FDA ‘Revitalization’ Bill Contains Hidden Pitfalls

Published July 1, 2007

The U.S. Senate in early May approved, by a 93-1 vote, legislation that, among other things, would give the pharmaceutical and medical device industries the privilege of paying $393 million in user fees to the government next year to help get their new treatments to patients faster.

The Food and Drug Administration Revitalization Act contains land mines that could delay getting new drugs and devices through the approval process and to patients. The bill grants new powers to the FDA to throw up more regulatory hurdles.

And even the user fees could backfire since, for the first time, they could be used not just to get drugs through the bureaucracy and to the market, but also to take drugs off the market. From the consumer’s viewpoint, that isn’t good.

The House will take up the measure next, and since members there are generally even more hostile to the complex and enormously expensive process of private drug development, their version is likely to be even more problematic.

More Resources

What the FDA needs is not more authority to tie the drug approval process in knots, but more resources to use modern information technologies to bring greater accuracy and efficiency to the approval process, as former FDA commissioner Mark McClellan passionately argued in the April 13 edition of the New England Journal of Medicine.

Dr. Richard Miller, president and CEO of Pharmacyclics, explained in The Wall Street Journal on May 10 how the FDA’s “outdated statistical standards” keep lifesaving medicines from helping desperate patients.

One example he cites: The FDA rejected a drug, Xcytrin, developed by his company to treat lung cancers that have metastasized to the brain. “The reason for the FDA’s refusal? The positive impact of the drug could be shown to be independent of chance at ‘only’ an 88 percent level of certainty,” instead of the 95 percent certainty the FDA requires.

Unless the “Revitalization” Act is stripped of the new provisions increasing FDA obstacles, it is likely to make drugs more expensive, by lengthening the approval process, and impede innovation further in one of our most important industry sectors.

SCHIP Expansion

During testimony before the Senate Energy and Commerce Committee in April, I cited studies showing expansions of government health care programs often crowd out private insurance coverage. The Congressional Budget Office (CBO) has produced a new study providing further validation.

For every 100 children who enroll in the State Children’s Health Insurance Program, the CBO found, “there is a corresponding reduction in private coverage of between 25 and 50 children.” So the crowd-out of private coverage is between 25 percent and 50 percent.

Plus, the study finds, the “estimates probably understate the total reduction in private coverage associated with the introduction of SCHIP” because they don’t include the number of parents who would drop private coverage. The CBO also points out employers are not to blame: “parents choose to forgo private coverage … rather than employers deciding to drop coverage for such children.”

Sen. Hillary Clinton (D-NY) and others want to expand SCHIP to include “children” up to the age of 25 and higher-income kids–$82,600 a year for a family of four–at taxpayer expense. The CBO says “expanding the program to children in higher-income families” will crowd out private coverage even more, since these kids are more likely to already be insured.

A simple reauthorization of SCHIP would be far better than a massive expansion.

Grace-Marie Turner ([email protected]) is president of The Galen Institute, a free-market think tank based in Virginia.

For more information …

“Drug Safety Reform at the FDA,” by Mark McClellan, M.D., American Enterprise Institute, April 17, 2007, http://www.aei.org/publications/filter.all,pubID.25961/pub_detail.asp

“The State Children’s Health Insurance Program,” Congressional Budget Office, May 2007, is available through PolicyBot™, The Heartland Institute’s free online research database. Point your Web browser to http://www.policybot.org and search for document #21273.