The FDA: Challenges for a New Century, a Rough Road Ahead For Would-be Reformers
Most Americans don’t think a lot about the scope, magnitude, and impacts of regulation on their lives. The FDA alone, for example, regulates products that account for more than a trillion dollars annually—25 cents of every consumer dollar, and the average cost (including out of pocket expenses and opportunity costs) to bring a new drug to market is now about $2.6 billion.1
However, the reassurance that regulation provides also has costs, direct and indirect. Regulation that is wrong-headed or that merely fails to be cost-effective actually costs lives, both directly by withholding life-saving products, and also by diverting societal resources to gratuitous regulatory compliance. Therefore, the number of lives saved or other benefits derived from government regulation should always be large enough to offset the costs. The diversion of resources to comply with regulation—good, bad, or indifferent—exerts an “income effect”2 that reflects the correlation between wealth and health. The poorest and most vulnerable in society disproportionately bear the costs and impacts of excess regulation, while they enjoy relatively few benefits. Although it is difficult to quantify precisely the relationship between mortality and the deprivation of income, academic studies suggest as a conservative estimate that approximately every $7 million to $10 million of regulatory costs will induce one additional fatality through this indirect “income effect.” 3 Because unnecessary deaths result from regulators “erring on the side of safety,” excessive regulation has been dubbed “statistical murder” 4 by John D. Graham and other risk-analysis scholars.
In recent years, under administrations both Democratic and Republican, the FDA has made egregious errors in both the formulation of policy and in the evaluation of individual products that have had important consequences. Most of these missteps have been in the direction of excessive risk-aversion or heavy-handed regulation, often because regulators have gotten risk-benefit judgments wrong. In addition, FDA officials have arbitrarily introduced various obstacles to drug testing: They have directed researchers at drug companies to begin trials at inappropriately low dosages; injudiciously limited early clinical trials only to single-dose, instead of multiple-dose, studies; demanded unnecessary, invasive procedures on patients; insisted on efficacy superior to existing drugs; and required that foreign trials be completed and the results submitted before the U.S. trials could even begin.
Sen. Charles E. Grassley (R-IA) once chided drug regulators, “The health and safety of the public must be the FDA’s first and only concern.” He is right, but, particularly when governmental premarketing approval of a product is required, greater health and safety are not synonymous with more stringent regulation. Regulatory agencies should strive to impose only the amount of regulation that is necessary and sufficient, but that’s not in their nature. The late, great economist Milton Friedman observed that to gain insight into the motivation of an individual or organization, look for the self-interest. The self-interest of federal regulators lies not in serving the public interest but in expanded responsibilities, bigger budgets and grander bureaucratic empires for themselves.
As discussed below, FDA’s transgressions are not limited to human drugs, and the impacts of those transgressions have ranged from the creation of disincentives to R&D to significant threats to public health. Because of the widespread dysfunction, malfeasance and nonfeasance that plagues today’s FDA, reforms of several kinds are needed—organizational, managerial and cultural.
