The FDA is Not an Example of Government Success.

Whenever threads about Libertarianism pop up, liberals usually cite the FDA as an example of why government is needed, why the market fails, and claim that if the FDA didn’t exist, drugs would be much less safe and on average more people per year would die from drug-related problems than die now under the FDA’s regulatory regime.

I happen to think this is an example of exactly the kind of wrong-headed thinking that pervades most arguments about the value of government programs. Namely, once a program is enacted it’s no longer possible to see what would have happened if it didn’t exist. Successes of the program are trumpeted by politicians and government supporters, and failures ignored. The opportunity costs of regulation are never discussed, nor the economic costs of the regulation itself - since it’s absorbed by the market it doesn’t appear on government balance sheets and is thus ignored.

So, given all that, I think it’s worthwhile to look a little closer at the FDA and try to determine if it really deserves its status as poster boy for the goodness of government.

I’ll start with some history of the various regulations that created the modern FDA, then talk about what the FDA actually does today, then level some criticisms against it.

History of the FDA
The first regulatory act controlling food and drugs was the Pure Food and Drug Act of 1906. This act came about because of public hysteria over food quality after the publication of Upton Sinclair’s “The Jungle”. Before this act was passed, you could buy and sell any drugs on the free market, and you didn’t need a doctor’s prescription. There was no public outcry for regulation until this alarmist book was published. This first regulation did little except provide criminal penalties for mislabeling foods and adulterating the content of foods and drugs. Note that there was no testing for safety or efficacy by the government - just tests to make sure that the food or drug was what you said it was.

In 1912, the act was amended again, this time to add criminal charges against false claims of efficacy.

The act remained unchanged until 1937, when a bad form of a sulfa drug was put on the market, resulting in the deaths of 107 children. The fact that this happened to children added to the public outcry, and the Roosevelt Administration was in the height of its regulatory expansion, so the Food, Drug, and Cosmetic act of 1937 was passed. This was the first time that new drugs actually had to be subject to regulatory approval before they could be sold. But the regulatory process was very light - producers had to submit a form with testimonials from doctors and documentation of tests that were done to prove the product safe. Regulatory approval was automatic after 60 days unless the FDA spotted a problem with the documentation.

There was also an ‘exemption’ clause for labeling requirements, ostensibly to allow manufacturers some flexibility in labeling, which the FDA abused to create a new category of drugs that could only be labeled as safe if they were prescribed by a doctor. This gave the FDA the power to prohibit certain drugs from being sold at all unless they were prescribed by a doctor - a power that was not the intent of the legislation.

By the start of the 1960’s, the average time for regulatory approval of a new drug was still only about half a year. But this resulted in the FDA’s big success, still touted today - the delay of the entry of Thalidomide into the U.S. market prevented it from being in widespread use before the discovery of infant birth defects from the drug. Therefore, the FDA did prevent thousands of birth defects.

As a result of this success, the government pushed for a massive expansion of the FDA’s powers. In 1962, the FDA’s power expanded to regulate manufacturing processes, to require pre-clearance of every human trial, to pre-approve all advertising and labels for drugs, and, in the biggest change, to require testing and certification for efficacy, and not just safety. This last change is primarily responsible for the huge increase in regulatory costs and delays. A big spike in overall development times for new drugs occured after 1962 - before 1962, the average development time of a drug was four to six years. By 1990, it had increased to 16 years - most of that time spent in FDA-controlled certification trials and testing.

After 1962, the number of new drugs entering the market began to decrease, as would be expected from economic theory. A radical increase in the costs of drug certification made many forms of drug research unprofitable, and manufacturers made more efforts to market drugs that could be sold to a mass audience, since the regulatory burden was a fixed cost that didn’t change whether you sold a thousand bills or a hundred billion.

The key thing to note here is how these regulations came to be - it wasn’t a slow, incremental process of fine-tuning and adding and removing regulations as market conditions changed or gaps in current regulation were found. The regulations were fairly static throughout most of the 20th century, punctuated by major new regulatory ‘bursts’ after high-profile events temporarily gave government political capital to use to expand its power. The odds that the regulations crafted in this kind of environment are anywhere close to optimal are vanishingly small. As are the odds that an act designed to regulate a highly technical field in 1962 is in any way appropriate to the R&D and markets in play in 2008. There have been minor changes in FDA regulations over the years, but the essential form and function of the agency has been defined by three incidents spread over 60 years.

Here’s a cite for this information: George Mason Law Review

Yet you yourself provide evidence that this isn’t some irrational complex on the part of “liberals” (I’m not a liberal, I still want drug regulationary bodies), in citing a drug, sold on the open market, that managed to kill 107 children! Isn’t this prima facie evidence of the market failure alluded to by “liberals”?

Further, do you think it’s wise to allow consumers to buy drugs, where there’s a high risk of the development of resistive strains of bacteria developing, without stringent controls on their usage, like antibiotics, at will?

I’m a little slow, so let me see if I’m reading your argument correctly:

“The FDA isn’t an example of success, because its power have been expanded by leaps and bounds at punctuated intervals rather than slowly creeping up over time. It also makes designing drugs in the US wildly more expensive & time consuming, because they regulate judiciously.”

While true, I think most folk would respond by saying “So what?” to the first part, and “that’s exactly what they should be doing” to the second. Am I missing something?

Nice summary Sam. And thanks for starting the new thread.

I’m a little worn out from the ‘Libertarian/fringe’ thread, so if you don’t mind, I’ll post a background null hypothesis for readers to consider as they go through this. And then lurk for a while.

Does anyone on this Board object to:

  1. Having the freedom to select the FDA as the approver of their drugs, exactly as they do today, and

  2. Leaving themselves the option to consider something else if they want to

In other words, safeguarding the option to do something else if they choose to do so. That’s all. It doesn’t mean eliminating the choice of having the FDA certify their drugs. It does mean taking back the option of choice, which doesn’t exist at the present moment.

If someone does object, I would appreciate it if they could explain why.

Extra bonus points for posters who explain why having the 2 options above would affect their personal decision to buy drugs.

Thanks again.

Yes Idaho - I would object to that.

We happen to live in a society where there is a collective assumption for the welfare of others who take upon stupid risks and lose. Quite frankly, I do not want to have my tax dollars going to pay for some 20 year old, or 30, 40 or whatever year old, who is now disabled for the rest of their life because they wanted the freedom to make their own choice - and they got badly burnt by it.

Its one thing to pay for a returning veteran who served his country and is disabled and needs support. As it is, we do not do enough for those folks. I do not want to add a whole new category to the list of societal dependents.

Why beat around the bush? What you’re proposing is the reintroduction of uncertified drugs into the marketplace. Having multiple sources of certification, with no oversight, is as bad as having none: you know nothing about drugs, I know nothing about drugs, neither do the vast majority of people, who are completely incapable of assessing the merits of multiple types of drug certification.

The free market is incapable of stopping bad drugs from entering the market, as the OP by Sam Stone shows. Drug sales are one area where problems need to be stopped before being released to the market, not waiting for hundreds to die then performing a recall.

I’ll object, but not as you desire. Rather, I object to what I see as your (mis)leading and false options. The choices are not as you say, rather they’re:

  1. Having the freedom to select a drug produced by a manufacturer that chooses the FDA as the approver of their drugs, and

  2. Allowing manufacturers to choose a different approver of their drugs (or none at all) if they want to.

In other words, an individual selecting a drug has no freedom of choice in the matter – that freedom is solely the manufacturer’s.

Note that my point is not to argue your advocacy for removing the FDA. Rather, it’s simply to put it on a proper footing, agreeing on premises and all that. Do you agree with my modifications?

We don’t need to look at the history of the FDA to make the comparison. We just need to look at the multitude of drugs which, woefully, are not subject to FDA oversight. So-called “herbal supplements” currently do compete in a free market. The “supplement” companies could, if they chose, establish some independent non-governmental regulatory agency to certify the safety and effectiveness of their products. They don’t, and the result is that many poisons get marketed to the public without anyone knowing until the death toll starts piling up.

The libertarian “solution” would be to let the people who take risks and lose rot. Regardless of the fact that it’s the libertarians insisting that they take that risk. And libertarians seldom seem to acknowledge the existence of bad luck or forces beyond your control; anything bad happens to you, it’s your fault.

I don’t see what is so misleading about IMM’s choices:

  1. Buy drugs that say “FDA Approved”. Or,

  2. Buy drugs that don’t.

Sounds straightforward to me.

Here’s a question:

If the FDA is so awesome at saving us from ourselves, why are our store shelves so full of liquor and tobacco? Thalidomide is mother’s milk compared to that shit. Sounds like a “regulatory failure” to me, sorely in need of a little free market correction.

How many people are fooled by the illusion of safety? “Cigarettes can’t be that bad! Why bother being an informed consumer when the FDA wouldn’t dare let me buy cigarettes if they weren’t good for me?”

Problems caused by the FDA

Here’s what’s wrong with the FDA, and why:

It Delays Necessary Drugs from the Marketplace

Good drugs help people. They save lives or improve our quality of living. The longer you keep the good ones off the market, the more people are harmed by lack of access. In many cases, people die.

There is plenty of evidence that the FDA causes excessive delays in drug certification, and that this has killed tens of thousands of people and caused uncountable others to spend years with less quality than they otherwise might have had. One way to do this is to compare the time-to-market of drugs in the U.S. compared to drugs developed in other countries. For example, drugs in Europe are often available for years before they clear FDA testing in the U.S…

A prime example of this was the availability of beta blockers in Europe for years before they were available in the U.S. Beta Blockers save thousands of lives per year from the prevention of secondary heart attacks in coronary patients. The FDA did not approve the first beta blocker in the U.S. for ten years after it was available in Europe, and other beta blockers that worked better in some patients were blocked much longer. Some estimates put the cost in lives of the FDA’s risk aversion over beta blockers in the tens of thousands of people.

The FDA has introduced some reforms to speed the process up, but only when the politics of the situation pushed them into it. The FDA fast-tracked some AIDS drugs like AZT for this reason, but other, less ‘sexy’ drugs do not get the same consideration.

Now, you might argue that the FDA is actually better than Europe’s system, because the additional lag time results in safer drugs. One way to test this is to look at recall rates of drugs that pass FDA approval and compare them with the recall rates of drugs developed in other countries which do not have an FDA. And in fact, there’s no statistical difference in recall rates - about 3% of FDA-approved drugs that enter the market are recalled, which is roughly the same amount of drugs recalled in Europe and other non-FDA markets.

Another way to determine if FDA approval in terms of efficacy works well or not is to compare on-label vs off-label uses. When the FDA approves a drug for efficacy, it only does so for the stated purpose of the drug. That use is the ‘on-label’ use of the drug. But once the drug is available, doctors are free to prescribe it for any use they see fit. This calls into question the need to test for efficacy in the first place, but it also gives us data points, because we can compare on label uses to off-label uses and see if there are any problems that can be attributed to lack of FDA efficacy testing.

What has been found is that an entire market-based certification system has built up for off-label uses of drugs. This study, which surveyed 500 doctors, is quite illuminating. Almost all of them prescribe drugs for off-label uses. The majority of them said that the FDA should not demand efficacy testing for off-label drugs, but agreed with efficacy testing for the primary use. This makes little sense, because some of these doctors wrote as many as 40% of their prescriptions for off-label uses. Why would they be willing to do that without efficacy testing, yet still demand it for one other use? I believe it is because of the native tendency of many people to see existing regulations as good and necessary, because the regulations have crowded out alternatives or they have simply grown up believing in them and have never questioned them. But when asked about an unregulated market, people can see the mechanisms that already exist and are therefore skeptical of more regulation.
Many off-label prescriptions for drugs are for treatments completely unrelated to the on-label use. For example, the only FDA-approved use for Thalidomide is in the treatment of leprosy, but 99% of the prescriptions for Thalidomide are for completely unrelated uses.

The widespread off-label use of drugs is also interesting, because it provides an argument for those who say that FDA testing is necessary because otherwise people would not get the information they need about drugs and widespread abuses would occur. In fact, in this case, the FDA actually prevents information from spreading, because it prohibits the marketing of drugs for off-label uses, it prohibits labeling of drugs for purposes of off-label use (even prohibiting things like recommended dosages). And yet, it appears that off-label use is not abused, is supported by the vast majority of doctors (94% of those surveyed), and is about as safely prescribed as on-label uses. How can that be?

The answer is as free-market supporters have been claiming - remove the FDA from the loop, and the market will provide mechanisms for evaluation, and tort law will prevent abuse. In fact, such a mechanism has been created. Standard reference works have been created by the AMA and other organizations: AMA Drug Evaluations, American Hospital Formulary Service Drug Information, and U.S. Pharmacopoeia Drug Indications. These standard references aggregate peer-reviewed research and doctor’s findings from around the world and give recommendations and critical information about drugs to doctors. Doctors rely on these trusted intermediaries, plus their own research and literature reviews, and patients trust their doctors. The various certifying boards keep the doctors in line, and malpractice lawyers hunt down those who abuse the system.

The result is that a fairly large percentage of drug prescriptions are actually done under the regulatory framework of the pre-1962 FDA, where safety was tested but not efficacy. Comparisons of that unregulated subset of prescriptions to on-label uses show that off-label uses are just as safe, just as efficacious, and generally make it into use years earlier than FDA drugs.

All of those leads me to conclude that the FDA should have its efficacy requirements removed altogether. This would drastically shorten regulatory trials, lower the costs of drug development and therefore the costs of drugs overall, and make the entire system more flexible in that the uses of drugs could be better tailored to the needs of individuals rather than fitting into the one-size-fits-all FDA approval approach.

This is what I get for taking so long to compose these messages: The message above and subsequent ones will answer your questions.

But as I pointed out above, off-label uses of drugs essentially creates an entire sub-field of medicine where there is no FDA efficacy testing whatsoever, and yet it seems to be working very well, and the vast majority of doctors are strongly opposed to extending FDA regulation into off-label uses. Even the American Medical Association is opposed. So why is efficacy testing so important for the one use originally proposed, but unnecessary for all others? Some drugs are not even used at all for their primary purpose, but almost exclusively prescribed for uses which the FDA has never even commented on.

The post I made also shows that the recall rate is no different in countries which don’t have an FDA, and which have a history of getting drugs to market quicker. How do you reconcile that?

The ‘so what?’ can easily be answered by those who will die of cancer because a promising drug, showing good results in Europe, is withheld from them because of the FDA. It could have been answered by the tens of thousands of people who died from secondary heart attacks because the FDA wouldn’t let them have beta-blockers which were widely available elsewhere in the world.

Pretty poor comparison. No one is claiming any medical benefits for alcohol or tobacco these days, and the Mfrs. of same had no problem making them in the past. IIRC the government made them stop making these claims in the 60’s-70’s. If the FDA had authority over cigarettes, you’d have some sort of leg to stand on. As it is, you don’t. Sorry, this is really an argument against the marketplace regulating itself.

So do doctors with their iron-fisted control of the prescription pad. Shouldn’t we just let the drug manufacturers sell the drugs directly to the consumer? Doctors delay the delivery of and add to the expense of drugs. Fair enough?

I can go to a different doctor.

Can I go to a different FDA?

I do. You may proceed.

Next Problem - Distortion of Incentives against some drugs and in favor of others

Have you noticed that drug manufacturers are increasingly researching ‘lifestyle’ drugs such as Cialis, Propecia, and Viagra? Why do you think that is?

The answer is that the regulatory burden imposed by the FAA is a fixed cost. Imposing a fixed cost skews the profitability of drugs. If a drug can sell 2 billion units and costs $200 million to put through, the cost per pill is 10 cents. But if the drug can only sell 100,000 pills, the cost of regulation is $2,000 per pill. The result is that pharmaceutical companies have been dropping research into drugs for conditions that only affect a small proportion of the population, in favor of drugs they can sell to everyone. This is a terrible unintended consequence, because the drugs that would only be sold in small quantities would tend to be for very serious conditions like rare cancers. The FDA is now trying to create a fast-track certification for these drugs, but let me point out again the inconsistency here - if they fast-track certification for this drug, it’s now available for off-label use, which could be for uses across the wider population. So if that’s acceptable, how do you justify much more stringent certification for other drugs just because their on-label use hits a larger percentage of people?

**Next Problem - Reduction in New Drugs Overall **

Since the introduction of the 1962 amendments to the Pure Food and Drug Act, the number of firms researching drugs, and the number of new drugs entering the market, has declined. The problem is getting worse. In an age where technology is providing increased choice and new products to people in every other industry, the number of new drug releases has been decreasing steadily. Only 16 new drugs were approved in 2007, and 18 in 2008.

Problem: The FDA raises drug costs
People die if they can’t afford the drugs they need. The high cost of drug certification is the primary reason why drugs are as expensive as they are - especially those drugs that apply to small parts of the population. A drug manufacturer has a fixed time window to earn back an investment in a drug before the patent expires and generics eat away at all the profits. This time window, multiplied by the number of people who can be expected to buy the drug, gives a pretty well known overall lifetime sales target for a drug. If a manufacturer has to spend 12 years and $200 million certifying a drug, and then has a fixed window to recoup that money, then those drugs are going to be very expensive. This eliminates many possibly beneficial drugs from even being considered for trials, but for the ones that do make it through, it drives their cost way up. This limits access, increases insurance costs, and is a major factor in the high cost of health care in the U.S.

The result of all this is that it seems to me the clear path forward would be to launch a regulatory review of the FDA with an eye towards eliminating the ‘efficacy’ requirement for on-label use, and for eliminating the restrictions on labeling and information regarding off-label uses.

If the U.S. made just this one change, it would bring all uses of the drugs into line with ‘off-label’ use, which has already shown itself to be safe and effective. It could cut years and tens of millions of dollars from the certification process, and dramatically lower the cost of drugs. It would also help push research back in a direction towards drugs needed for critical health problems affecting smaller subsets of the population and aware from ‘lifestyle’ drugs.

I have no problem with the FDA acting in an informational capacity, and I could accept it requiring safety testing, although I don’t think it’s necessary. But the efficacy requirement is damaging and on balance kills more people than it saves and is destructive to the health care industry. It should be dropped.

Rats. You didn’t earn the extra bonus points. You immediately jumped to ‘welfare of others’.

I’m not sure I buy your argument.

So what if medicines ‘claim’ something, and cigarettes and tobacco don’t? Anybody is free to claim anything they want. Those late-night TV penis-length enhancers that are the stuff of cocktail-party jokes because of their claims. Nobody believes them.

If cigarettes claimed that they were healthy for you, and made you relax, would it really matter? If the little WARNING labels were taken off cigarettes altogether, or made bigger, would it really matter?

A product can claim anything it wants. There’s probably some grey area here in terms of laws protecting consumers from fraud and such. And as Sam Stone pointed out, many drugs today are used for off-label use anyway.

Idaho - I do not think my answer was in the welfare of others. I would say its the opposite - I just do not want to pay for others stupid mistakes. Thats in my own self interest.