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."

The FDA’s New Leaders Can Unleash Innovation

Streamlining effectiveness evaluations à la Operation Warp Speed would unlock trillions in economic value

By By Tomas J. Philipson. Excerpts:

"Cutting a year off the FDA’s decade-long approval process would generate about $10 trillion in economic value, according to a new study"

"speeding up development by one to six years for FDA-approved medical products (small-molecule drugs, biologics and medical devices) would unlock between $10 trillion and $49 trillion in economic value."

"If you are willing to pay $100 to brush your teeth for a year but a toothbrush costs $5, the multiple of consumer gains above price is 20. A substantial base of economic evidence puts this multiple around 15 for medical products, which had aggregated U.S. net sales of about $676 billion in 2024. Multiply these sales by 15 and you get into multiple trillions"

"effectiveness trials that provide evidence on how well medical products work for an imaginary average patient, as opposed to real heterogeneous patients who differ in their assessments of the risks and rewards. This one-size-fits-all clearance applies to products already proven safe."

"The FDA could unleash trillions in value by taking six steps to shorten effectiveness assessments, akin to the methods of Operation Warp Speed during Covid-19."

"Under current procedures, once a product is cleared for safety, the FDA can take up to a decade to establish effectiveness for one particular use of a drug. But it then allows the private sector to judge effectiveness for subsequent off-label uses." 

Dr. Makary and Mr. Hyde at the FDA

The agency kills a therapy for melanoma despite the evidence of progress against deadly tumors

WSJ editorial. Excerpts:

"Patients with metastatic melanoma who stop responding to other immunotherapies typically die in less than a year. In Replimune’s trial, tumors shrank in nearly all patients and vanished in one of six. About a third went into remission. FDA staff were so impressed by the results that the agency designated RP1 a “breakthrough therapy” in November 2024 to expedite its review."

"As we’ve reported, Dr. Prasad last summer overruled career staff to reject RP1. The agency’s main criticism was that its trial lacked a control arm, though this would be unethical in late-stage patients who failed to improve on other therapies."

"Start with the claim that the tumor-shrinking effects of RP1 could not be disentangled from that of another immunotherapy that patients were taking concurrently. But all patients had previously relapsed or failed to respond to other immunotherapies. RP1 is intended to help these refractory patients by boosting their response to other therapies."

"cancer in responding patients advanced after a median 30.6 months when they also got RP1, versus 4.4 months of being treated with other immunotherapies."

"The FDA implicitly concedes that the RP1 results are impressive by contriving ridiculous reasons to argue they could be exaggerated." 

Obesity Economics: How Subsidies Distort the American Diet

Federal subsidies drive food production, consumption, and — unintentionally — chronic disease. Now we’re being asked to subsidize weight loss drugs to fight what farm policy broke. 

By Laura Williams of AIER. 

"Let me introduce you to Sam. Sam has obesity, Type 2 diabetes, heart disease, and high blood pressure. His diet consists mostly of refined grains and trans fats. He’s got cabinets full of dirt-cheap junk food and sky-high healthcare costs to address its effects. He takes home $27,000 a year, but spends $36,000. He’s in debt up to his jaundiced eyeballs, and he wants his niece to foot the bill for weight-loss medication.

As a real-life niece of my Uncle Sam, I’m concerned about his diet. Some 56.2 percent of the daily calories consumed by US adults come from federally subsidized food commodities: corn, soybeans, wheat, rice, sorghum, dairy, and livestock. While these calorie-dense foods once made sense for a government preparing for famine or total war, in recent decades they’ve instead helped make us fatter and sicker. 

Obesity is a top driver of healthcare costs. One study compared the health of people who eat mostly foods the federal government subsidizes to those who eat fewer. Those who follow the revealed preferences of what the government subsidizes (rather than the diet it consciously recommends) are almost 40 percent more likely to be obese and face significant diet-related health issues. Those with the highest consumption of federally subsidized foods also have significantly higher rates of belly fat, abnormal cholesterol, high levels of blood sugar, and more markers of chronic inflammation. All these are increasing contributors to the most common causes of death in the developed world.

The negative impact of subsidized crop consumption on health — while it can’t be called causal — persists even after controlling for age, sex, and socioeconomic factors. But life does not control for those factors.

The Great Grain Giveaway

The federal government recommends one diet to Americans, and subsidizes another. The Dietary Guidelines for Americans from the USDA and HHS promote eating fruits, vegetables, whole grains, protein, and moderate dairy, while limiting saturated fats, sugars, salt, and refined grains. According to data compiled for Meatonomics, American agribusiness receives about $38 billion annually in federal funding, with only 0.4 percent ($17 million) going to fruits and vegetables. Just three percent of cropland is devoted to fruits and vegetables, despite USDA guidelines’ insistence that they should cover half of your dinner plate. Just 10 percent of Americans consume the recommended amount of fresh produce, and the poor consume the least. (Fruit and vegetable producers’ exclusion from the federal direct payments program provides a valuable example of a food industry thriving without significant subsidies. They do, however, rely heavily on migrant labor to lower costs.)

Instead, the US spends tens of billions annually to subsidize seven major commodities. The three largest farm subsidy programs contribute 70 percent of funds to producers of just three crops — corn, soybeans, and wheat. Approximately 30-40 percent of US corn, over half of soybeans, and nearly all sorghum feed livestock, heavily discounting high-fat, lower-nutrition meat and dairy (especially compared to grass-fed options). The prevalence of grain-fed livestock generates demand for commodities used to feed them, completing the circle. 

Subsidies also contribute to our consumption of refined grains, sugary drinks, and processed foods. About five percent of corn becomes artificially cheap high-fructose corn syrup (which allows it to compete with tariffed natural sugars), and half of soybeans are processed into oils, which also contribute to obesity.

My Uncle Sam is sick because he eats the food the government makes artificially more affordable. Those foods are poorer in quality and more harmful to health than their unsubsidized alternatives. We are paying to make ourselves sicker.

Diet-Related Health Issues Fuel Healthcare Costs

For more than 20 years, the FDA has known that trans fats and refined grains harm health, damage metabolism, and cause disease. Diet-related illnesses like obesity, Type 2 diabetes, and high blood pressure are increasing, while heart disease remains the leading cause of death. These epidemics are intertwined at the artery level, and both contribute hugely to rising US health care costs.

In an economic order awash with subsidies and regulation, agricultural policy is health policy. Government subsidies for agricultural products have shaped the current American nutritional environment, and they are exacerbating obesity trends.

An article in the American Journal of Preventive Medicine confirms: “Current agricultural policy remains largely uninformed by public health discourse.”

Johns Hopkins physician (and current Commissioner of the US Food and Drug Administration) Marty Makary called out the disconnect clearly. “Half of all federal spending is going to health care in its many hidden forms,” he told an interviewer in October, but Americans continue “getting sicker and sicker… Chronic diseases are on the rise. Cancers are on the rise. And we have the most medicated generation in human history.”

We’re getting more medicated every day — and more of it is at taxpayer expense. 

A Better Answer Than Ozempic?

Government spending on healthcare now exceeds the entire discretionary budget. Excess weight is a significant risk for older Americans, who are also the most likely to both have high healthcare costs and to rely on government health care. Forty percent of Americans over 60 are classified as having obesity, which is a contributing or complicating factor in diseases that kill older Americans: cancers, heart disease, infection, stroke, and cirrhosis.

Late last year, the Food and Drug Administration approved the weight-loss drug Wegovy as a treatment for people at risk of heart attack or stroke. Medicare is forbidden by statute from covering prescription drugs for weight loss alone, but in 2021 regulators approved Wegovy for reducing weight-related risks in patients with diabetes. Medicare Part D plans spent $2.6 billion last year on related compound Ozempic to keep 500,000 patients with diabetes stable. Wegovy’s list price is around $1,300 per month, but that’s still small compared to the $1.4 trillion Americans spend on direct and indirect costs from obesity.

It has a certain economic logic. Instead of waiting for a patient to develop a cascade of expensive comorbidities like heart failure or diabetes, we could consider asking Medicare to pay for anti-obesity meds on the front end. That wouldn’t work as well as lifestyle changes, but all our health and activity messaging over the past several years doesn’t seem to have moved that needle, and significant evidence suggests our efforts are counterproductive. 

The Tangled Web of Farm Subsidies

To understand the insanity of American agricultural and health policy, it’s hard to do better than comedian-illusionists Penn & Teller, who in characteristically salty style (really — you’ll want headphones and a sense of humor to watch the video) explained it this way 15 years ago: 

High fructose corn syrup is a dirt-cheap way to add sweetener and extend shelf life. And why is it so cheap? Because we subsidize corn farmers! Our government gives about 10 billion of our tax dollars to corn farmers every year so they can produce more corn than we need. They then sell the corn at artificially low prices. They spend our money to make corn syrup cheap, and now the same government that uses our tax money to keep soft drinks cheap wants more of our tax money to make soft drinks more expensive. Does anyone else think this is incredibly f—d up?

Yes, Penn. We do. And since that clip aired, obesity rates have worsened 50 percent, and rose 78 percent in children. Medical spending on the consequences of obesity doubled. Over the same period, subsidies to corn growers (which includes disaster aid and insurance) have tripled. 

Rather than cut back on his terrible diet, Uncle Sam wants us to pony up for weight loss drugs — to undo what our food policy has done."

Get the Government Out of the GLP-1 Market

Its involvement often leads to distortions and perverse incentives

Letter to The WSJ. 

"Dr. Gilberto de Lima Lopes Jr. is right that the market for medications is imperfect, but it is often government that is the culprit (“The Free Market Alone Won’t Cut GLP-1 Prices,” Letters, Nov. 21).

Oncology, his speciality, is the canonical example of government distortion. In Medicare, cancer medications are often reimbursed through the Part B program. Providers get a percentage of the sales price for administering each drug, so it’s hardly surprising that they tend to prefer expensive treatments. This incentive doesn’t exist in Medicare Advantage, where private plans are responsible for reimbursement and thus more likely to deliver cheaper alternatives.

Other, less-regulated disease areas show better market responses. While prices fall most dramatically with the entry of generics after patent expiration, competition among branded drugs can also push prices lower. We saw this occur for hepatitis C treatments. Meanwhile, we have never seen a market like the one that is developing for antiobesity medications. More than 124 drugs were in clinical trials last year. About 40 million Americans already have used an injectable GLP-1 for weight loss. A cheaper pill is expected soon.

The race for market share is leaving pharmacy benefit managers on the sidelines. Drug companies are discounting to customers purchasing directly, and they’ve made similar agreements with big retailers like Costco. The deal the Trump administration struck with Novo Nordisk and Eli Lilly to sell GLP-1s through a new direct-to-consumer platform, TrumpRx, will result in prices 74% lower than previous list prices.

Price transparency is crucial. Ironically, because insurers were reluctant to cover these high-demand drugs, patients demanded more transparency. This helped drive prices lower. USC Schaeffer research shows better access can provide social returns greater than the S&P 500’s performance this century.

These aren’t artificial or government-forced pricing decisions that harm innovation. On the contrary, suppliers are reacting to an unparalleled opportunity and consumers are profiting. That’s what happens in a competitive market.

Dana P. Goldman

University of Southern California" 

Bans on Artificial Food Dyes are Unjust

By Chris Freiman.

"Artificial food dyes have been garnering a surprising amount of attention over the last few months. The FDA recently banned Red No. 3 due to concerns about the product’s safety. Now a number of states are making a push to prohibit even more artificial food dyes. These bans are defended on the grounds that artificial dyes pose health risks, add nothing of nutritional value, and serve only to make food and drinks more visually appealing. So why not prohibit them? It seems like a ban would be all benefit and no cost.

Let’s assume, at least for the sake of argument, that the above concerns are justified; even so, we shouldn’t ban artificial food dyes. The reason is simple: people have the right to decide for themselves whether they have good reason to accept risks to their own health. Suppose, as some claim, that the bans on artificial dyes would make the relevant products more expensive. For instance, the National Confectioners Association suggests that they “will make food significantly more expensive for, and significantly less accessible to, people in the states that pass them.” Someone should be free to buy and consume riskier food to save money given that people generally have the right to take health risks for financial reasons. Jane is free to quit her desk job to start work on a commercial fishing vessel for a trivial increase in salary even though commercial fishing is a lot riskier than working from an office. Similarly, someone should be free to consume products with artificial dyes to save money if they prioritize savings over safety.

Now, the claim that the artificial dye bans will make food more expensive is contested. So let’s suppose it’s false and prices won’t change at all. Maybe the only reason why these dyes are used is to make food and drinks more aesthetically appealing. Still, people have the right to take risks for purely aesthetic reasons. Imagine you’re at a car dealership choosing between a gray car and a red car. They’re the same price, but the red car has fewer safety features than the gray one. However, you simply prefer red and so you buy the red car. Maybe that’s an unwise choice, but it’s yours to make. Or suppose you’ve got a headache and you’re choosing between two pain relievers. The red pill carries greater risks than the gray pill. But here again, you simply prefer red to gray, and so you opt for the riskier pill. Few would dispute that you should be free to make this choice.

The right to make decisions regarding your own health is grounded in the right of bodily autonomy, which is sometimes summarized as “your body, your choice.” Since it’s your body, you have the right to take risks with it. You can undergo risky surgeries, climb Mount Everest, or simply refuse to take needed medication. Think of it this way: if the Picasso painting is yours, you have the right to play Frisbee with it. This risks harming the painting, but it would be wrong for others to forcibly stop you. Similarly, maybe consuming artificial food dyes is risky and unwise, but you’re taking the risk with your own body. So, it would be wrong for others to forcibly prevent you from consuming them.

Lastly, consider that the state doesn’t ban substances that are far more harmful than artificial food dyes, such as cigarettes. This is strange—it’s analogous to the state making it illegal to stub your toe to ensure that you’re taking care of your health, while at the same time legalizing dueling. If we’re unwilling to ban products that are more harmful than artificial food dyes, we shouldn’t be willing to ban artificial food dyes either."

What Comes After the FDA’s Drug Monopoly?

Private certification, insurer evaluation and peer-reviewed research step up.

Letter to The WSJ. 

"The FDA’s monopoly over drug and device approval—created by the 1938 Food, Drug, and Cosmetic Act and expanded by later amendments—wasn’t inevitable and is long overdue for reform (“Advice for Makary’s FDA: Get Out of the Way,” Letters, Nov. 7). Before the government seized that authority, private organizations like the American Medical Association and the U.S. Pharmacopeia helped certify safety and effectiveness. These voluntary systems informed consumers without restricting access to care.

The 1962 Kefauver-Harris Amendments, enacted after the thalidomide tragedy, required the agency to judge a drug’s safety and effectiveness—an expansion that has slowed innovation and delayed patients’ access to lifesaving treatments. Today’s “drug lag” and “drug loss” mean Americans wait years and pay billions more for medicines already available overseas.

Private certification, insurer evaluation and peer-reviewed research can assess safety and effectiveness more efficiently than a government bureaucracy. Patients should have the freedom to decide which evidence they trust and which risks they are willing to take. Congress might restore that freedom by recognizing drug approvals from peer regulatory bodies in advanced nations such as the European Union, Canada and Australia—and ultimately ending the FDA’s power to prevent adults from choosing their own treatments. The right to self-medicate is inseparable from the right to self-govern.

Jeffrey A. Singer

Cato Institute" 

Advice for Makary’s FDA: Get Out of the Way

The government isn’t the only arbiter of product quality

Letter to The WSJ. 

"Your editorial “The Spin Doctors at the FDA” (Oct. 28) rightly urges the agency to speed up its drug approvals. Years ago Milton Friedman identified the FDA as Exhibit A in America’s overregulation problem. A medication that saves 100,000 lives kills a million when the agency sits on it for a decade.

About 86% of U.S. healthcare spending is outside the realm of prescription drugs and benefits us without any “help” from insulated bureaucrats determining its quality. More important, a large share of drug spending doesn’t require FDA approval. That is because “off label” use—taking a drug for a disease not approved by the FDA after the agency has accepted it for another purpose—is legal. This practice allows for robust private-sector research, all without government’s explicit say-so. For oncology, the largest drug class in the FDA pipeline, off-label use is often the norm.

If the private sector can determine effectiveness for subsequent uses of a drug not approved by the FDA, why can’t it handle the initial use too? The government isn’t the only arbiter of product quality. Insurance companies, providers and patients will all demand evidence before use but will accomplish it more efficiently.

Countless drugs have been stuck for years in the FDA quagmire. One shows great potential in slowing memory loss of early-stage Alzheimer’s. Another one is for the neurological disease ataxia that has been delayed for many years. Zynquista offers hope for type 1 diabetes—an important potential adjunct to insulin—and yet the FDA is dragging its feet in giving it the green light.

Congress could save lives and reduce suffering by relaxing or repealing the 1962 mandate that the FDA assess drugs for efficacy. It would be a humane solution for those afflicted with cancer, Alzheimer’s, diabetes, epilepsy, Parkinson’s and multiple sclerosis, among others. Call it Operation Warp Speed Part II and let the private sector get to work.

Tomas J. Philipson

Chicago

Mr. Philipson was a member of the White House Council of Economic Advisers, 2017-20, and its acting chairman, 2019-20."

 

No Swords, No Subsidies: Let the Market Set Drug Prices

By Jeffrey A. Singer.

"On November 6, President Donald Trump announced that the government will refrain from tariffs on Eli Lilly’s and Novo Nordisk’s imported products and active pharmaceutical ingredients and that Medicare and Medicaid will subsidize the use of their drugs. In exchange, the pharmaceutical companies will significantly cut prices for their GLP‑1 weight-loss medications, Zepbound and Wegovy. Medicare and Medicaid will pay approximately $245 per month to the companies for the products, and Medicare Part D beneficiaries will have a $50 co-pay.

Because Medicare and Medicaid don’t currently pay for GLP-1s prescribed for weight loss, this new deal will likely lead to increased government spending. 

While the list prices of these drugs are $ 1,000 per month, both Lilly and Novo Nordisk have already been selling them to cash-paying patients at lower prices. Lilly intends to sell the product to cash-paying patients over its website, LillyDirect, for $299 per month. Novo Nordisk already sells Wegovy to cash-paying patients for $499 per month through NovoCare. This shows what happens when third-party payers don’t distort the market’s natural price feedback loop.

The deal also requires the US Food and Drug Administration (FDA) to fast-track the approval of the companies’ forthcoming oral GLP-1s, which the companies intend to sell for $149 per month.

I have mixed feelings about today’s announcement. On one hand, lower prices will reduce the subsidies taxpayers provide to Medicare beneficiaries and demonstrate the value of allowing Medicare and Medicaid to negotiate directly. On the other hand, using tariffs as a threat—a sword of Damocles hanging over the companies—is not negotiation; it’s extortion. Skill in extortion isn’t the same as skill in dealmaking.

I’m also glad the agreement includes the FDA fast-tracking new weight-loss drugs. But the agency shouldn’t make patients needing other therapies wait. If faster approvals are justified here, they’re justified across the board.

Of course, it would be even better if the FDA ended its prescription requirement for GLP-1s so consumers could access them over the counter. As Michael F. Cannon, Charles M. Silver, and I argued here,

Drugs tend to be dramatically less expensive when they are available OTC [over the counter]. For example, the per-milligram price of prescription ibuprofen is 28 times higher than that of OTC ibuprofen. The per‐​milligram price of prescription naproxen sodium is 3.3–4.2 times higher than for OTC naproxen sodium. The Consumer Healthcare Products Association estimates OTC drugs save consumers $51.6 billion a year relative to higher-priced prescription medicines, plus another $94.8 billion on unnecessary doctor’s office visits and diagnostic tests.

Prescription drugs often cost more than their OTC counterparts in part because insurance usually covers them, while consumers pay out of pocket for OTC products. When people spend their own money, they naturally look for value and drive price competition. But when an insurer foots the bill, patients lose that incentive to compare costs—giving drug makers room to raise prices without much pushback.

Market competition and consumers’ comparison shopping can make GLP-1s more affordable and accessible than Medicare and Medicaid subsidies can.

Today’s bargain may offer short-term relief, but it still keeps Washington in the driver’s seat, deciding who pays, who profits, and which drugs get fast-tracked. Real affordability won’t come from political deals or tariff threats; it will come from empowering patients to make their own choices in a genuinely competitive market. When consumers, not bureaucrats, control the purse strings, prices fall and access improves naturally—no swords and no subsidies required."

Is a Drug Effective? The FDA Shouldn’t Decide

Pharmaceutical companies are better positioned to understand what information physicians want—and how to generate it quickly and economically

Letter to The WSJ. 

"James Meyer objects to our Oct. 18 op-ed, writing that the federal government has an interest in ensuring a drug’s efficacy because it often picks up the tab for it (Letters, Oct. 25). True—that’s why we wrote that “drug companies would still run efficacy trials” because “doctors, insurers and patients want assurances that a new drug actually works.”

As in many other areas of life, government bureaucracies make everything slower, more expensive, less efficient and less tailored to the end users’ needs. Pharmaceutical companies are better positioned to understand what information physicians want—and how to generate it quickly and economically. Their ability to do so will help determine the success of the products they are developing. Licensed, medically trained doctors must then prescribe a given drug—an additional mechanism for ensuring efficacy.

Still, it’s worth remembering that even if two large randomized controlled trials are run to test for it, it’s possible only 60% of patients will benefit. No one knows if a patient will be in the 60% or the 40%. It always comes down to trial and error.

Charles Hooper and Solomon Steiner" 

Deregulation Can Make Medications Cheaper

If the FDA policed only safety, not efficacy, the result would be more innovation at lower cost

By Charles L. Hooper and Solomon S. Steiner. Mr. Hooper is president of the life-science consultancy Objective Insights. Mr. Steiner is an emeritus professor of neuroscience at City University of New York and an adjunct professor of molecular pharmacology, physiology and biotechnology at Brown University Alpert Medical School. Excerpts:

"From 1938 through 1962, the Food and Drug Administration required proof of safety before drug approval but not proof of efficacy. The approach was abandoned due to a significant misunderstanding of the thalidomide tragedy—when thousands of babies outside the U.S. were born with severe birth defects."

"Congress required, through the Kefauver-Harris Amendments of 1962, proof of efficacy before granting marketing approval. The new rule addressed a problem that didn’t exist"

"bringing one successful drug to market costs about $9 billion on average."

"if a clinical trial shows that a drug works for 60% of patients, no one knows in advance if it will work for a particular patient." 

"Some patients respond well to [anticoagulants like] Pradaxa but not Xarelto, and vice versa. A drug might fail for one patient but be the right one for another. Fewer approved drugs means fewer chances for patients to find their match." 

"Drug companies would still run efficacy trials because it is in their interest to do so. Doctors, insurers and patients want assurances that a new drug actually works. But those trials would be designed to answer the medical community’s pressing questions, not to satisfy a bureaucratic checklist" 

Make Drug Approval Easier

By David Henderson. 

"A few days ago, I listened to Russ Roberts’s EconTalk interview of cardiologist Eric Topol on the health issues involved with aging. For some reason, I’m getting increasingly interested in that issue.

An interesting issue comes up at about 36:00 point. Topol states:

We should be using better nanoparticles and keeping that mRNA from ever having untoward side effects. But, we haven’t. The companies that make these are stuck in the original version. But, we got about a billion people exposed to them.

Later, Russ follows up with this:

When you say companies are stuck with their original versions, is that because of the intellectual property protection that they’re relying on and that it’s expensive therefore for them to start from scratch, and therefore they just don’t have an incentive to innovate? Or is there something else going on?

Russ is onto something: the expense of starting from scratch.

Topol responds:

No, I think part of it is the intellectual property. Part of it is they have now had mass production of hundreds of millions of vaccines and to go to a new process–the point being, is: we’ve known that the nanoparticles can be optimized so they even have better penetration. We have these things called self-amplified vaccines where you give much tinier amounts of mRNA. And that’s approved in Japan. But there’s not even a bit of effort to get that going in the United States. That would help reduce the mRNA side effects.

So, these companies, they did very well during the pandemic and they got things going quickly. That’s great; but they’re not keeping up with the field. And we’re seeing in other parts of the world the innovations that we need.

What Topol doesn’t get into is why there’s progress in Japan that is not being replicated in the United States.

The answer is the Food and Drug Administration. Ever since the 1962 change in law, drug companies that want to introduce a drug into the lucrative U.S. market must show not only safety but also efficacy. The requirement for showing efficacy has added almost a decade to the drug development process.

So the issue is not intellectual property per se. It’s that the process of getting approval is daunting.

That’s why it makes sense, as Dan Klein has argued, for the FDA to automatically approve drugs that have been approved by the FDA’s counterpart in even one of, say, a list of 15 relatively wealthy countries.

You might argue that that’s too risky. But if you don’t like the risk, wait until the FDA approves it. Other people can take their chances. That’s what’s so great about freedom. We need more of it."

No Alzheimer’s Drug for Old Men?

New evidence of effectiveness is cause to drop a Biden restriction on Medicare coverage for anti-amyloid treatments

WSJ editorial. Excerpts:

"Two studies presented at the Alzheimer’s Association International Conference last week show that the benefits of amyloid-clearing monoclonal antibodies by Eli Lilly and Biogen-Eisai grow over time. The drugs slowed cognitive decline in clinical trials used for Food and Drug Administration approval by some 25% to 36% over 18 months. In follow-up studies, these benefits doubled at three years for Lilly’s treatment and roughly quadrupled over four years for Biogen-Eisai’s. That’s great news for patients."

"the Biden Centers for Medicare and Medicaid Services (CMS) in 2022 restricted access to all anti-amyloid drugs approved by the FDA because it wasn’t convinced they were “reasonable and necessary.”" 

The Sarepta Mugging and Drug Innovation

The Trump FDA tries to kill a therapy that has helped boys with a deadly diagnosis

WSJ editorial. Excerpts:

"nearly 1,000 patients have been treated with Elevidys, a large sample size for a nascent gene therapy. Both Duchenne patients who died suffered from advanced disease and could no longer walk when treated. Sarepta more than a month ago paused shipments to patients who can no longer walk."

"the FDA has demanded the company stop shipping the Duchenne drug for all patients."

"it isn’t obvious what the company can now do to receive a clean bill of health. A senior FDA official told the press last week that the drug faced an “arduous and treacherous” path back to market and that the company suspended shipments because the agency had “a gun to its head.”"

"boys improved on secondary measures such as “time to rise from the floor, 10-meter walk/run, time to ascend four steps.”"

"such secondary endpoints had been used to support prior drug approvals as primary endpoints."  

Agency Overreach Leaves Patients Untreated

Medicare coverage for new treatments takes years. Thanks, CMS.

By Joseph Grogan. He is a senior visiting scholar at University of Southern California’s Schaeffer Institute. Excerpts:

"the Coverage and Evidence Development program at the Centers for Medicare and Medicaid Services." 

"The program took a turn for the worse under the Obama administration. CMS abused CED to stifle access to FDA-approved products, from heart valve replacements to PET scans diagnosing Alzheimer’s disease, restricting Medicare coverage. Under the Biden administration, CMS applied CED for the first time to medications—which restricted coverage for an entire class of new Alzheimer’s therapies."

"Of 27 medical devices covered under CED since 2005, four have “graduated” to unrestricted coverage. Two product decisions were ceded to Medicare’s regional administrative contractors. The other 21 remain in limbo." 

Maestro Trump and Drug Prices

By Sheldon Richman. Excerpt:

"The Maestro seems not to realize that price controls have failed for 4,000 years! They bring shortages, reduce innovation, and cause other distortions, which the government then tries to fix by expanding its restrictions. Never mind that the government makes drugs more expensive than they would be in an unhampered market.

Prices will differ from country to country for sensible reasons. Economists call this market segmentation and price discrimination. Some people in certain circumstances are willing and able to pay more than others whose circumstances differ. We see this with airline fares and off-peak movie ticket prices. Americans are richer than other people and can afford to buy things that others couldn’t and wouldn’t buy at American prices. Sure, everyone prefers all prices to be lower—except his own, of course—but does that mean the government could mandate lower prices without negative consequences for all? No.

Once a modern drug is produced and sold in the rich American market at a price high enough to yield a profit and recoup the stratospheric R&D costs, the drug maker can produce additional quantities at a low marginal cost and profitably expand sales to poorer people abroad at a lower price. This is good for the foreign buyers who otherwise wouldn’t have access, but it does not harm Americans: regardless of what others pay, they buy the drug because they think the benefits exceed the cost.

A government decree to make prices more equal would be harmful all around. As economist Alex Tabarrok writes, banning price discrimination “will end up hurting patients in low-income countries while delivering minimal gains to Americans. Worse, by reducing pharmaceutical profits overall, it weakens incentives to develop new drugs. In fact, in the long-run U.S. consumers are better off when poorer countries pay lower prices—just as airline price discrimination makes more routes viable for both economy and first-class passengers.” Likewise, if movie theaters couldn’t price-discriminate, we’d have fewer theaters and less service from surviving theaters because profitably filling seats at off-peak times would not be an option. When the government restricts profits, it restricts supply and innovation.

That we lack a fully free market today does not substantially change the analysis. We can be confident that government intervention makes medical care artificially expensive by imposing artificial costs, restricting supply, and stimulating demand. A ban on global price discrimination would hardly help improve things. We’d have fewer new drugs. (Watch Alex Tabarrok and Robert Murphy discuss this and related issues.)

This case against Trump’s executive order is valid even when we acknowledge that foreign buyers of American drugs are governments that impose price controls. As many have pointed out, importing other countries’ price controls makes no sense.

No discussion of drug prices is complete without noting the burdens imposed by the Food and Drug Administration (FDA) and the patent system. Bringing a drug to market costs upward of $2 billion, and most never make it. Private competitive testing and certification firms (analogous to Consumer Reports) could replace the FDA and the prescription requirement. With informed consent, people should be free to take medicines that have undergone different degrees of testing. Life is risk. The government can’t change that.

Regarding the patent system, while 15-year monopoly pricing to some extent offsets the FDA burden, it should be abolished along with that agency. Because of vigorous competition, Americans pay far less for out-of-patent generic drugs than the rest of the world. Intellectual property is inconsistent with property rights because it prohibits manufacturers from using their own physical property to produce things. Unlike finite physical property, ideas aren’t properly ownable: when an idea is communicated to others, the first person still retains it. Its economic value may fall, but no one has a property right in a thing’s market value. For those who fear that the end of drug patents would spell the end of innovation, see Michele Boldrin and David K. Levine’s Against Intellectual Property, which has a chapter on the international pharmaceutical industry.

Trump’s plan to tamper with drug prices will reduce profits to “Big Pharma”—ooh, what a scary term!—impede innovation, and make everyone less healthy in the future. Drugs currently under patent may seem expensive, but as Tabarrok points out, many modern drugs reduce the need for more costly and dangerous surgeries, and most drugs are paid for through insurance policies. (The government also makes insurance artificially expensive through mandated coverage and discriminatory tax treatment.)

Moreover, as Tabarrok says, Americans get new drugs first. So, all things considered, drug prices don’t look so bad after all. The moral and economic case for freeing the market is watertight, but that doesn’t mean what we have now is worthless and could not become worse with more intervention.

America’s interventionist medical system must be replaced by a free market in medicine. Most of every dollar spent on medical care today is paid for or mandated by the U.S. government. Barack Obama’s Affordable Care Act made a flawed system worse. Coercion, which includes medical licensing, hospital certification, and official accreditation of medical schools, should be eliminated because nothing has proved better at delivering goods and services than the competitive profit-and-loss system directed at consumer satisfaction."

A Blueprint for FDA Reform

From Alex Tabarrok.

"The new FDA report from Joe Lonsdale and team is impressive. It has a lot of new material, is rich in specifics and bold in vision. Here are just a few of the recommendation which caught my eye:

From the prosaic: GMP is not necessary if you are not manufacturing:

In the U.S., anyone running a clinical trial must manufacture their product under full Good Manufacturing Practices (GMP) regardless of stage. This adds enormous cost (often $10M+) and more importantly, as much as a year’s delay to early-stage research. Beyond the cost and time, these requirements are outright irrational: for example, the FDA often requires three months of stability testing for a drug patients will receive after two weeks. Why do we care if it’s stable after we’ve already administered it? Or take AAV manufacturing—the FDA requires both a potency assay and an infectivity assay, even though potency necessarily reflects infectivity.

This change would not be unprecedented either. By contrast, countries like Australia and China permit Phase 1 trials with non-GMP drug with no evidence of increased patient harm.

The FDA carved out a limited exemption to this requirement in 2008, but its hands are tied by statute from taking further steps. Congress must act to fully exempt Phase 1 trials from statutory GMP. GMP has its place in commercial-scale production. But patients with six months to live shouldn’t be denied access to a potentially lifesaving therapy because it wasn’t made in a facility that meets commercial packaging standards.

Design data flows for AIs:

With modern AI and digital infrastructure, trials should be designed for machine-readable outputs that flow directly to FDA systems, allowing regulators to review data as it accumulates without breaking blinding. No more waiting nine months for report writing or twelve months for post-trial review. The FDA should create standard data formats (akin to GAAP in finance) and waive documentation requirements for data it already ingests. In parallel, the agency should partner with a top AI company to train an LLM on historical submissions, triaging reviewer workload so human attention is focused only where the model flags concern. The goal is simple: get to “yes” or “no” within weeks, not years.

Publish all results:

Clinical trials for drugs that are negative are frequently left unpublished. This is a problem because it slows progress and wastes resources. When negative results aren’t published, companies duplicate failed efforts, investors misallocate capital, and scientists miss opportunities to refine hypotheses. Publishing all trial outcomes — positive or negative—creates a shared base of knowledge that makes drug development faster, cheaper, and more rational. Silence benefits no one except underperforming sponsors; transparency accelerates innovation.

The FDA already has the authority to do so under section 801 of the FDAAA, but failed to adopt a more expansive rule in the past when it created clinicaltrials.gov. Every trial on clincaltrials.gov should have a publication associated with it that is accessible to the public, to benefit from the sacrifices inherent in a patient participating in a clinical trial.

To the visionary:

We need multiple competing approval frameworks within HHS and/or FDA. Agencies like the VA, Medicare, Medicaid, or the Indian Health Service should be empowered to greenlight therapies for their unique populations. Just as the DoD uses elite Special Operations teams to pioneer new capabilities, HHS should create high-agency “SWAT teams” that experiment with novel approval models, monitor outcomes in real time using consumer tech like wearables and remote diagnostics, and publish findings transparently. Let the best frameworks rise through internal competition—not by decree, but by results.

…Clinical trials like the RECOVERY trial and manufacturing efforts like Operation Warp Speed were what actually moved the needle during COVID. That’s what must be institutionalized. Similarly, we need to pay manufacturers to compete in rapidly scaling new facilities for drugs already in shortage today. This capacity can then be flexibly retooled during a crisis.

Right now, there’s zero incentive to rapidly build new drug or device manufacturing plants because FDA reviews move far too slowly. Yet, when crisis strikes, America must pivot instantly—scaling production to hundreds of millions of doses or thousands of devices within weeks, not months or years. To build this capability at home, the Administration and FDA should launch competitive programs that reward manufacturers for rapidly scaling flexible factories—similar to the competitive, market-driven strategies pioneered in defense by the DIU. Speed, flexibility, and scale should be the benchmarks for success, not bureaucratic checklists. While the drugs selected for these competitive efforts shouldn’t be hypothetical—focus on medicines facing shortages right now. This ensures every dollar invested delivers immediate value, eliminating waste and strengthening our readiness for future crises.

To prepare for the next emergency, we need to practice now. That means running fast, focused clinical trials on today’s pressing questions—like the use of GLP-1s in non-obese patients—not just to generate insight, but to build the infrastructure and muscle memory for speed."

FDA Deregulation of E-Cigarettes Saved Lives and Spurred Innovation

By Alex Tabarrok.

"What would happen to drug development if the FDA lost its authority to prohibit new drugs? Would research and development boom and lives be saved? Or would R&D decline and lives be lost to a flood of unsafe and ineffective drugs? Or perhaps R&D would decline as demand for new drugs faltered due to public hesitation in the absence of FDA approval? In an excellent new paper Pesko and Saenz examine one natural experiment: e-cigarettes.

The FDA banned e-cigarettes as unapproved drugs soon after their introduction in the United States. The FDA had previously banned other nicotine infused products. Thus, it was surprising when in 2010 the FDA was prohibited from regulating e-cigarettes as a drug/device when a court ruled that Congress had intended for e-cigarettes to be regulated as a tobacco product not as a drug.

As of 2010, therefore, e-cigarettes were not FDA regulated:

…e–cigarette companies were able to bypass the lengthy and costly drug approval process entirely. Additionally, without FDA drug regulation, e–cigarette companies could also freely enter the market, modify products without approval, and bypass extensive post–market reporting requirements and quality control standards.

Indeed, it wasn’t until 2016 that the FDA formally “deemed” e-cigarettes as tobacco products (deemed since they don’t actually contain tobacco) and approvals under the less stringent tobacco regulations were not required until 2020. For nearly a decade, therefore, e-cigarettes were almost entirely unregulated and then lightly regulated under the tobacco framework. So, what happened during this period?

Pesko and Saenz show that FDA deregulation led to a boom in e-cigarette research and development which improved e-cigarettes and led to many lives saved as people switched from smoking to vaping.

The boom in research and development is evidenced by a very large increase in US e-cigarette patents. We do not see a similar increase in Australia (where e-cigarettes were not deregulated) nor do we see an increase in non e-cigarette smoking cessation products (figure 1a of their paper not shown here).

 

Estimating the decline in smoking and smoking-attributable mortality (SAM) is more difficult but the authors assemble a large collection of data broken down by demographics and they estimate that prohibiting the FDA from regulating e-cigarettes reduced smoking attributable mortality by nearly 10% on average each year from 2011-2019 for a total savings of some 677,000 life-years.

The authors pointedly compare what happened under deregulation of e-cigarettes–innovation and lives saved–with what happened to similar smoking cessation products that remained under FDA regulation–stagnation and no reduction in smoking attributable mortality.

A key takeaway on the slowness of FDA drug regulation is that it took 9 years before nicotine gum could be sold with a higher nicotine strength, 12 years before it could be sold OTC, and 15 years before it could be sold with a flavor. Further, a recent editorial laments that there has been largely non–existent innovation in FDA–approved smoking cessation drugs since 2006 (Benowitz et al., 2023). In particular, the “world’s oldest smoking cessation aid” cyctisine, first brought to market in 1964 in Bulgaria (Prochaska et al., 2013), and with quit success rates exceeding single forms of nicotine replacement therapy (NRT) (Lindson et al., 2023), is not approved as a drug in the United States.

The authors conclude, “this situation raises concern that drugs may be over–regulated in the United States…”. Quite so.

Addendum: A quick review on the FDA literature. In addition to classic works by Peltzman on the 1962 Amendments and by myself on what we can learn about the FDA from off-label pricing we have a spate of recent new papers including Parker Rogers, which I covered earlier:

In an important and impressive new paper, Parker Rogers looks at what happens when the FDA deregulates or “down-classifies” a medical device type from a more stringent to a less stringent category. He finds that deregulated device types show increases in entry, innovation, as measured by patents and patent quality, and decreases in  prices. Safety is either negligibly affected or, in the case of products that come under potential litigation, increased.

and Isakov, Lo and Montazerhodjat which finds that FDA statistical standards tend to be too conservative, especially for drugs meant to treat deadly diseases (see my comments on their paper and more links in Is the FDA Too Conservative or Too Aggressive?)

See also FDA commentary, for much more from sunscreens to lab developed tests."