients – not regulators or even physicians – should have ultimate control over treatment. I mention regulators because government authorities, in particular the Food and Drug Administration, make it extremely difficult for the very ill to gain access to unproven therapies. This barrier became more daunting when the FDA instituted regulations in 1962 that signifi cantly raised the cost and lengthened the time it takes to bring new drugs to market.

Before that year, pharmaceutical makers had to show only that drugs appeared to be safe for the vast majority of patients likely to take them. Assuring safety required clinical trials along with other evidence and was not an easy obstacle to overcome. But I do not want to argue here the issue of how safe is safe enough, and I assume that an FDA safety standard, perhaps even a strengthened one, is desirable.

The 1962 regulations, however, went beyond safety to add an efficacy standard. That is, clinical trial evidence would from then on have to strongly support claims that products significantly aid in the treatment of specific diseases or conditions. Indeed, in the final stage of mandated clinical tests, randomized trials must show that those treated with a drug are significantly helped compared with a control group.

This efficacy test greatly lengthened the average time between discovery and approval. Although in recent years the FDA has maintained a “fast track” for high priority drugs, bringing a new therapy to market takes an average of 12 to 15 years. The typical drug must be tested on some 6,000 patients, increasing total development costs by about 40 percent. It follows that a return to a safety standard alone would lower costs and raise the number of therapeutic compounds available. In particular, this would include more drugs from small biotech firms that do not have the deep pockets to invest in extended efficacy trials. And the resulting increase in competition would mean lower prices – without the bureaucratic burden of price controls. In turn, cheaper and more diverse drugs would induce insurance companies and public providers to cover many more new drugs, even when their efficacy was uncertain.

Elimination of the efficacy requirement would give patients, rather than the FDA, the ultimate responsibility of deciding which drugs to try. Presumably, the vast majority of patients would continue to rely on the opinions of physicians about which drugs to use. But many people whose lives are at risk want proactive in reporting what is known about the value of drugs in treating diseases, making data available through the Internet and other consumer-friendly media.

One of the more depressing aspects of serious disease is the sense of impotence – that very sick persons can do little to help themselves. This may explain why placebos sometimes generate positive effects. Indeed, Anup Malani of the University of Virginia found that patients receiving placebos in double-blind trials of ulcer drugs reported significantly less pain than they had before the trials.

Giving people whose lives are threatened by serious diseases greater access to safe, promising (albeit unproven) drugs and other treatments would help their psychological state. More important, it would lower the cost and hasten the development of therapies.

Even a simple safety standard seems excessive for a disease like cancer. The vast bulk of the treatments for cancer are highly toxic. The whole problem with trying to selectively kill cancer cells is that they share too much in common with normal cells aside from their uncontrolled growth.

Alex and Daniel B. Klein have a web site dedicated to examining FDA regulation, FDAReview.org. From the web site:

Medical drugs and devices cannot be marketed in the United States unless the U. S. Food and Drug Administration (FDA) grants specific approval. We argue that FDA control over drugs and devices has large and often overlooked costs that almost certainly exceed the benefits. We believe that FDA regulation of the medical industry has suppressed and delayed new drugs and devices, and has increased costs, with a net result of more morbidity and mortality. A large body of academic research has investigated the FDA and with unusual consensus has reached the same conclusion.

Drawing on this body of research, we evaluate the costs and benefits of FDA policy. We also present a detailed history of the FDA, a review of the major plans for FDA reform, a glossary of terms, a collection of quotes from economists who have studied the FDA, and a bibliography with many webbed links.

From a rights perspective I am especially opposed to allowing the FDA to continue to have the power to slow the delivery of new drugs to the market for diseases that are fatal. If you have just been told you have 1 or 2 or 5 years to live because of some form of cancer why shouldn't you be free to try any drug against your disease? Why should the government have the power to "protect" you. Protect you from what? Death? You are already going to die. Sure, an experimental therapy may kill you sooner. But suppose you have a bone cancer that is going to take 5 or 6 or 7 disabling and extremely painful years to kill you. Isn't it your right as owner of your own body and life to gamble on some alternatives?

There is also the compelling economic case for fewer regulatory obstacles which Gary Becker and many other economists make. As it stands now there are very few organizations with the financial wherewithal to bring a drug all the way to market. This limits how many drugs will be brought all the way through all the steps. Medicinal chemist and blogger Derek Lowe delivers a daily source of sobering commentary on all the scientific, financial, and regulatory obstacles to bringing new drugs to market. The cost of bringing a new drug to market is over $800 million dollars (more like $900 million) Such a large sum of money makes investors extremely risk averse and any drug is a longer shot gamble just isn't going to be developed.

One of the costs is the work that needs to be done for the regulatory process. But another substantial cost is time to market. The longer it takes the higher the cost is in interest for the money to develop the drug. If the efficacy stage was cut out of the regulatory process then the cost of the work on the efficacy stage of regulatory approval as well as the interest cost on all the earlier stages would drop.

Perhaps the "efficacy" stage of FDA approval could be left in place as an optional stage. Anyone who wanted to take only drugs that were approved for efficacy would be free to do so. Any drug company would be free to start selling once the safety stage (or some less restrictive stage in the case of cancer drugs) was passed. The drug company could start selling then and still go after "efficacy" approval in order to later use that additional approval in marketing to doctors and patients.

The result of this proposed reduction in FDA power would be to increase the rate at which new drugs are tried, increase the number of organizations developing new drugs, and to lower the cost of drugs. The rate of advance of biomedical resesarch and biotechnology will accelerate if the cost and time to market for drugs is reduced. We will have longer life expectancies and lower medical bills if the efficacy stage of testing is removed as a requirement for new drug approval.

Share |      Randall Parker, 2004 April 29 12:28 PM  Biotech Advance Rates

Lyle Barbato said at April 29, 2004 2:37 PM:

I would say that safety is not always the determining factor in regard to some medicines. A case in point deals with anti-seizure medications. They have horrible side-effects and simply would never be approved if they weren't shown to have efficacy in preventing people from having 10-20 seizures a day.

By that same token, I would be very surprised if efficacy studies weren't necessary in most FDA cases in order to justify the side effects. Most prescription drugs are not benign substances.

Froth said at April 29, 2004 8:21 PM:

Yeah, Lyle, let those puling whiners eat cake. We have effective and caring bureaucracies to decide sick people's tolerance for risk. Government agencies should be picking winners and losers in this high-tech area. A torrent of information must have bottlenecks, or our solons would be overwhelmed by so many new things coming out of nowhere. Why, next thing you know, some guy in a garage lab would claim to know better than our large mega-corporations! People near death or suffering would just stir up some market-thingy with their vast demand, and that just breeds advertising, competition, support groups, and other icky things. And you just know that people whose lives are being crushed by some condition just won't bother to google up some information about it. The bourgeois are so uninformed.

Lyle Barbato said at April 29, 2004 10:01 PM:

Actually, from a rights perspective I'm against all regulation regarding drugs and the drug war.

But this model seems a little simplistic. Removing efficacy studies wouldn't immediately fix the problem regarding these drugs. Deregulation would lead to a similar industry to the herbal market and unfortunately the average consumer is not a pharmacist and does not know about drug interactions or understand antibiotic resistance. Is it the government's job to protect the people from free markets, blah, blah, blah, like you said? If your decisions could inadvertantly harm others or if incomplete information could inadvertantly cause you to harm yourself without intention, then maybe.

From a rights perspective, if someone chooses to harm themself by taking uppers, downers, cyanide, whatever, then fine. But providing adequate safeguards and information so that someone which doesn't want to won't harm themselves is a concern.

Also, if efficacy studies aren't done through the FDA anymore, would you advocate raising taxes so that the government could do them? Or maybe we should throw those pansy whiners to the curb that want to know whether or not their medications work. Maybe they'll just get lucky and pick the right thing as the free unregulated market on pills grows.

Randall Parker said at April 29, 2004 11:25 PM:

Lyle, If I was diagnosed with cancer I'd seek doctors for advice treatment, not the local herbalist. The vast bulk of the population feels the same. The people who seek herbalist help instead will of course continue to do so.

This partial deregulation would still leave doctors with the power to prescribe the drugs. The drugs wouldn't all suddenly be available Over The Counter (OTC). The bulk of the population would still turn to experts for the same reason people use accountants and lawyers: they know how.

As I stated, the efficacy studies would be optional. That would be a marketing advantage for those drug companies that pursued them.

The government already does fund large studies comparing the relative efficacy of some different treatment options for a number of disorders. Also, a lot of efficacy studies get funded by the pharma companies when, say, company A thinks its drug is better than company B. Sometimes the result comes back opposite of what the funders expected and the funders literally have funded studies whose results undermined their sales. If you were to read Derek Lowe's blow that I link to you'll he has reported on some of those studies just as they were published.

Some efficacy studies are cheap to do once the drugs are widely used since one can just examine the medical records of various people who are using various drugs. I expect to see more of that as the computer systems collect more and more treatment data from family doctors, specialists, and medical centers.

Reason said at April 30, 2004 12:02 AM:

From a high level perspective, it's fairly clear that we live in a society in which the ruling class does not think you own your own body. Government employees have greater rights than you to determine what you can and can't do with your own body in many, many ways.

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