In 1962, after the thalidomide tragedy, Congress passed a law requiring drug manufacturers to prove their drugs were safe but also effective before they could market them.
The regulations set off a debate, especially in the last few decades, over whether patients should have access to “safe” drugs, even if clinical trials show they may not work. What if the drugs cost tens of thousands of dollars? Should private insurance companies and taxpayers, through government health care programs, foot the bill?
During his tenure at the U.S. Food and Drug Administration, Vinay Prasad, the chief medical and scientific officer, raised concerns about drugs that were marginal in effectiveness or had a higher risk profile than drugs currently on the market.
Personal Decision Making?
The consumer should be the ultimate arbiter of efficacy and cost-effectiveness in a free market, says Michael Cannon, director of health policy studies at the Cato Institute.
“People have a fundamental human right to take whatever medicines they wish,” said Cannon. “When the government keeps medicines off the market, it denies that right and makes patients less safe. The particular medications in question were perhaps ineffective, but the form of regulation Prasad employed is definitely ineffective.”
Prasad’s departure, however, was a triumph of the pharmaceutical industry and a defeat for effective regulation of efficacy and safety, says Charles Silver, University of Texas law professor and co-author of “Overcharged: Why Americans Pay Too Much for Health Care.”
“I think Prasad was fired because he wanted to raise standards and wasn’t shy about telling people their standards were too low,” said Silver. “The last thing the industry wants is an FDA with high standards.”
A Middle Ground
There is a way to retain some regulatory safety testing while preventing taxpayers and policyholders from paying millions of dollars on drugs that do not work, says Jane Orient, M.D., the executive director of the Association for American Physicians and Surgeons.
“The regulatory system does harm in imposing outrageous costs that delay approval of important drugs while serving as an insurmountable barrier to drugs with no prospect of turning enormous profit,” said Orient.
“We would be much better off with a caveat emptor policy, with the FDA’s role restricted to removing adulterated products, with transparency and excellent after-market surveillance,” said Orient.
“There should also be private industries testing products for purity, correct dosing, and honest reporting,” said Orient. “This would be a valuable service for which most would be willing to pay. Insurance subscribers should have the right to elect coverage without mandates for such products.”
Consumer ‘Reimbursement’
Cannon pointed to a potential free-market solution favored by Cato.
“Patients, doctors, employers, health plans, politicians, and even taxpayers all adopt lax cost-effectiveness standards because the government has put them all in a position where they are spending other people’s money,” said Cannon.
“When consumers control all $6 trillion of U.S. health spending, and the savings from avoiding wasteful expenditures go to them rather than someone else, the economic impact of wasteful health spending will be minimal.”
Prasad’s resignation is effective on April 30, 2026, at which time he will return to his academic position at the University of California, San Francisco.
Kevin Stone ([email protected]) writes from Arlington, Texas
