NIH should not be a pharmaceutical company

Tevi Troy Senior Fellow, Hudson Institute
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The National Institutes of Health recently announced that it would be engaging in a billion-dollar effort to encourage the development of new pharmaceutical therapies. The New York Times headline for this story sounded innocuous: “Federal Research Center Will Help Develop Medicines.” But not everyone is so sanguine about this effort. Fox News, for example, re-ran the Times story under the header: “Obama Creating Billion Dollar Gov’t-Run Drug Company.”

Even though people might differ on the interpretation, most everyone can agree on the underlying and problematic fact that the development of new pharmaceutical therapies has slowed in the United States. The Times story has two charts accompanying its article. One showed that research spending by the large pharmaceutical companies has declined in recent years. The second chart showed that the number of new pharmaceuticals approved by the FDA has been lower in recent years than it was throughout much of the 1990s. The government’s response to these troubling developments is to try to make the NIH into another drug developer, at a time when existing drug developers are having a difficult time getting their products to market.

The sad truth, however, is that this approach has not been successful in the past. For a variety of reasons, governments tend not to be good at applied research, and therefore have a poor track record when it comes to drug development. As Dr. Thomas Insel, director of the National Institute of Mental Health, reminded the Times, NIH is “an agency that has never developed drugs and actually doesn’t know how to do therapeutics that well.” Wake Forest biochemistry professor Mark Lively, another skeptic, asked a highly relevant question: “[T]he N.I.H. is not likely to be very good at drug discovery, so why are they doing this?”

Although the NIH solution is wrongheaded, the Obama administration is right to be concerned about the problem. The recent slow pace of drug development in this country carries serious consequences for millions of Americans — indeed, for the entire world. Pharmaceutical products are essential to American lives and livelihoods — when viewed from the perspective of economic growth, personal health, and national security. Nevertheless, there are better ways to approach this issue than getting the government on board as a pharmaceutical development company, an expensive endeavor that is likely to end in failures.

In order to advance the cause of pharmaceutical development, the government should focus on the FDA, which even HHS Secretary Kathleen Sebelius has acknowledged creates “bottlenecks” in the scientific development process. Indeed, the chance that a new compound entering human testing will reach the market is only 8% today, compared to 14% a decade ago, according to a paper on FDA’s own website. It is this decrease in the batting average of drugs that has pushed up the cost and time for new drug approvals to nearly 10 years and a billion dollars. Such government-imposed cost and inefficiency discourages pharmaceutical investment, which compounds the problem of fewer new products entering the marketplace.

For this reason, HHS announced in August that it would create an expedited process for helping to get biological countermeasures that could help our country defend itself against a bioterror attack. If this is a good idea in the area of bioterror countermeasures, then FDA should consider expedited and simpler procedures for a variety of lifesaving and life-saving technologies, and not just ones having to do with biodefense. If cost is a concern in adapting this approach more widely, then HHS should be spending the proposed billion dollars going to NIH on streamlining FDA’s burdensome review processes and on funding the Reagan-Udall initiative, which was supposed to spur innovation by helping to advance regulatory science to keep pace with American innovation and ingenuity.

Another important initiative that can help lead to more drugs making it to market is the recent BRAT — “benefit risk action team” — framework. As former FDA official Peter Pitts describes it, the BRAT framework is a way to “move toward an assessment that seeks to incorporate all relevant aspects of benefit and risk.” The idea, recently written up in the scientific journal Clinical Pharmacology & Therapeutics, is to develop clearer guidelines for regulators in making decisions about the benefits and risks of various compounds. Ultimately, this approach could also be used to give doctors and patients more discretion regarding the risks they are willing to bear. A person suffering from late-stage cancer will obviously be more willing to try a risky product than a healthy 25-year-old would. The notion of approving products along a risk continuum could get more products out there in the marketplace and ultimately save and extend lives of people now — and in the future. This is obviously the ultimate goal of pharmaceutical development and every humane citizen.

To address the very real and serious problem of pharmaceutical development requires a focus and attention on the real source of the problem, which is the chief challenge in the drug development and approval process. There are a variety of good suggestions out there that would help fix this problem. Unfortunately, the Obama administration’s idea to create a new, billion-dollar government run initiative is not one of them.

Tevi Troy is a Senior Fellow at the Hudson Institute and a former Deputy Secretary of Health and Human Service.