Big Pharma’s New Business Model: FDA Does Harm

In today’s Wall-Street Journal Dr. Scott Gottlieb points out the obvious problems of the FDA. Gottlieb argues correctly that advances in medicine have been hindered by too much regulation. The average cost for a drug company to create just one pill is roughly $1 billion. The FDA now requires more patients, more tests, and I believe regulates to the point where they create drugs that are too safe. The number of patients required for clinical trials have increased from 1,600 in the late 1970’s to roughly 4,200 in the 1990’s. This of course creates additional costs for the drug companies. Today the cost of enrolling just one patient in phase III (final stage) trials is $26,000. In 1987, the cost to develop a drug was $437 million (in 2010 dollars). By 2000, this number increased to a little over $1 billion (in 2010 dollars). The question is what is driving up the cost?

Note this is just for one patient. The number of tests that must be done on patients (blood work, x-rays, etc) has from just 1999-2005 has increased 59%. During this same period the amount of time required to complete clinical trials has increased 69%. The percentage of drugs getting approved has also decreased. 63% of drugs advance from Phase I to Phase II testing. However, only 33% of Phase II drugs get into Phase III. At Phase III the chances of a drug becoming approved are 80%. The percentage of drugs that get passed has been decreasing over time.

The FDA is focused on making sure that drug companies are producing safe drugs. The FDA can restrict what drugs people choose to take. This to me doesn’t make a lot of sense considering we choose what to eat, drink, and do with our bodies. The most common argument about why we need the FDA is because people simply don’t know enough about drugs. True, individuals themselves may not however this is why people seek out information. People can get vast information about diseases, illnesses, and drugs online. Individuals can evaluate their own risk-reward models. No system will be perfect. However, the question is what leads more people better off. Right now many people are suffering from pain and illnesses because the FDA won’t let XYZ drug company test their drug. One great idea is if patients want to take a drug not approved by the FDA to sign a waiver from the drug company saying that they can not later come back and sue. The FDA has little or no incentive when it comes to approving a drug. Have you ever heard of patients suing the FDA for not approving drugs that could have potentially saved lives?