Regulatory trends worsen the economy’s prognosis

Henry Miller Senior Fellow, Pacific Research Institute.
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President Obama spent much of a town hall meeting on Monday trying to rebut the charge that he is anti-business.  However, his administration’s treatment of the pharmaceutical and medical device industries gives the lie to those denials.

Both the president himself and his appointees to senior positions at regulatory agencies such as FDA and EPA seem to be clueless about what businesses need — transparent, consistent, reasonable regulatory policies.

During the Obama administration’s tenure, the FDA’s long-standing risk-aversion has reached new heights.  There are innumerable examples, but nowhere is the phenomenon more evident than in the FDA’s imposition of Risk Evaluation and Mitigation Strategies (REMS), which the agency can impose at will on new drugs.  These REMS include a list of punitive “elements to assure safe use” of the drug, which encompass: restriction of the drug to specified patient populations, distribution only by certain specialty pharmacies, required laboratory findings and monitoring in all patients who get the drug, advertising permitted only to certain categories of physician specialists, and patient enrollment in a central registry.

The REMS restrictions and requirements, which amount to “limited,” or “conditional,” approvals of new drugs, constrain the prescribing and use of medicines and thereby diminish the potential market for drugs.  Does FDA over-prescribe them?  Here’s a hint: A former head of the agency quipped, “Dogs bark, cows moo, and regulators regulate.”

Even these limited approvals number each year only about half the numbers seen in the mid-1990s. And what makes these trends particularly ominous is that only 2 in 10 marketed drugs recoup their development costs.  This situation is not sustainable.

In addition, the FDA is moving toward far more stringent regulation of medical devices such as pacemakers, defibrillators and artificial joints.  In particular, they are reevaluating an abbreviated review process known as “premarket notification,” which requires a lesser degree of evidence of safety and efficacy than “premarket approval” and so is far cheaper and faster; only about 10 percent of these expedited applications contain data from clinical trials.  The notification route to marketing a product, which is intended for products that are “substantially equivalent” to products already on the market, has generally worked well for more than 30 years, and its availability is one reason the United States has led the world in the development of medical devices.

The makers of medical devices that do require clinical data are complaining bitterly that the FDA frequently reneges on agreements: Even after clinical trials are completed successfully, regulators frequently move the goalposts and demand additional studies.  In addition, medical device manufacturers are also being subjected to new “user fees” — discriminatory taxes — just to get FDA to review their applications.

Because the developers of medical devices are typically small and cash poor, this uncertainty and added expense can threaten their very survival.  At the very least, these trends are raising the time and expense to develop and test medical devices and limiting the number of new products that are introduced.  At a conference last week, Eamonn Hobbs, the chairman of the Medical Device Manufacturers Association, called the current regulatory situation “a perfect storm” marked by “some of the worst things I’ve seen in 30 years.”

Decisions on individual products reflect the agency’s high and escalating risk-aversion.  In February the FDA turned down a new formulation of a popular drug called gabapentin for the treatment of restless legs syndrome, the uncontrollable movement or twitching of the legs caused by an imbalance in the neurotransmitter dopamine in the brain.  In denying approval after its review of the application for marketing approval, the agency expressed concern about the finding of pancreatic tumors in a rat study.
Two things are problematical about this decision not to approve the drug after the completion of the clinical trials.  First, the FDA knew about similar findings in animal testing of the drug when they approved it more than a decade ago for uncontrolled epilepsy (but rationalized that approval because of the seriousness of the condition).  One wonders, then, why FDA permitted the company to plan and perform the clinical trials if their successful completion could not culminate in approval.

Second, rats are not little people with long tails.  As the American Council on Science and Health has pointed out, “Differences in physiology and anatomy between humans and mice, rats, and other species often make it difficult to apply animal results confidently and directly to human health.  Animal testing should not be viewed as sufficient, in the absence of additional supporting data, to predict risk to humans.”  There are no additional data to suggest that gabapentin causes tumors in humans.

As the agency weighs benefits versus risks of drugs and medical devices — its stock in trade — the risk side clearly dominates.  As Dr. Kenneth Kaitin, director of the Tufts Center for the Study of Drug Development, has observed, “The FDA is now “viewed as an agency that is supposed to keep unsafe drugs off the market, not to speed access to life-saving drugs.”  This trend toward unreasonable — some would say obsessive — risk-aversion began more than a decade ago but has escalated markedly in the Obama administration.  The numbers of clinical trials and patients that support applications for marketing approval and the length and complexity of the trials all have been on the rise.  As a result, the cost to bring a single drug to market now averages more than $1.4 billion and requires 12-15 years.

With an aging population that needs new and innovative drugs and medical devices to fend off the ravages of chronic diseases, the current trends at the FDA are not what the doctor ordered — for patients, for industries that take significant financial risks, or for recovery from the deepest recession in memory.

Henry I. Miller, a physician and fellow at the Hoover Institution and at the Competitive Enterprise Institute, was the founding director of the FDA’s Office of Biotechnology.  He is the author of “To America’s Health: A Proposal to Reform the FDA.”