Results for “FDA” 465 found
Hedging FDA Risk?
In the words of a recent article, the FDA’s rejection of a recent drug application was a stunning setback. Stunning setbacks are by definition unpredictable and unpredictable risks aren’t correlated with other risks which means that they can be easily priced and bought and sold. The all-star team of Adam Jørring, Andrew W. Lo, Tomas J. Philipson, Manita Singh and Richard T. Thakor propose just this in Sharing R&D Risk in Healthcare via FDA Hedges.
The idea is to create FDA Hedges that pay out a fixed fee if a drug fails to be approved and zero otherwise. Pharmaceutical firms could then buy some of these contracts and reduce their risk exposure which in turn would increase their incentive to invest in R&D.
The idea is clever but firms and even more so firm owners already have many ways to diversify and its not clear what the value of an additional source of diversification is, even one that is more closely tuned to the firm’s profits. It’s also not clear how much additional R&D would be driven by offloading these risks. Pharmaceutical R&D is valuable, however, so even small increases in R&D are welcome even if more fundamental changes would be better. Prices in these markets would also provide useful information.
I also worry that we are asking a lot of FDA reviewers and firm insiders to keep their inside information private. Information about FDA approval decisions is already very valuable and there have been a few cases where insiders trade on their information or leak it to make millions. FDA Hedges might make this problem worse which should be balanced against the possible gains.
Will Trump Appoint a Great FDA Commissioner?
As someone who has written about FDA reform for many years it’s gratifying that all of the people whose names have been floated for FDA Commissioner would be excellent, including Balaji Srinivasan, Jim O’Neill, Joseph Gulfo, and Scott Gottlieb. Each of these candidates understands two important facts about the FDA. First, that there is fundamental tradeoff–longer and larger clinical trials mean that the drugs that are approved are safer but at the price of increased drug lag and drug loss. Unsafe drugs create concrete deaths and palpable fear but drug lag and drug loss fill invisible graveyards. We need an FDA commissioner who sees the invisible graveyard.
Each of the leading candidates also understands that we are entering a new world of personalized medicine that will require changes in how the FDA approves medical devices and drugs. Today almost everyone carries in their pocket the processing power of a 1990s supercomputer. Smartphones equipped with sensors can monitor blood pressure, perform ECGs and even analyze DNA. Other devices being developed or available include contact lens that can track glucose levels and eye pressure, devices for monitoring and analyzing gait in real time and head bands that monitor and even adjust your brain waves.
The FDA has an inconsistent even schizophrenic attitude towards these new devices—some have been approved and yet at the same time the FDA has banned 23andMe and other direct-to-consumer genetic testing companies from offering some DNA tests because of “the risk that a test result may be used by a patient to self-manage”. To be sure, the FDA and other agencies have a role in ensuring that a device or test does what it says it does (the Theranos debacle shows the utility of that oversight). But the FDA should not be limiting the information that patients may discover about their own bodies or the advice that may be given based on that information. Interference of this kind violates the first amendment and the long-standing doctrine that the FDA does not control the practice of medicine.
Srinivisan is a computer scientist and electrical engineer who has also published in the New England Journal of Medicine, Nature Biotechnology, and Nature Reviews Genetics. He’s a co-founder of Counsyl, a genetic testing firm that now tests ~4% of all US births, so he understands the importance of the new world of personalized medicine.
The world of personalized medicine also impacts how new drugs and devices should be evaluated. The more we look at people and diseases the more we learn that both are radically heterogeneous. In the past, patients have been classified and drugs prescribed according to a handful of phenomenological characteristics such as age and gender and occasionally race or ethnic background. Today, however, genetic testing and on-the-fly examination of RNA transcripts, proteins, antibodies and metabolites can provide a more precise guide to the effect of pharmaceuticals in a particular person at a particular time.
Greater targeting is beneficial but as Peter Huber has emphasized it means that drug development becomes much less a question of does this drug work for the average patient and much more about, can we identify in this large group of people the subset who will benefit from the drug? If we stick to standard methods that means even larger and more expensive clinical trials and more drug lag and drug delay. Instead, personalized medicine suggests that we allow for more liberal approval decisions and improve our techniques for monitoring individual patients so that physicians can adjust prescribing in response to the body’s reaction. Give physicians a larger armory and let them decide which weapon is best for the task.
I also agree with Joseph Gulfo (writing with Briggeman and Roberts) that in an effort to be scientific the FDA has sometimes fallen victim to the fatal conceit. In particular, the ultimate goal of medical knowledge is increased life expectancy (and reducing morbidity) but that doesn’t mean that every drug should be evaluated on this basis. If a drug or device is safe and it shows activity against the disease as measured by symptoms, surrogate endpoints, biomarkers and so forth then it ought to be approved. It often happens, for example, that no single drug is a silver bullet but that combination therapies work well. But you don’t really discover combination therapies in FDA approved clinical trials–this requires the discovery process of medical practice. This is why Vincent DeVita, former director of the National Cancer Institute, writes in his excellent book, The Death of Cancer:
When you combine multidrug resistance and the Norton-Simon effect , the deck is stacked against any new drug. If the crude end point we look for is survival, it is not surprising that many new drugs seem ineffective. We need new ways to test new drugs in cancer patients, ways that allow testing at earlier stages of disease….
DeVita is correct. One of the reasons we see lots of trials for end-stage cancer, for example, is that you don’t have to wait long to count the dead. But no drug has ever been approved to prevent lung cancer (and only six have ever been approved to prevent any cancer) because the costs of running a clinical trial for long enough to count the dead are just too high to justify the expense. Preventing cancer would be better than trying to deal with it when it’s ravaging a body but we won’t get prevention trials without changing our standards of evaluation.
Jim O’Neill, managing director at Mithril Capital Management and a former HHS official, is an interesting candidate precisely because he also has an interest in regenerative medicine. With a greater understanding of how the body works we should be able to improve health and avoid disease rather than just treating disease but this will require new ways of thinking about drugs and evaluating them. A new and non-traditional head of the FDA could be just the thing to bring about the necessary change in mindset.
In addition, to these big ticket items there’s also a lot of simple changes that could be made at the FDA. Scott Alexander at Slate Star Codex has a superb post discussing reciprocity with Europe and Canada so we can get (at the very least) decent sunscreen and medicine for traveler’s diarrhea. Also, allowing any major pharmaceutical firm to produce any generic drug without going through a expensive approval process would be a relatively simply change that would shut down people like Martin Shkreli who exploit the regulatory morass for private gain.
The head of the FDA has tremendous power, literally the power of life and death. It’s exciting that we may get a new head of the FDA who understands both the peril and the promise of the position.
The FDA Fails to Prevent Traveler’s Diarrhea
I’ve been getting lots of vaccinations in preparation for my sabbatical in India. A Canadian friend recommended Dukoral. Dukoral is a vaccine for cholera, a very serious disease although one that’s rare for travelers even in undeveloped countries. (It’s roughly comparable in prevalence to Japanese encephalitis, however, which most travel physicians recommend vaccinating for.) As a side-effect, however, Dukoral is also quite effective (60%) against the most common cause of traveler’s diarrhea, that caused by enterotoxigenic E. coli.
Dukoral was approved in the European Union in 2004 but it has not been approved in the United States (a different cholera vaccine was approved late last year but it is not yet widely available). Moreover, Dukoral is available without a prescription in Canada (and also I believe in New Zealand). It’s a big seller in Canada and widely used by Canadians abroad.
It has long been my position that if a medical drug or device has been approved in another developed country then it ought to be approved in the United States. If it’s good enough for the Canadians then it’s good enough for me.
Never let it be said that I don’t follow through on my beliefs. I arranged for someone to buy me some Canadian Dukoral and ship it over the border. Unfortunately, my “connect” is not as practiced in the art of evading U.S. customs as would be ideal and in a fit of regrettable honesty wrote “gift, diarrhea medicine” on the package. The ever-vigilant U.S. Customs intercepted and confiscated my package, thus saving me from the dangers of FDA-unapproved medicine. So I am out $150 (2 doses) and will be less than fully protected on my trip.
If my son or I become “indisposed” in India, I will know who to blame.
Making American Great Again–The FDA
Does Donald Trump want to streamline the FDA and speed new drugs to patients? The Washington Post thinks that it can read the tea leaves:
A single sentence in President-elect Donald Trump’s health-care platform sends a strong hint to the drug and medical device industry that they may have an easier time getting their products on the market under his administration.
“Reform the Food and Drug Administration, to put greater focus on the need of patients for new and innovative medical products,” his health plan states.
On the face of it, the bullet point may seem almost bland, but efforts to integrate patients’ preferences and encourage innovation often result in proposals aimed at speeding up the process for getting new medicines on the market by easing regulations. Critics argue that such efforts can erode standards that are in place to protect patients from drugs that don’t work and might even be harmful.
“The language … is industry code for deregulation and reducing of safety standards,” said Robert Weissman, president of Public Citizen, a consumer watchdog.
There is plenty of evidence that the FDA is too slow (see, for example, here, here, here and here) so I would support such a move. Senators Cruz and Lee proposed a reciprocity bill last term under which drugs approved in other developed countries would quickly be approved here; perhaps such a bill could find renewed interest in a Trump administration (Economists also support the idea of reciprocity.)
On the other hand, Trump has expressed support for Medicare being allowed to negotiate drug prices which is tantamount to price controls given the size of Medicare and that is potentially a disaster. Price controls could significantly reduce research and development in the pharmaceutical industry and end up greatly adding to the invisible graveyard. Trump’s advisers would seem to lean towards streamlining the FDA process rather than imposing price controls but it’s difficult to be certain.
The FDA is Also Slow at Hiring
One of the reason’s the FDA is too slow to approve new drugs is that as a branch of the Federal government they are tied to slow and inefficient hiring rules.
The Food and Drug Administration has more than 700 job vacancies in its division that approves new drugs, and top officials say the agency is struggling to hire and retain staff because pharmaceutical companies lure them away.
“They can pay them roughly twice as much as we can,” Janet Woodcock, who directs the FDA’s Center for Drug Evaluation and Research (CDER), said at a rare-diseases summit recently in Arlington, Va.
High-value, potentially life-saving drugs are being delayed because the FDA is constrained from paying market rates. Absurd. Moreover, it’s not just about the wage rate.
[Janet] Woodcock [Director of FDA’s Center for Drug Evaluation and Research] wrote in December that staffing was a priority in 2016 because the center had “more than 600 staff vacancies.” At the Arlington event, she called the federal hiring system “challenging,” adding that prospective candidates often take other jobs while waiting for the FDA to make an offer.
“We move rather slowly — like a snail might be a better analogy,” agreed Peter Marks, director of the FDA’s Center for Biologics Evaluation and Research. “A young person with a family can’t wait four months for us to get through some of the federal hiring process. So if they have something else that’s more . . . expedient, they will take that.”
Sadly, slow and bureaucratic describes not just the hiring process but the drug approval process. The only difference is that patients don’t have an option to take the expedient alternative.
The FDA and the EpiPen Shock
I haven’t written much about the massive increase in the price of the EpiPen because I’ve said it all before–mostly this about FDA costs and delay and some bending of various laws to favor cronies and, as with the infamous Shkreli and Daraprim case, one solution would be a reciprocity system that allowed importation of epipen-like devices approved abroad.
I’m glad, however, that I didn’t go into this in detail because SlateStarCodex has knocked one out of the park on this issue:
…when was the last time that America’s chair industry hiked the price of chairs 400% and suddenly nobody in the country could afford to sit down? When was the last time that the mug industry decided to charge $300 per cup, and everyone had to drink coffee straight from the pot or face bankruptcy? When was the last time greedy shoe executives forced most Americans to go barefoot?
…[lots of stuff about FDA and EpiPen specifically]…
Imagine that the government creates the Furniture and Desk Association, an agency which declares that only IKEA is allowed to sell chairs. IKEA responds by charging $300 per chair. Other companies try to sell stools or sofas, but get bogged down for years in litigation over whether these technically count as “chairs”. When a few of them win their court cases, the FDA shoots them down anyway for vague reasons it refuses to share, or because they haven’t done studies showing that their chairs will not break, or because the studies that showed their chairs will not break didn’t include a high enough number of morbidly obese people so we can’t be sure they won’t break. Finally, Target spends tens of millions of dollars on lawyers and gets the okay to compete with IKEA, but people can only get Target chairs if they have a note signed by a professional interior designer saying that their room needs a “comfort-producing seating implement” and which absolutely definitely does not mention “chairs” anywhere, because otherwise a child who was used to sitting on IKEA chairs might sit down on a Target chair the wrong way, get confused, fall off, and break her head.
(You’re going to say this is an unfair comparison because drugs are potentially dangerous and chairs aren’t – but 50 people die each year from falling off chairs in Britain alone and as far as I know nobody has ever died from an EpiPen malfunction.)
Imagine that this whole system is going on at the same time that IKEA donates millions of dollars lobbying senators about chair-related issues, and that these same senators vote down a bill preventing IKEA from paying off other companies to stay out of the chair industry. Also, suppose that a bunch of people are dying each year of exhaustion from having to stand up all the time because chairs are too expensive unless you have really good furniture insurance, which is totally a thing and which everybody is legally required to have.
And now imagine that a news site responds with an article saying the government doesn’t regulate chairs enough.
Read the whole thing.
Addendum: Steve in the comments reminds me that there is a case of a big increase in the price of chairs. Of course, it proves the rule.
The FDA versus the Tooth
The NYTimes has an incredible story on a simple, paint-on liquid that stops tooth decay and prevents further cavities:
Nobody looks forward to having a cavity drilled and filled by a dentist. Now there’s an alternative: an antimicrobial liquid that can be brushed on cavities to stop tooth decay — painlessly.
The liquid is called silver diamine fluoride, or S.D.F. It’s been used for decades in Japan, but it’s been available in the United States, under the brand name Advantage Arrest, for just about a year.
The Food and Drug Administration cleared silver diamine fluoride for use as a tooth desensitizer for adults 21 and older. But studies show it can halt the progression of cavities and prevent them, and dentists are increasingly using it off-label for those purposes.
Ari Armstrong has the right reaction:
So the Japanese have been using this drill-free treatment for “decades,” yet we in the United States have had to wait until last year to get it. And the only reason we can get it now to treat cavities is that it happens to be allowed as on “off-label” use for what the FDA officially approved it for.
The NYTimes continues:
Silver diamine fluoride is already used in hundreds of dental offices. Medicaid patients in Oregon are receiving the treatment, and at least 18 dental schools have started teaching the next generation of pediatric dentists how to use it.
…The main downside is aesthetic: Silver diamine fluoride blackens the brownish decay on a tooth. That may not matter on a back molar or a baby tooth that will fall out, but some patients are likely to be deterred by the prospect of a dark spot on a visible tooth.
…[But] “S.D.F. reduces the incidence of new caries and progression of current caries by about 80 percent,” said Dr. Niederman, who is updating an evidence review of silver diamine fluoride published in 2009.
Fillings, by contrast, do not cure an oral infection.
But as Armstrong writes the craziest part of the story is this:
American dentists first started using similar silver-based treatments in the early 1900s. The FDA is literally over a century behind the times.
It seems that the future of dental treatment has been here all along but a combination of dentists wanting to be surgeons, lost knowledge, and FDA cost and delay prevented it from being distributed. Incredible.
The Good News on the FDA and ANDAs
Yesterday, I pointed out that generic drug prices are falling. So what accounts for the small number of large price increases in the generic drug market? It’s a combination of market shenanigans, supply shocks, and FDA delay.
The markets where price increases have been large tend to be relatively small. Daraprim, for example, is only prescribed some 8-12 thousand times per year in the United States. The small size of these markets is no accident. Keep in mind that whatever one may think of Shkreli, he did show a kind of entrepreneurial genius in scouring the universe of drugs in the United States to select one where monopoly power could be so effectively exploited. Shkreli found a market where 1) the total size of the market was low so there wasn’t much competition but 2) the drug treated a serious illness and 3) there wasn’t a good substitute so the value of the drug to the small number of patients was very high.
In addition, Shkreli knew that he had at least a 3-4 year window of opportunity to exploit monopoly power. To compete with Daraprim a competitor would have to submit an Abbreviated New Drug Applications (ANDA) to the FDA. Despite the name, Abbreviated, it costs at least five million dollars to go through the process and right now there is a backlog of nearly 3,000 ANDAs at the FDA’s Office of Generic Drugs. In recent years, it has taken 3- 4 years to get a generic drug approved. The cost is too high and the delay too long.
(I am focusing on the standard route to market entry and ignoring the possibility of importation or compounding which I discussed earlier. I’m also ignoring that Daraprim is unusual in that it was approved in 1953 before the current FDA system of safety and efficacy trials, and the FDA is being absurdly cagey about whether they would allow a simple ANDA for Daraprim. I may write about that in a future post– see here for a related case.)
So what’s the good news? In 2012 Congress passed the Generic Drug User Fee Act (GDUFA). Modeled after the very succesful PDUFA, the act earmarks fees paid by generic drug manufacturers to the FDA’s Office of Generic Drugs. As a result of those fees, the FDA has hired more reviewers and they are rapidly reducing the backlog. That’s the first piece of good news.
A second piece of good news is that FDA delay isn’t the only cause of the backlog. Another cause of the ANDA backlog was an unexpected increase in the number of ANDAs. I would have been much more worried if the number of ANDAs had decreased. Despite new user fees and some increase in regulation the increase in submissions is evidence that the US generic market is competitive, vibrant, and profitable.
The generic drug market in the United States has been very successful. We are constantly told, for example, that US pharmaceutical prices are the highest in the world and that is true for patented drugs but generic drug prices in the US are among the lowest in the developed world and most prescriptions are of generics.
We can address the price hiccups in the generic market by opening up to more world suppliers, speeding up the ANDA process and keeping costs of entry low. Overall, however, we shouldn’t let the price hiccups detract attention from the fact that the generic drug market is competitive, vibrant and thriving and we want to keep it that way.
Economists on FDA Reciprocity
Daniel Klein & William Davis surveyed economists about whether it would be an improvement to reform the FDA so that “as soon as a new drug is approved by any one of five [FDA approved international] agencies, that drug automatically gains approval in the United States.” They report:
Of the 467 economists who answered the question and did not mark “Have no opinion,” 53 percent agreed that the reform would be an improvement, while 29 percent disagreed. (The remainder said they were “neutral.”) Moreover, those favoring the reform were more likely to say they held their belief “strongly.” Hence, the balance of economist judgment certainly leaned in favor of the liberalization.
Economists are not the only ones in favor of reciprocity. Others are also coming around, at least partially. In Generic Drug Regulation and Pharmaceutical Price-Jacking I argued in response to the massive increases in the price of Daraprim (generic name Pyrimethamine) that we ought to allow importation:
Pyrimethamine is also widely available in Europe. I’ve long argued for reciprocity, if a drug is approved in Europe it ought to be approved here. In this case, the logic is absurdly strong. The drug is already approved here! All that we would be doing is allowing import of any generic approved as such in Europe to be sold in the United States.
In a paper in JAMA discussing the same case, Drs Jeremy Greene, Gerard Anderson, and Joshua M. Sharfstein agree, writing:
A second option is to temporarily permit the importation of drug products reviewed by competent regulatory authorities and approved for sale outside the United States. For example, Glaxo, the original manufacturer of pyrimethamine, sells a version of the drug approved for use in the United Kingdom at less than $1 per tablet.
Dr Sharfstein by the way was Principal Deputy Commissioner of the US Food and Drug Administration from March 2009 to January 2011.
Addendum: I will be discussing/debating pharmaceutical policy with Dr. Sharfstein at on event sponsored by the Council on Foreign Relations in Washington, DC the morning of Monday January 25. Invitation only but email me if you want an invite.
The FDA and Magical Thinking
Vox had a piece yesterday on the Cruz-Lee proposal to make it easier for U.S. patients to access drugs and devices already approved in other developed countries. The Vox piece had some howlers. Most notably this:
“There’s no evidence the FDA blocks innovation or makes innovation harder or makes it more costly,” said Kesselheim.
Frankly, that would be laughable were it not coming from a professor of medicine at Harvard Medical School. It costs well over a billion dollars to get the average new drug approved and much of that cost comes from FDA required clinical trials. Longer and larger clinical trials mean that the drugs that are eventually approved are safer. But longer trials also mean that good drugs are delayed. And the more expensive it is to produce new drugs the fewer new drugs will be produced. In short, longer and larger trials mean drug delay and drug loss.
We live in a world of tradeoffs. Let’s debate the tradeoffs. But let’s not engage in magical thinking where there are no tradeoffs and “no evidence” that the FDA makes drug development more costly.
A more subtle error was committed by the author who writes:
But it’s not clear that this legislation can solve the biggest problem here — the lack of promising treatments in the pipeline. In other words, a faster approval process can’t fix a dearth of innovation from labs themselves.
Many factors go into drug development that are outside the FDA’s purview. Nevertheless, faster drug approval can and does increase innovation. Approving drugs more quickly is equivalent to a decrease in the costs of research and development. Time is money. Reducing the cost of development increases the incentive to develop new drugs.
The Prescription Drug User Fee Act, for example, reduced drug approval times by about 10 months. Philipson et al. calculate that:
…the more rapid access of drugs on the market enabled by PDUFA saved the equivalent of 140,000 to 310,000 life years.
(PDUFA does not appear to have materially affected safety but Philipson et al. calculate that even under a worst case scenario the benefits of PDUFDA far exceeded the costs).
Moreover, Vernon et al. find that the reduction in approval time from PDUFA increased new drug development:
Controlling for other factors such as pharmaceutical profitability and cash flows, we estimate that a 10% decrease (increase) in FDA approval times leads to an increase (decrease) in R&D spending from between 1.4% and 2.0%. Combining this estimate with recent research on the link between PDUFA and FDA approval times…we calculate PDUFA may have incentivized an additional $10.8 billion to $15.4 billion in pharmaceutical R&D. Recent economic research has shown that the social rate of return on pharmaceutical R&D is very high; therefore, the social benefits of PDUFA (over and above the benefits of more rapid consumer access) are likely to be substantial.
Finally, return to the issue of reciprocity. Many of the critics of reciprocity respond with simple appeals to nationalism. We are the best! Rah, rah, rah! But if the critics were German or French they would argue that the EMA is superior to the FDA. Indeed, when I raise the issue of reciprocity with Europeans they respond in exactly the same way as Americans. How could anyone suggest that the EMA automatically approve drugs approved by the FDA! The horror.
The argument for reciprocity, however, isn’t that the FDA is uniquely bad or always worse than the EMA or vice-versa. The argument is that it’s wasteful to duplicate the lengthy approval process and that both agencies sometimes make mistakes. As a result, it’s simple common sense to let Americans avail themselves of drugs and devices approved in other developed countries.
Personalized Medicine and the FDA
In my post A New FDA for the Age of Personalized, Molecular Medicine I wrote:
Each patient is a unique, dynamic system and at the molecular level diseases are heterogeneous even when symptoms are not. In just the last few years we have expanded breast cancer into first four and now ten different types of cancer and the subdivision is likely to continue as knowledge expands. Match heterogeneous patients against heterogeneous diseases and the result is a high dimension system that cannot be well navigated with expensive, randomized controlled trials. As a result, the FDA ends up throwing out many drugs that could do good.
The Manhattan Institute has today taken out a full-page ad in the New York Times calling for a discussion about how to integrate personalized medicine with the FDA. The ad reads in part:
A new era in science and medicine calls for a new approach at the federal Food and Drug Administration, which determines whether any new treatment is safe and effective.
Every American has a stake in this change – because everyone will be a patient someday.
Congress should lay the foundation for a 21st century FDA by creating an external advisory network drawing on the expertise of the scientific and patient communities to assist the FDA in setting standards for how biomarkers can be better integrated into the drug development process.
This is a call for collaboration on an unprecedented scale to help the FDA chart a safe path for advancing biomarkers from discovery in a lab to your doctor’s office. We echo previous recommendations made by the President’s Council of Advisors on Science and Technology, the National Institutes of Health, a report from the National Research Council – and senior staff at the FDA itself.
The ad is signed by former FDA commissioner Andrew von Eschenbach, Peter Huber, (whose excellent book The Cure in the Code lays out the science and policy of biomarkers), Eric Topol, and myself among others.
See Project FDA for more.
Is the FDA Too Conservative or Too Aggressive?
I have long argued that the FDA has an incentive to delay the introduction of new drugs because approving a bad drug (Type I error) has more severe consequences for the FDA than does failing to approve a good drug (Type II error). In the former case at least some victims are identifiable and the New York Times writes stories about them and how they died because the FDA failed. In the latter case, when the FDA fails to approve a good drug, people die but the bodies are buried in an invisible graveyard.
In an excellent new paper (SSRN also here) Vahid Montazerhodjat and Andrew Lo use a Bayesian analysis to model the optimal tradeoff in clinical trials between sample size, Type I and Type II error. Failing to approve a good drug is more costly, for example, the more severe the disease. Thus, for a very serious disease, we might be willing to accept a greater Type I error in return for a lower Type II error. The number of people with the disease also matters. Holding severity constant, for example, the more people with the disease the more you want to increase sample size to reduce Type I error. All of these variables interact.
In an innovation the authors use the U.S. Burden of Disease Study to find the number of deaths and the disability severity caused by each major disease. Using this data they estimate the costs of failing to approve a good drug. Similarly, using data on the costs of adverse medical treatment they estimate the cost of approving a bad drug.
Putting all this together the authors find that the FDA is often dramatically too conservative:
…we show that the current standards of drug-approval are weighted more on avoiding a Type I error (approving ineffective therapies) rather than a Type II error (rejecting effective therapies). For example, the standard Type I error of 2.5% is too conservative for clinical trials of therapies for pancreatic cancer—a disease with a 5-year survival rate of 1% for stage IV patients (American Cancer Society estimate, last updated 3 February 2013). The BDA-optimal size for these clinical trials is 27.9%, reflecting the fact that, for these desperate patients, the cost of trying an ineffective drug is considerably less than the cost of not trying an effective one.
(The authors also find that the FDA is occasionally a little too aggressive but these errors are much smaller, for example, the authors find that for prostate cancer therapies the optimal significance level is 1.2% compared to a standard rule of 2.5%.)
The result is important especially because in a number of respects, Montazerhodjat and Lo underestimate the costs of FDA conservatism. Most importantly, the authors are optimizing at the clinical trial stage assuming that the supply of drugs available to be tested is fixed. Larger trials, however, are more expensive and the greater the expense of FDA trials the fewer new drugs will be developed. Thus, a conservative FDA reduces the flow of new drugs to be tested. In a sense, failing to approve a good drug has two costs, the opportunity cost of lives that could have been saved and the cost of reducing the incentive to invest in R&D. In contrast, approving a bad drug while still an error at least has the advantage of helping to incentivize R&D (similarly, a subsidy to R&D incentivizes R&D in a sense mostly by covering the costs of failed ventures).
The Montazerhodjat and Lo framework is also static, there is one test and then the story ends. In reality, drug approval has an interesting asymmetric dynamic. When a drug is approved for sale, testing doesn’t stop but moves into another stage, a combination of observational testing and sometimes more RCTs–this, after all, is how adverse events are discovered. Thus, Type I errors are corrected. On the other hand, for a drug that isn’t approved the story does end. With rare exceptions, Type II errors are never corrected. The Montazerhodjat and Lo framework could be interpreted as the reduced form of this dynamic process but it’s better to think about the dynamism explicitly because it suggests that approval can come in a range–for example, approval with a black label warning, approval with evidence grading and so forth. As these procedures tend to reduce the costs of Type I error they tend to increase the costs of FDA conservatism.
Montazerhodjat and Lo also don’t examine the implications of heterogeneity of preferences or of disease morbidity and mortality. Some people, for example, are severely disabled by diseases that on average aren’t very severe–the optimal tradeoff for these patients will be different than for the average patient. One size doesn’t fit all. In the standard framework it’s tough luck for these patients. But if the non-FDA reviewing apparatus (patients/physicians/hospitals/HMOs/USP/Consumer Reports and so forth) works relatively well, and this is debatable but my work on off-label prescribing suggests that it does, this weighs heavily in favor of relatively large samples but low thresholds for approval. What the FDA is really providing is information and we don’t need product bans to convey information. Thus, heterogeneity plus a reasonable effective post-testing choice process, mediates in favor of a Consumer Reports model for the FDA.
The bottom line, however, is that even without taking into account these further points, Montazerhodjat and Lo find that the FDA is far too conservative especially for severe diseases. FDA regulations may appear to be creating safe and effective drugs but they are also creating a deadly caution.
Hat tip: David Balan.
FDA approval at what price?
There is plenty of debate over whether the FDA should be looser or tougher with new drug approval, but I rarely hear the question posed as “approval at what price?”
One option would be to approve relatively strong and safe drugs at full Medicare and Medicaid reimbursement rates, if not higher. Drugs with lesser efficacy or higher risk could be approved at lower reimbursement prices. It is possible or perhaps even likely, of course, that private insurance companies would follow the government’s lead.
Dr. Peter Bach has promoted one version of this idea, and produced a calculator for valuing these drugs. In essence the government would be saying to lower quality producers “yes, you can continue to try to improve this drug, but not at public expense.”
I believe proposals of this kind deserve further attention, and in general the notion of regulatory approval need not be conceived in strictly binary, yes/no terms.
FDA Loses Another Free Speech Case
WSJ: A federal court in New York delivered a setback to the Food and Drug Administration, ruling the agency can’t bar a drug company from marketing a pill for off-label use as long as the claims are truthful.
The decision by the federal district court in the Southern District of New York, is the latest of a line of such cases. It concerns the Irish company Amarin Pharma Inc. and its fish-oil-derived drug Vascepa, and it has been closely watched by the pharmaceutical industry. The company asked the court to stop the FDA from enforcing its off-label marketing ban, and the court agreed.
The ruling is important because in the last few years the FDA has extracted billions of dollars in settlements from pharmaceutical firms for engaging in what appears to be constitutionally protected speech. In fact, the courts have repeatedly ruled that FDA and Congressional restrictions on truthful and non-misleading off-label marketing are unconstitutional.
In Washington Legal Foundation v. Friedman, for example, the DC court issued an injunction preventing the FDA from prohibiting, restricting, sanctioning or otherwise seeking to limit pharmaceutical and device manufactures from disseminating information about off-label uses from peer-reviewed professional journals or textbooks. In U.S. v. Caronia the court (2nd circuit) reversed a criminal conviction and said that the FDA cannot criminalize truthful promotion of off-label uses of approved drugs. Indeed, the court in that case defended the utility of such promotion:
…prohibiting off-label promotion by a pharmaceutical manufacturer while simultaneously allowing off-label use “paternalistically” interferes with the ability of physicians and patients to receive potentially relevant treatment information; such barriers to information about off-label use could inhibit, to the public’s detriment, informed and intelligent treatment decisions. See Va. Bd. of Pharmacy v. Va. Citizens Consumer Council, Inc., 425 U.S. 748, 770 (1976)
…See also Sorrell, 131 S. Ct. at 2670- 72 (“[The] fear that [physicians, sophisticated and experienced customers,] would make bad decisions if given truthful information” cannot justify content-based burdens on speech.”) (citing sources);
…Liquormart, 517 U.S. at 503 (“[B]ans against truthful, nonmisleading commercial speech . . . usually rest solely on the offensive assumption that the public will respond ‘irrationally’ to the truth. . . . The First Amendment directs us to be especially skeptical of regulations that seek to keep people in the dark for what the government perceives to be their own good.”).
In Washington Legal Foundation v. Henney the court summed up concisely:
The First Amendment is premised upon the idea that people do not need the government’s permission to engage in truthful, nonmisleading speech about lawful activity.
(By the way, it’s this line of cases that makes me think that 23andMe has a strong first amendment case for presenting to customers information about their own DNA.)
The courts were exactly correct. Off-label uses of approved drugs are a vital part of the discovery process of modern medicine. New uses for old drugs are often discovered through serendipity and close observation in the field. Indeed, modern medicine moves faster than the FDA and it often happens that the first-line therapy is an off-label treatment. Prohibiting firms from truthfully discussing such treatments with physicians is not just unconstitutional it’s also paternalistic and harmful to patient welfare.
This case, Amarin v FDA, is especially egregious because the company wants to discuss with physicians the results of its own FDA-approved trial. Amarin has a fish-oil derived drug designed to reduce triglyceride levels and it already has approval to sell and market this drug in patients with very high levels of triglycerides. It also wanted approval to sell the drugs in patients with high (but not very high levels) and it conducted an FDA-approved trial that showed that the drug is safe and effective at reducing triglyceride levels in this set of patients.
Although the trial was successful the FDA, for reasons discussed below, refused to grant approval. Amarin isn’t disputing the refusal but they wanted to tell physicians the results of the trial and then let the physicians and their patients decide whether reducing triglyceride levels is something that they want to do given currently existing evidence about triglyceride levels and heart attacks. The FDA threatened to pursue civil and possibly criminal charges but the court has now precluded the FDA from those pursuits.
Aside from the first amendment issues, the case is also interesting as another example of how a capricious FDA can kill innovation through regulation uncertainty. (The story is similar in many respects to that told by Joseph Gulfo in Innovation Breakdown, see my review).
To wit: Amarin wanted approval to sell its drug to patients with high levels of triglycerides and they obtained a special protocol agreement (SPA) from the FDA to run a study in this population. Quoting the court:
An SPA agreement is a written agreement that a manufacturer may enter into with the FDA, which sets out the design and size parameters for clinical trials of a new drug, and the conditions under which the FDA would approve the drug. For the manufacturer, such an agreement minimizes development risk by providing regulatory predictability: Provided that the manufacturer follows the procedure set in the SPA agreement and the drug proves meets the benchmarks for effectiveness set in the agreement, the FDA must approve the drug.
The results of the study were good:
The ANCHOR study achieved each numeric objective that the SPA Agreement had set: The results showed that Vascepa produced a statistically significant decrease in triglyceride levels in persons with persistently high triglycerides, as well as in other lipid, lipoprotein, and inflammatory biomarkers.
…Because Amarin had met all requirements for approval set out in the ANCHOR SPA Agreement, Amarin anticipated that the FDA would approve Vascepa for the additional use that Amarin sought, i.e., by patients with persistently high triglycerides.
Instead of approving the drug, however, the FDA rescinded their agreement. The FDA argued that although the drug did reduce triglyceride levels it was no longer certain that reducing triglyceride levels would reduce cardiovascular events.
Can you imagine the tailspin this sent researchers at Amarin into when they learned that the drug would not be approved despite passing all the agreed upon tests? (Read Gulfo for a vivid account of his case).
Who will invest in bio-medical advances with this kind of risk? Sergei Brin said that he didn’t want to invest in health care because “It’s just a painful business to be in . . . the regulatory burden in the U.S. is so high that I think it would dissuade a lot of entrepreneurs.” It’s precisely this kind of regulatory uncertainty that an SPA was meant to avoid. By rescinding their agreement, the FDA is sending the message to investors that no one is safe.
Fast Tracking the FDA
Bart Madden and James Pinkerton suggest a new “free to choose” track for pharmaceuticals. Pharmaceuticals which showed initial effectiveness would be available for early sale but all treatment information under the early-sale program would have to be reported to an open-access database.
After a drug successfully passes safety trials and shows initial effectiveness in clinical trials—that is, the early steps—a drug developer could request that their drug be available for sale on a “free to choose” track (the developer could elect also to continue on the FDA clinical trial track). As a result, patients such as Matt Bellina would be able to access innovative new drugs up to seven years earlier than waiting for a final FDA decision. For patients given only a few years—or months—to live, seven years sooner could spell life, not death.
Under our proposal, a patient’s doctor would be required to submit treatment results and medical information such as a patient’s genetic data to the open-access database. Doctors and patients would get real-time updates about the benefits and side effects of any “free to choose” drug and be able to make informed decisions about an early use of these new drugs versus approved drugs.
We might bear in mind that clinical trials involve patients who are mostly similar. On the other hand, because the “free to choose” option would be available to everyone, new insights would be obtained about how a drug performs for a far broader range of patients. These insights would better inform the biopharmaceutical industry, leading, in turn, to better allocation of research funds and faster innovation.
Bart’s excellent book Free to Choose Medicine has more on the proposal, which I think would speed drugs to patients and increase pharmaceutical research and development. Do note that I hold the Bartley J. Madden chair in economics at Mercatus at GMU and I have my biases.