Fixing the FDA

by Reihan Salam

Michele Boldrin and S. Joshua Swamidass call for the FDA to focus on ensuring safety. Carl Schramm has argued along similar lines, which could mean that there is an emerging consensus. There is a small, easily bridged difference between the two approaches. Schramm writes:

The agency’s regimes for product testing and control need to be streamlined — perhaps by adopting a new, quicker-to-market model such as “adaptive” regulation — and some aspects could be stripped away entirely. One approach would be to have the FDA go on approving drugs and devices for safety, but let the market determine efficacy, at least to a greater extent than at present. Also, once a treatment has passed the FDA’s safety exam, why not reduce the added hurdle of tort liability by exempting the makers from punitive damages?

Boldrin and Swamidass offer a strong incentive for private firms to conduct research on efficacy:

We can reduce the cost of the drug companies’ bet by returning the FDA to its earlier mission of ensuring safety and leaving proof of efficacy for post-approval studies and surveillance. It is ensuring the efficacy—not the safety—of drugs that is most expensive, time-consuming and difficult. All the usual mechanisms of ensuring the safety of drugs would remain firmly in place.

In exchange for this simplification, companies would sell medications at a regulated price equal to total economic cost until proven effective, after which the FDA would allow the medications to be sold at market prices. In this way, companies would face strong incentives to conduct or fund appropriate efficacy studies. A “progressive” approval system like this would give cures for rare diseases a fighting chance and substantially reduce the risks and cost of developing safe new drugs.

If progressive approval works for rare diseases, there is no reason it should not be adopted across the board. The current system favors a small number of blockbuster drugs that can be sold to millions of patients. The coming revolution in medicine will rely on carefully targeting hundreds or even thousands of drugs to the correct patients. But lawmakers must first usher in a new system that makes developing these precision treatments possible.

This is exactly the kind of legislation conservative lawmakers should be working on. It would spur growth-enhancing innovation in the life sciences, and it would offer a model for smart deregulation. But right now, at least, we’re debating a debt limit increase that would have to be passed even if the White House were willing to embrace Chairman Ryan’s ambitious budget reform concept.  

The Agenda

NRO’s domestic-policy blog, by Reihan Salam.