The American Interest
Analysis by Walter Russell Mead & Staff
FDA Crushing Pharmaceutical Growth

Government regulation is stifling America’s vibrant pharmaceutical industry. A recent report by the President’s Council of Advisors on Science and Technology estimates that it costs an average of $1.2 billion to win FDA approval and bring a new drug to market. Given that biopharmaceuticals account for roughly two percent of the economy, this is no small matter.

The chief problem is the complex process of clinical trials, in particular “Phase 3,” in which a drug is tested and retested to prove its its effectiveness in treating conditions across a broad population. These trials have a strong track record, but they are poorly suited to new biopharmaceuticals, which are often very effective in smaller, targeted groups despite a lower success rate in the public at large. Under the current system, many of these drugs may fail their trials despite their effectiveness when prescribed correctly.

Two industry insiders have proposed a solution in a Bloomberg op-ed: Replace Phase 3 with a market system, allowing patients and doctors to determine which drugs are effective by monitoring the real-world results:

Under our proposed system, the drug could have come to market after promising early-stage research in targeted patients, with appropriate post-marketing studies required. Payers and patients would be the ultimate judge about the quality of the product, and companies could learn from the experience to develop superior products if needed.

Companies would still be liable for unforeseen side effects, but patients and doctors would be warned — through the drug’s labeling — that the product had been approved based on promising but provisional research.

Unfortunately, Via Meadia has no doctors on staff, and we aren’t equipped to fully evaluate this proposal; this is a complicated business and the devil is in the details. But the broad concept is important. Streamlining regulatory procedures is a way to stimulate the economy and improve lives that doesn’t involve more deficit spending.

What health care reformers should be looking for is a combination of measures to ensure that the industry remains competitive and dynamic. Some proposals, like this one, will be welcomed by drug companies; others, like allowing Medicare to negotiate lower prices for drugs, will not. But overall, changes like this will allow the industry to bring new and better drugs to the market while creating jobs.

Fortunately, this shouldn’t be too difficult. Our health care system is so poorly designed, so clumsily regulated and so inefficiently administered that there are lots of beneficial changes that can be made without too much fuss.

[Pills image courtesy of Shutterstock.com.]

Published on March 1, 2013 12:25 pm