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About the Author
Henry I. Miller, M.S., M.D., is a research fellow at the Hoover Institution. His research focuses on public policy toward science and technology, especially pharmaceutical development and the new biotechnology. His work often emphasizes the excessive costs of government regulation and models for regulatory reform.
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To America's Health
A Proposal to Reform the Food and Drug Administration
By Henry I. Miller
Hoover Institution PressCopyright © 2000 Board of Trustees of the Leland Stanford Junior University
All rights reserved.
The Birth and Growth of Premarket Regulation
The federal government's role in regulating consumer products today is so pervasive that most Americans probably assume it is one of Washington's basic, essential jobs — like building highways and collecting taxes. Every consumer product sold is subject to at least one, and in many instances several, federal regulatory statutes, plus a bewildering array of implementing regulations, guidelines, and policies. But these regulations are relatively recent phenomena; before the twentieth century, in fact, there was no direct federal regulation of consumer products in the United States.
The Biologics Act of 1902 ushered in the Regulatory Century, and, as is often the case with regulatory legislation, it was written in a crisis atmosphere. In 1901, a contaminated smallpox vaccine caused an outbreak of tetanus in Camden, New Jersey, and a single lot of tetanus-contaminated diphtheria antitoxin resulted in the death of several children in St. Louis. Ensuing petitions triggered historic legislation. The 1902 statute required that the federal government grant premarket approval of two complementary license applications for every biological drug (blood and blood products, vaccines, derivatives of natural substances for treating allergies, and extracts of living cells). One application was a product license application (certifying the product itself); the other was an establishment license application (validating the production process and facility). Never before had any European or American government required explicit government licensing or approval of a category of consumer products before marketing. Earlier lawmaking in Europe, the American colonies, and the United States had made the sale of adulterated or misbranded products illegal but had provided governmental authorities only with the power to police the marketplace; that is, regulators could review already marketed products and bring legal action against any product found to violate the statutory requirements. With the 1902 act, government was given the unprecedented administrative authority to prevent the marketing of a consumer product. It could bar the product from ever reaching the marketplace simply by turning down a marketing application or by taking no action at all on the matter. The same premarket authority was later enacted into law for animal biological drugs, in the Virus, Serum, and Toxin Act of 1913.
Congress did not grant this power casually; in fact, the premarket approval requirements of the Biologics Act of 1902 stood alone for more than fifty years. When Congress enacted the Federal Food and Drugs Act of 1906 to regulate the rest of the drug supply (that is, nonbiological drugs) in the United States, it did not authorize any form of premarket testing or approval or even the development of administrative regulatory standards. The Federal Meat Inspection Act of 1906 and the Insecticide Act of 1910 similarly relied entirely on traditional police powers and imposed no regulatory requirements before marketing.
As first drafted, even the Federal Food, Drug and Cosmetic Act of 1938 — the principal enabling statue of today's FDA — included only policing authority. Before it became law, however, a hastily marketed drug containing an untested solvent (diethylene glycol, a potent poison) killed more than a hundred people within a few days. In response to this tragedy, Congress included in the 1938 act a new provision to require sponsors (companies) to submit a New Drug Application (NDA) to the FDA before introducing a new drug into interstate commerce. The NDA described the proposed uses of the drug and the tests that demonstrated safety at the recommended dose. Under the 1938 act, if a company submitted an NDA for a product and the FDA took no action within sixty days, the application was, in effect, approved and the drug could be marketed lawfully. In other words, Congress stopped short of requiring that new drugs obtain an affirmative premarket approval; the default position was permission for the drug sponsor to market the product. Moreover, only the safety, not the effectiveness, of the drug was considered to be within the FDA's purview; effectiveness was left for the marketplace to determine.
A decade later, following World War II, Congress replaced the Insecticide Act of 1910 with the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) of 1947. For the first time, every pesticide was required to be registered before it could be marketed lawfully. The 1947 act contained no authority, however, for the United States Department of Agriculture (USDA), which regulated pesticides at that time, to deny registration based on an administrative determination that a product was adulterated or mislabeled.
The combined impact of these various federal regulatory statutes on commerce in legitimate products was negligible, and there were, in fact, public health benefits. The policing, or surveillance, of the marketplace — that is, postmarket regulation — by the FDA and USDA under these regulatory statutes was extremely successful in weeding out adulterated and misbranded products. By taking strong regulatory action, these two agencies removed thousands of unsafe and ineffective products from the market, thus benefiting both consumers and the legitimate industry. At the same time neither the industry's ability to develop and market new products nor individual choice were compromised: Because their scope was narrow, the premarket approval requirements for human and animal biological products had little negative impact, and free choice in the marketplace was actually enhanced by the requirement for accurate labeling of regulated products.
Beginning in the 1950s, however, the regulatory landscape changed dramatically. Congress required premarket approval of a large number of consumer products by enacting the following series of statutes:
Miller Pesticide Amendments of 1954, requiring premarket approval of pesticide residues in or on food
Food Additives Amendment of 1958, requiring premarket approval of food additives
Color Additive Amendments of 1960, requiring premarket approval of color additives
Drug Amendments of 1962, which introduced premarket affirmative approval and required that marketed drugs be found by the FDA to be both safe and effective
Animal Drug Amendments of 1968, requiring premarket approval of new animal drugs and feed additives
Federal Environmental Pesticide Control Act of 1972, requiring premarket approval of pesticides
Medical Device Amendments of 1976, requiring premarket notification for all medical devices and premarket approval for Class III medical devices
Toxic Substances Control Act of 1976, requiring premarket notification for chemical substances
Infant Formula Act of 1980, requiring premarket notification for infant formulas
Nutrition Labeling and Education Act of 1990, requiring pre-market approval of nutrient descriptors and disease prevention claims for food
The pivotal event in U.S. drug regulation was passage of the 1962 amendments to the Food, Drug and Cosmetic Act of 1938. Whereas under the 1938 statute a product could be marketed unless the FDA actually denied approval of the NDA, after 1962 an affirmative approval from the agency was required; in other words, disapproval was the default position. The 1962 statute also imposed other significant constraints and requirements on drug sponsors: For the first time, all human testing of new drugs, all drug advertising, and all labeling had to be reviewed and precleared by the FDA, and the FDA promulgated Good Manufacturing Practices regulations. The Food, Drug and Cosmetic Act, as amended, fundamentally altered the nature of American drug research, development, and production. Judgments about what was desirable and undesirable could no longer be made primarily by manufacturers, physicians, and patients via the marketplace but were entrusted to a regulatory monopoly administered by a central governmental authority.
The enormous economic impact on pharmaceuticals was seen almost immediately after the 1962 law was enacted. The drug industry's research output declined rapidly, as measured by the introduction of Investigational New Drug (IND) Applications to the FDA to begin clinical testing for new chemical entities (NCEs). There was an immediate decline of more than 50 percent in the early 1960s; for about a decade thereafter the output was fairly constant, but in the mid-1970s it fell again by another 50 percent. The submission rate recovered somewhat in the early 1980s but declined again from the mid-1980s to the mid-1990s. (Since about 1990, the shortfall in INDs for NCEs has been compensated for by an increase in the introduction of INDs for biotechnology products, which are predominantly biological drugs and are, for historical reasons, not counted as NCEs.) Another effect of the increasingly onerous and unpredictable regulatory requirements in the United States is that many American companies have chosen to test and market their products abroad. Reflecting this migration are the disproportionate increases abroad in numbers of employees of American research-based pharmaceutical companies, as compared to U.S.-based employees. From December 1995 to June 1998, for example, foreign employment by these companies grew by 17.2 percent, while domestic employment increased 4.8 percent. (The fact that there was an actual decrease of 10.2 percent in the numbers of domestic scientific, professional, and technical staff in American research-based companies from 1995 through 1997, the last time period for which statistics are available, argues that this is unlikely to be a reflection of shifts in marketing, sales, and administrative personnel. In other words, there has been a real redistribution of scientific and technical resources.)
The other legislative actions enumerated above did to most other commercial sectors what the 1962 amendments did to drug regulation. Taken collectively, this legislation has resulted in a revolution in product regulation. Since the 1950s federal responsibility has grown from simple policing after the product launch to virtually universal premarket regulation.
Possessing a monopoly on product review and approval, the federal government has in most sectors become the sole gatekeeper to the marketplace; regulators at a veritable alphabet soup of agencies now have the final authority to determine whether and when a product will reach consumers. For a product subject to premarket approval, no manufacturer has the legal right to distribute the product and no member of the public has the right to obtain it, unless and until the relevant federal agency authorizes marketing. Statute by statute, regulation by regulation, and decision by decision, massive bureaucracies have arisen to rein in industry and control product flow. What many fail to realize is that a regulatory statute, even if it is not amended, is not static. When the statute is first enacted, its implementation is generally narrow and limited to the specific requirements of the law, and its impact, therefore, is often modest. As time goes on, however, each successive generation of administrators tends to redefine the scope of jurisdiction and add new requirements. Seldom does the scope narrow; almost never do requirements disappear. Regulation begins to take on a life of its own. And as regulators interpret statutes ever more broadly and comprehensively, they become, in effect, a special interest group with a vested interest in expanded responsibilities, budgets, and empires. In the absence of effective, conscientious congressional oversight, what develops is an increasingly burdensome and inefficient regulatory system. Nowhere can this be seen more clearly than in the evolution of premarket licensing mechanisms for drugs.
The current system of oversight of pharmaceutical development includes no mechanism for public accountability. This means, for example, that citizens who could benefit from certain pharmaceutical products have no right to participate in the process and no access to judicial review of whatever action is taken by the federal government. Even the applicant (company) is precluded from access to the courts until final action is taken on a product application. And neither the public nor the media readily learns about potentially life-saving drugs and devices that have been delayed by regulators' timidity or foot-dragging. Thus, premarket approval severely limits individual freedom of choice. Personal autonomy is subjugated to government controls. Citizens are precluded from obtaining products they wish to purchase and have no recourse other than to await government approval. American citizens have been forced to travel abroad to obtain drugs and treatments not available in the United States because of our slower and more stringent regulatory system, and they have even been prohibited from bringing these drugs back into this country for their own use.
When combined with other economic consequences of regulation, these constraints on patient access create an invisible crisis. The greater the investment required to bring products to market, the less competition there is to make them, so fewer products are pursued and the price to consumers for the products that are ultimately approved steadily increases. Particularly for small businesses, the investment required to obtain premarket approval of products such as drugs and pesticides can be prohibitive. Although there have been other challenges as well to entrepreneurship and corporate innovation in the pharmaceutical industry — some of which are discussed in subsequent chapters — increased regulatory requirements, the FDA's risk-averse culture, and the absence of effective congressional oversight of drug regulators have been major impediments.CHAPTER 2
Factors Affecting Drug Development
Regulatory Creep at the FDA
The FDA is arguably the most omnipresent regulatory agency in the United States. It has responsibility for more than a trillion dollars worth of consumer products annually, ranging from condoms and X-ray machines to drugs, vaccines, pregnancy home-testing kits, and artificial sweeteners. In its role as the nation's regulator of drugs, the agency is the gatekeeper between the developer and the marketplace.
The FDA's enabling statutes — the Federal Food, Drug and Cosmetic Act and the Public Health Service Act (which mandates regulation of biological drugs) — are not highly prescriptive or detailed. They permit government regulators great latitude to apply scientific knowledge and common sense to oversight. However, this latitude has also freed regulators to decide how much power and discretion they should exercise. Not surprisingly, their tendency has been consistently toward ever greater power and discretion.
The FDA evaluates and approves drugs. It does not discover or test them. That is done by a sponsor, usually a private pharmaceutical company. This point can not be overemphasized: It is not the FDA that is bringing life-saving new therapies to American consumers but private companies and research institutions. The process of research and development is difficult in the best of circumstances — and not always financially rewarding — so the relationship between sponsor and overseer is critical in ensuring that consumers reap all the health benefits possible in a timely and safe manner. Development of a new drug begins with preclinical investigations: in vitro screening for a desired chemical or biological activity or trait, followed by screening in laboratory animals to determine therapeutic activity and possible toxicity. These preclinical investigations generate preliminary knowledge about the pharmacological and toxicological properties of the agent. If they yield promising results, they are followed by clinical testing in humans over a period of years. Two obligatory applications to the FDA are made as part of the process of drug development. Before embarking on the first phase of clinical testing, the sponsor must submit an application called an Investigational New Drug, or IND, filing. The agency then monitors the testing through periodic reports, inspections and audits. When clinical testing has progressed to a point where the drug sponsor is satisfied that the drug is ready for consumers and meets the regulatory standards of safety and effectiveness for a specific use, it submits the second mandatory application, the New Drug Application, or NDA, seeking approval to market the drug.
Excerpted from To America's Health by Henry I. Miller. Copyright © 2000 Board of Trustees of the Leland Stanford Junior University. Excerpted by permission of Hoover Institution Press.
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Table of Contents
ContentsList of Figures,
Foreword Terry L. Anderson Preface John J. Cohrssen,
PART I THE NEED FOR FUNDAMENTAL FOOD AND DRUG ADMINISTRATION REFORM,
1 The Birth and Growth of Premarket Regulation,
2 Factors Affecting Drug Development,
3 Reforming the Current System,
4 The Failure of Self-Reform and Congressional Reform,
PART II A MODEL FOR REFORM OF THE FOOD AND DRUG ADMINISTRATION,
5 A Spectrum of Possibilities,
6 A Proposal for Regulatory Reform,