Policy Documents

The Case for Firing the FDA

April 14, 2009

The ominous signs all point in one direction. Firms in the United States are now divesting from research in new drugs and medical devices. No collapse in demand explains the trend. Aging populations need drugs and devices to manage Alzheimer’s disease, diabetes, bad hips, and a host of other conditions. Obese populations cry out for dietary drugs. Investors know of the pent-up demand. They also know, and dread, the Food and Drug Administration’s chokehold on new investment, precipitated by its use of faulty protocols to evaluate applications for new drugs and new medical trials.

Signs of the decay are everywhere. Pfizer (but not Merck) has announced a long-term decision to reduce its investment in medical research, owing to the high business risks. The FDA refused to approve Orexigen’s new diet drug, Contrave, demanding that the firm conduct long-term cardio studies to show that the use of the drug did not increase the risk of heart attack. In recent months, clinical trials for four new diabetes drugs have been scrapped in light of increased costs that their companies have to bear. Medical manufacturers are deciding to set up shop outside our borders. More than one study, and a host of popular complaints, decry the delayed introduction in the U.S. of treatments used successfully overseas. In one breath, the FDA has announced that it will fast-track some devices. In the next, it laments that limited resources could well restrict that preferred treatment to as few devices as two.

For too long, prudent reformers have hoped that the FDA would mend its hidebound ways. After 40 or more years of frustration, it is now time to strip the FDA of most of its powers. The agency that prides itself on offering the highest level of "protection" to U.S. citizens probably kills more people through delay than it could ever save. Its relentless quest to determine the safety and effectiveness of new products makes it incapable of thinking about whether the marginal costs of any new test or restriction exceed its marginal benefits.

To cure that ailment, Congress should put the FDA on a budget to conduct its own clinical trials. Let the FDA undertake the tests that it requires private companies to conduct at their own expense, and watch how the regulator starts to whistle a different tune.

To grasp the magnitude of the current regulatory mistakes, it is necessary to determine as a matter of first principle how best to regulate the introduction of new drugs and medical devices. In an imaginary world of perfect certainty, the institutional arrangements for deciding which drugs and devices make it to market, and which are left on the cutting room floor, would be of no importance. All-knowing and informed regulators would decide to keep only dangerous or useless devices off the market. No patient or physician would protest those decisions. Alternatively, the FDA could close up shop, and all-knowing physicians and patients would spurn these same problematic drugs and devices. Life is easy in Shangri-La.

But in the real world, matters of institutional design become imperative because information is imperfect and transaction costs are high. Here, it becomes critical to decide what sorts of decisions should be made by what people at different stages of drug and device development. On this matter, the FDA takes the position that the double-blind study sets the gold standard for deciding which products should come to market and which ones should not. In a double-blind study, neither patient nor tester knows who is in the control group and who receives the new drug or device. But the excessive reliance on these studies is part of the current problems. Double-blind studies often do pick out those drugs and devices whose generic flaws are so grave that they are best kept off the market. In most cases, however, products with these characteristics don’t even make it to FDA review in the first place, rendering many double-blind studies superfluous.

Unfortunately, the FDA exerts its control over clinical trials to cover products that should, and eventually do, make it to market. For these cases, the correct procedures should ask whether the information that the FDA wants to acquire is worth the money and the delay needed to acquire it, or whether the costs of delay are far greater than the costs of the trials themselves.

The Contrave heart trials could take years and tens of millions of dollars to uncover what may turn out to be a minor elevated cardiac risk. So what? Estimates of that risk could be communicated to physicians and patients at the outset of the process and updated thereafter. So informed, patients and their doctors would be armed with the best information then available to make clinical choices. Strip the FDA of its gatekeeper function and let it issue whatever warnings it chooses for products now on the market. Now it has to compete for attention, because no doctor, patient, HMO, clinic, or hospital has to listen to what it has to say, especially when other individuals and groups may provide alternative warnings.

Right now, moreover, the FDA understates the inherent limitations of the vaunted clinical trials it requires companies to conduct. These trials can only work if they gather together enough individuals with the same profile to decide whether the new drug or device represents an improvement over the prior state of affairs. With weight control and cholesterol drugs, it is relatively easy to assemble large-scale populations, which might yield useful results. But with cancer drugs, the number of potential enrollees is thankfully far smaller, leading to all sorts of delay, and to the recruitment of patients located outside of the United States, where it is more likely that administrative errors could scuttle the entire process. Worse still, the information gathered from a highly structured clinical trial fails to provide the information that people need once a drug or device makes it to market.

Here’s why: clinical trials cull out prospective patients with complex medical dossiers so that the control group and the test group resemble each other as much as possible. In addition, double-blind trials are often run on population groups that differ in significant ways from the patients targeted for these treatments. It is dangerous, for instance, to run trials on pediatric or geriatric populations that could need them most. Pregnant women, and those who may become pregnant, are also harder to test than men, even though the same drug (and perhaps even devices) will work differently in the two populations. So constrained, the certification of a drug or device for general use therefore gives grossly inadequate information about the complex issues that will be faced when it is in the field. Ironically, in these situations, the information gleaned from long use of the drug in practice may be a better guide to the drug than the clinical trials, precisely because so many different types of people have used the drugs without complaint.

Worse still, for many cases, doctors are rightly appalled at the prospect of running a trial to compare a known but dangerous treatment against the new proposed drug thought to offer better prospects. Sensible people are willing in general to trust historical data, much of which is accurately coded in cancer cases, while forgoing the control "arm" of a clinical trial. But all too often an adamant FDA requires the added hardship, cost, and delay of a two-arm trial. The whole process is misguided because clinical trials look for statistically significant results in large populations. Yet the FDA never asks the only question that physicians and patients really care about: am I better off taking my chances with a new and uncertain treatment, or sticking with known but ineffective treatments? For people who can calculate the odds, the right answer is often to take the risk. To the FDA, which refuses to make any expected value calculations, the answer is a near invariant no.

That profound difference in outlook shapes the treatment of serious disease. Rational people constantly seek compassionate exemptions to access risky drugs not yet on the market, which the FDA routinely denies to preserve the integrity of its clinical trials. Fortunately, the FDA does not have any power today to block so-called "off-label uses," whereby physicians take a drug or a device that has been approved for one indication (i.e. treatment of a dangerous condition), only to try it for another, without undergoing any clinical trials at all. The FDA makes it difficult for drug and device companies to collect information on these off-label uses, and it is illegal for such companies to promote off-label uses of the drug.

At this point, the gray market takes over as many organizations, such as the National Comprehensive Cancer Network, kick into gear to offer the rapid dissemination of such information that clinical trials never collect: real time reports of adverse events associated with the drug, experiences with the drug overseas, the drug’s interaction with other in-body drugs, and the like. These are not small data sets. Exact numbers are hard to gather, and the stated estimates are probably low. Still, a good guess is that about 80 percent or more of cancer cases are treated with off-label uses.

But there is no possibility of any off-label use for those promising treatments that have never made it through clinical trials. Indeed, one of the most fiendish features of FDA oversight is that drug companies will quit trials when the cost of meeting new demands makes marketing the drug a losing proposition. But the added costs of a good drug or device to its maker are trivial in comparison to the forgone patient benefit of using these drugs. Drug and device companies are leery of a populist backlash from fighting FDA decisions. But patient groups are typically apoplectic over the dilatory tactics of the FDA.

And they are right. The key analytical point is that the FDA approval of a new drug or device is only the first step toward its successful deployment. Once either type of product makes it to the market, we trust doctors and patients to make judgments about the drug, free from the prying eyes of the FDA. The question that the FDA has never answered is why the elaborate ways of collecting information for approved drugs in their off-label incarnations do not work as well for drugs that it now keeps off the market. Of course, the odds of getting the right decision for untested drugs are lower than they are for tested drugs.

Unfortunately, though, people don’t have the luxury of waiting. The right question asks what is the best approach to drug treatment at any given time? Here, off-label uses again offer an instructive guide. The only collective information that the FDA generates for off-label drug uses is whether they pass a Phase I clinical trial, which is designed to rule out drugs whose high toxicity is likely to kill. Most people want to know that information, and they would demand it even if the FDA were stripped tomorrow of its authority to regulate the safety and effectiveness of new drugs and devices. So why not let all new drugs on the market once that low barrier is passed? The FDA puts forward claims that once it no longer walks the beat, clueless patients and supine physicians will flock to the next laetrile—a useless drug that enjoyed some voguish popularity 50 years ago. But it is always wrong to focus on failure to make future policy while ignoring all the gains from letting successful drugs onto the market earlier. It is worth noting that the Abigail Alliance—which has fought a nonstop war against the FDA—points out that every drug that the Alliance has championed has ultimately made it to the market.

In sum, no subtle tweak will wean the FDA from its excessive reliance on double-blind clinical trials. Sensible people take information from any place they can get it: off-label uses, overseas uses, past practice, or whatever is available. The FDA scorns information that has value equal to or greater than that to which it shows its allegiance. Its defects are both cognitive and bureaucratic. The only solution is to strip it of its gatekeeper function. If Congress wants to invest in clinical trials, let it give the FDA a budget to conduct those on whatever drugs or devices it sees fit. But unless Congress makes big changes quickly, the exodus of drug and device manufacturers from this country will proceed apace, wreaking havoc on the well being of the patients that they are now unable to serve.

Richard Epstein is the Peter and Kirsten Bedford Senior Fellow at Hoover. He is also the Laurence A. Tisch Professor of Law at New York University and the James Parker Hall Distinguished Service Professor of Law at The University of Chicago. His areas of expertise include constitutional law, intellectual property, and property rights. His most recent books are The Case Against the Employee Free Choice Act (Hoover Press, 2009) and Supreme Neglect: How to Revive the Constitutional Protection for Private Property (Oxford Press, 2008). This piece was originally published at Defining Ideas, and is reprinted with permission.