Results for “fda”
461 found

Should the SEC self-finance?

by  Tyler Cowen in

I haven't seen this issue receive much attention on the usual blogs (Yves Smith is one exception).  Here is one argument for self-finance:

The Obama administration has requested long overdue increases in both budget and staff for the S.E.C., and has plans to add as many as 374 employees. Those increases are vital, but because they’re dependent on Congress, there is no guarantee that they will be sustained.

Instead, the commission should finance itself – much as the Federal Reserve and the Federal Deposit Insurance Corporation do today through fees on banks. These two pivotal financial regulatory agencies thus have the flexibility to adjust their own staff.

And it appears easy:

Such a self-financing system would not mean higher fees; the commission collects far more in fees from corporate filings and stock market trading than it gets from Congress. But those fees go back into the federal coffers. In 2007, the S.E.C. brought in $1.5 billion, almost twice its 2007 budget.

This seems like a short-run improvement, but the idea nonetheless makes me a bit nervous.  What will it look like in practice, ten or fifteen years from now?  Was reliance on fees in every way beneficial for the FDA?  Admittedly, self-finance is one pathway to higher levels of finance, but the two issues are conceptually distinct and we might prefer to implement the appropriate level of finance directly through Congress.  I fear that in the longer run self-finance means that the SEC never wishes to see the financial sector shrink.  (Of course maybe it's not going to shrink anyway.)  A related question is what kind of internal controls the SEC would need to maintain its own fiscal discipline and prevent overspending, backed by an excess raising of funds and fees.  So whether self-finance is a good idea probably depends on what you are comparing it to.  A final question, and not a small one, is whether you think the SEC should be more independent from Congress.

Here is the SEC's own case for self-finance.  Here is a 2002 GAO study of the idea, very useful and it also discusses other cases of self-finance among regulatory authorities.

I don't have any strong conclusion here other than "maybe."  

The economics of placebos for self-remitting diseases

by  Tyler Cowen in

Daniel Carpenter, who just wrote the very impressive FDA book, has an interesting paper on his home page:

I develop a simple stochastic model of inference and therapeutic utilization in the presence of placebo effects, when the underlying medical condition may be self-remitting. In the model, expectations generate a “felt” health state which can mimic the medically cured health state even when the treatment in question has no real curing power. This effect may be augmented by self-limitation of the medical condition for which the treatment is utilized. A human agent then applies Bayes’ rule to the felt history as if it were generated pharmacologically. A more sophisticated agent knows of placebo effects but does not know the precise extent to which they contribute to curing. I describe the bias that attends inference and the under – or overutilization of therapies under such a model. A central result of the model is that human placebo learning is generally subject to greater bias in estimating treatment efficacy when diseases are self-limiting. Human agents may commit several types of decision errors under placebo learning. They may continually choose a more costly (expensive, hazardous) treatment when a less costly one would work as well, or they may continually use inferior treatments for life-threatening illnesses. When diseases are self-limiting, both these types of error are more likely when the human agent has high initial beliefs about the treatment. Possible applications of the model include the patent medicine industry, the robustness of markets for herbal and nutritional supplements, and the contemporary stability of counterfeit drug operations.

Of course this applies a lot more broadly than to medicine.  It helps explain why people overuse and underuse "treatments" of many different kinds, including education.  Here is Dan Carpenter's page on fly fishing.

Why are Americans more risk averse about medicine than Europeans?

by  Alex Tabarrok in

The stereotype is that Americans are more risk-loving and entrepreneurial than the less-rugged Europeans who instead seek shelter under the umbrella of the welfare state.  Yet when I talk about the FDA I point out that for many decades (from say the late 1960s to PDUFA in 1993 and perhaps again more recently) the FDA lagged behind its European counterparts in approving new drugs.  U.S. risk aversion in drug approvals is especially peculiar since the major scare which increased FDA powers and slowed down approvals was the thalidomide disaster but thalidomide was approved in Europe not in the U.S.  Nevertheless, we were the ones who got scared.

More recently, Scott Gotlieb argues that the Europeans have pushed H1N1 vaccine production forward using adjuvants and novel production techniques while the US has chosen less risky (some might say less entrepreneurial) older approaches.

The tort system is sometimes blamed for excess U.S. risk aversion but in both these cases it's mostly the U.S. government which is more risk averse than its European counterpart.  Moreover, the US government is more risk averse over medical matters and not say about sending troops abroad or about providing a safety net for other risks.

I think this is a puzzle.  Why has the U.S. government been more risk averse with regard to medicine than European governments but less risk averse in other areas?

Facts about airline water

by  Tyler Cowen in

Fact 1:

In the United States, drinking water safety on airlines is jointly
regulated by the EPA, Food and Drug Administration (FDA), and Federal
Aviation Administration (FAA). EPA regulates the public water systems
that supply water to the airports and the drinking water once it is
onboard the aircraft. FDA has jurisdiction over culinary water (e.g.,
ice) and the points where aircraft obtain water (e.g., pipes or
tankers) at the airport. In addition, air carriers must have
FAA-accepted operation and maintenance programs for all aircraft, this
includes the potable water system. (EPA)

Fact 2:

…the news carried stories that the US EPA had determined that 15% of
water on a sample of 327 aircraft flunked the total coliform standards
and inspections showed that all aircraft were out of compliance with
the national drinking water standards.

Rest assured, the EPA has crafted new rules to address the problem.

Debbie Hirst, not Stephen Hawking

by  Tyler Cowen in

Didn't I cover this story once before?

One such case was Debbie Hirst’s. Her breast cancer had metastasized, and the health service would not provide her with Avastin,
a drug that is widely used in the United States and Europe to keep such
cancers at bay. So, with her oncologist’s support, she decided last
year to try to pay the $120,000 cost herself, while continuing with the
rest of her publicly financed treatment.

By December, she had
raised $20,000 and was preparing to sell her house to raise more. But
then the government, which had tacitly allowed such arrangements
before, put its foot down. Mrs. Hirst heard the news from her doctor.

“He
looked at me and said: ‘I’m so sorry, Debbie. I’ve had my wrists
slapped from the people upstairs, and I can no longer offer you that
service,’ ” Mrs. Hirst said in an interview.

“I said, ‘Where
does that leave me?’ He said, ‘If you pay for Avastin, you’ll have to
pay for everything’ ” – in other words, for all her cancer treatment,
far more than she could afford.

Officials said that allowing
Mrs. Hirst and others like her to pay for extra drugs to supplement
government care would violate the philosophy of the health service by
giving richer patients an unfair advantage over poorer ones.

I'm not saying Obama wants to do this, I am saying there are some unacceptable features of Britain's NHS (update: the policy was reversed in 2008).  The point is not to compare those features to the problems with the U.S. system.  The point is that everyone is gainsaying the Hawking example without recognizing there have been other people in similar predicaments.  How could such a policy ever have been adopted in the first place?  This is just a reminder, it's not a prompt for you to repeat the familiar story that the U.S. pays more without getting better health care outcomes.

If you want to do a broader comparison, here is more on the NHS and drugs.  Did you know that Rilutek, the main drug (its efficacy is debated) for treating ALS (Lou Gehrig's disease), has been available in the UK since 1997.  It was approved by the FDA in 1995 though covered by Medicare only after the prescription drug bill.  As of 2004, single-payer system New Zealand wasn't offering the drug at all.  If you're wondering, single-payer Canada had approval of the drug in 2000, but with partial early usage in 1995.

By the way, Medicare does cover ALS, even if you're not 65, but various important forms of home adaptation and assistance are left uncovered, as is often the case with Medicare.  It seems the U.S. is the best place for drugs but quite possibly not the best coverage overall for ALS.  If you're looking for one good health care reform, consider dropping the reimbursement rate penalty for home care.

My knowledge of ALS-related issues is not extensive, but aren't such comparisons more interesting than reading another blog post bashing idiots? The more you bash the idiots, the more you are playing into the hands of…the idiots.

Barack Obama on Sweden

by  Tyler Cowen in

Read this post; here is Obama speaking:

Sweden, on the other hand, had a problem like this. They took over the
banks, nationalized them, got rid of the bad assets, resold the banks
and, a couple years later, they were going again. So you'd think
looking at it, Sweden looks like a good model. Here's the problem;
Sweden had like five banks. [LAUGHS] We've got thousands of banks. You
know, the scale of the U.S. economy and the capital markets are so vast
and the problems in terms of managing and overseeing anything of that
scale, I think, would — our assessment was that it wouldn't make
sense. And we also have different traditions in this country.

Here is a short movie by Ingmar Bergman.  Here is a Carl Milles sculpture.  Here is some cabbage with your pizza.

Econ Journal Watch

by  Tyler Cowen in

Table of Contents with links to articles (pdf)

The Worst Idea I have Heard Today

by  Alex Tabarrok in

One idea that might prevent a repeat of the turmoil: a commission that
would vet financial products before their release, akin [to] the Food and Drug Administration’s
evaluation of drugs before they’re released to the market. McFadden
suggested, “we may need a financial-instrument administration that
tests the robustness of financial instruments and approves only the
uses where they can do no harm.”

Nobel laureaute Daniel McFadden quoted at Real Time Economics.  Do tell what will be left when we approve only things "that can do no harm."? 

Might I also suggest that before calling for a financial FDA, Prof. McFadden should investigate what economists who have studied the matter have concluded about the safety and effectiveness of the real FDA.   

Letter to the NEJM

by  Alex Tabarrok in

The issue of off-label prescribing is heating up again.  A recent article in the New England Journal of Medicine by Randall Stafford made the case for greater regulation.  I am concerned that the benefits of off-label prescribing are not fully appreciated.  Dan Klein and I wrote a letter to the NEJM – which they declined to publish – in response.  Here’s the letter:

Dear NEJM,

R.S. Stafford writes that off-label prescribing “permits innovation in clinical practice … offers patients and physicians earlier access to potentially valuable medications and allows physicians to adopt new practices based on emerging evidence.”  Nevertheless, he calls for greater FDA regulation.

In contrast, we argue that the efficacy of off-label usage suggests that less FDA regulation of first or on-label usage would increase innovation and offer patients earlier access to new medications. 

Off-label prescribing is regulated by the judgments of doctors, medical researchers, industry, the patient community, and patients.  This system offers patients a more nuanced approach to care than a top-down approach.  We should extend this approach to new drugs as well as to new uses for old drugs.

Our perspective is bolstered by a large survey of physicians which demonstrates strong support for off-label prescribing and considerable support for reducing FDA regulations on new drugs.

Daniel Klein
Alexander Tabarrok
George Mason University

On a Fast Track to Nowhere?

by  Alex Tabarrok in

Periodically when the FDA is criticized for slowing the approval of new drugs they announce a new policy like Fast Track.  I’m skeptical of these announcements since they are inconsistent with the FDA’s incentives.  A recent investigative report in the Cleveland Plain Dealer seems to suggest that I am right to be skeptical but in the end makes me wonder whether Fast Track may be useful after all.  Here’s the part that supports my skepticism.

A decade ago, the Food and Drug Administration introduced a Fast
Track designation for drugs in development that was intended to speed
the availability of medical treatments for serious diseases.

However, a seven-month investigation by The Plain Dealer shows that
this government blessing has not increased the number of drugs approved
or moved them to market faster.

…Dr. John Jenkins, director of the FDA’s Office of New Drugs,
acknowledged that the Fast Track designation only gives companies the
same access to FDA programs that was already in place when they lobbied
Congress for the provision in 1997.

       "There’s really not much other, if any, benefit for Fast Track," he said.

The report, however, makes a big deal of the fact that stock prices do respond positively to Fast Track designation.  The report spins this as pump and dump with the FDA in effect doing the pumping and insiders and hedge funds doing the dumping. 

…frenzied trading occurs regularly when companies announce Fast Track
status. The number of shares bought and sold more than doubled on 49
percent of days that companies announced Fast Track designations.
Trading was 10 times higher than the day before in 22 percent of
instances….hedge funds and others who [short the stock] bet that the price of a
stock will fall – and it often does after the initial jump a company
receives from Fast Track designation.

But I’m also skeptical of stories that suggest markets are systematically fooled by non-events and the numbers presented do not seem wildly inconsistent with a modest but real positive signal from being listed as Fast Track.

Stock prices of companies that trade on the New York Stock Exchange
rose just 1 percent after Fast Track announcements… Excluding these companies, most of which are major
pharmaceutical firms, Fast Track announcements boosted stock prices
11.5 percent.

I’ll call this one a draw until further information arrives.  What wisdom does the crowd offer?

Hat tip to Mike Giberson at Knowledge Problem.

Surgery vs. Drugs

by  Alex Tabarrok in

Levitt and Dubner discuss bariatric surgery in their most recent NYTimes column.  Writing on their blog (they or their publicist) say this:

Bariatric surgery is often the most effective treatment for the morbidly obese,
and with a mortality rate of around one percent, it isn’t terribly risky…

Not terribly risky!!!  I consider a 1% chance of death to be very risky, perhaps worthwhile for some morbidly obese people but when 1 in every 100 patients doesn’t make it off the table that is not good odds.

What I find most interesting, however, is that I don’t think that any drug, even one with net benefits, could pass FDA trials with a mortality risk of 1%.  Recall that Rezulin was pulled from the market when 63 out of 750,000 people developed liver problems (the actual number may have been higher of course but the numbers aren’t even close.)   

It doesn’t make sense to regulate one source of risk at much higher rates than another source, given equal benefits.  It’s quite possible, for example, that patients denied risky weight loss drugs turn to even riskier bariatric surgery.   (I am not arguing this point here, I am explaining why efficiency requires that equal risks be regulated equally).

So if it doesn’t make sense to regulate one source of risk at much higher rates than another source, should surgery be regulated more or drugs less? 

The roots of medical innovation

by  Tyler Cowen in

In a much-praised piece, Jon Cohn argues that the NIH, not commercial incentives, is the key to American medical innovation.  He writes:

The great breakthroughs in the history of medicine, from the development of the polio vaccine to the identification of cancer-killing agents, did not take place because a for-profit company saw an opportunity and invested heavily in research. They happened because of scientists toiling in academic settings. "The nice thing about people like me in universities is that the great majority are not motivated by profit," says Cynthia Kenyon, a renowned cancer researcher at the University of California at San Francisco. "If we were, we wouldn’t be here." And, while the United States may be the world leader in this sort of research, that’s probably not–as critics of universal coverage frequently claim–because of our private insurance system. If anything, it’s because of the federal government.

The single biggest source of medical research funding, not just in the United States but in the entire world, is the National Institutes of Health (NIH): Last year, it spent more than $28 billion on research, accounting for about one-third of the total dollars spent on medical research and development in this country (and half the money spent at universities).

A few points should be made:

1. The strength of American medical innovation stems from the combination between the NIH, private philanthropy, and commercial incentives.  Cohn has lots of (just) praise for the NIH, as basic research is often a public good.  But he doesn’t say enough about philanthropy, and he confuses pro-NIH evidence with showing the superfluity of commercial incentives.

2. Send some flowers to Cynthia Kenyon, whom I could not personally quote in this manner with a straight face.  You would never know that universities are profiting from drugs, and patenting them, at an unprecedented rate.  Universities are also forming partnerships with drug companies at an unprecedented rate. 

3. Companies must work very hard to translate basic research into usable applied form and the U.S. is a clear world leader in this regard.  A drug idea is not the same as a drug.  Cohn at times admits this, but is he really denying that the supply curve here slopes upward with regard to expected profits?  You can cite all kind of "mixed" factors about commercial incentives but at the end of the day that is the basic question.

4. Statins, Prozac, and anti-AIDS drugs are notable examples of #1.  Or try this list of Merck products.  Merck and Pfizer are much more than simply marketing or doctor bribery machines, although admittedly they are that too. 

5. The standard arguments against commercial "me-too" drugs are considerably overrated.

6. FDA restrictions are at least partly responsible for the costly, overly concentrated, and blockbuster-oriented nature of U.S. and other pharmaceutical companies.  Tight regulations discriminate against the small company and the small idea.  Even if you think tight regulations are a good idea, don’t blame these tendencies on the big bad corporations.

7. It is odd for Cohn to cite me as his libertarian foil, since the referenced piece very clearly cites the NIH as a critical factor behind American medical innovation.  This odd citation again represents the desire to replace "anti-commercial" arguments with an easier-to-make "pro-NIH" case.

9. The NIH works as well as it does because the money is mostly protected from Congress.  It is not a success which can easily be replicated.  The more money is at stake, the more Congress wants to influence allocation.  We should guard this feature of the system jealously and try to learn from it.  If we can.

The bottom line: Arguments for the NIH are not arguments against the importance of commercial incentives for medical innovation.

Addendum: Read Clive Crook too.