The FDA Can’t Manage Its Own Risk Problem

By Raymond J. March. He is a professor of economics at North Dakota State University.

"Risk management is the leading reason the Food and Drug Administration cites medical device makers for failing to meet quality requirements, which makes it all the more striking that when companies look to the agency for guidance on how to do it, the answer is not very helpful.

Keisha Thomas, associate director for compliance at the FDA’s Center for Devices and Radiological Health, told attendees at a recent industry conference that risk management should be “fluid, living, breathing, moving, evolving constantly” and “in a state of continuous improvement all the time.”

Talk about a non-answer.

Private companies—whether making medical goods or anything else—flourish or fail by assessing risk well. The FDA doesn’t face that discipline. The agency’s only real power is to remove products from the market or stop them from entering it. That is a blunt instrument applied to an incredibly dynamic market for medical goods.

More importantly, accepting risk is a matter of personal preference and available alternatives—circumstances that differ for every patient and cannot be aggregated into a one-size-fits-all standard without discarding what makes medical treatment effective in the first place.

The incentive structures are simply different, leading to different outcomes. Public regulatory bodies tend toward over-stringency—making compliance costly and difficult while also pushing patients toward less-safe alternatives. Private entities may set imperfect standards, but they better preserve the patient-physician relationships that make treatment work. When directly compared, private efforts often outperform their public counterparts.

The case of Accutane illustrates this well. Before the FDA intervened, Hoffman-LaRoche privately managed the drug’s serious risks—including its potential to cause birth defects—through a voluntary physician registration system and patient consent protocols. From 1989 to 1998, pregnancy rates among female Accutane users nearly halved under this private program. The FDA considered it a failure anyway and replaced it with its own program, SMART, in 2002.

SMART was so burdensome that many physicians stopped prescribing Accutane. Prescriptions fell 23 percent in a single year, while pregnancy rates went up. The FDA then replaced SMART with an even more stringent program, iPLEDGE, which produced similar results: more paperwork, more patient lock-outs, and no meaningful reduction in pregnancies. Patients responded by purchasing Accutane online without prescriptions—precisely the outcome the FDA’s intervention was meant to prevent.

Accutane is a drug, but the FDA’s record on medical devices is, if anything, worse. The agency approved a Swedish fertility app called Natural Cycles as the first FDA-cleared contraceptive app in 2018, years after the market had already produced dozens of similar apps, roughly three-quarters of which accurately predicted fertile days without any FDA involvement. Natural Cycles itself was under investigation in Europe for unintended pregnancies shortly after receiving its FDA blessing. It is not clear that the agency’s approval added anything the market hadn’t already sorted out—and the evidence suggests it may not have raised the bar at all.

Then there is the Owlet Smart Sock. After five years on the market, monitoring the pulse and oxygen levels of over 600,000 infants with 90 percent accuracy, the FDA sent Owlet a warning letter in 2021, declaring the product a medical device requiring agency approval. The sock was pulled. No FDA-approved alternative that monitored both pulse and oxygen existed.

As I noted at the time, the cost was the hundreds of thousands of infants who went without a reliable monitoring device. By 2022, with RSV sweeping the country, the cost of over-caution fell on the parents and infants the FDA aimed to protect.

There is a clear reason the FDA struggles to provide effective risk-management guidance and seems to flounder when asked to manage risk for others: it can’t.

Risk is best addressed by markets, not regulations or federal guidelines. The FDA’s incentives run toward removing products and avoiding blame, not toward preserving patient access and physician judgment. Ironically, it’s a real risk to our health and the healthcare sector to imagine otherwise."