
Most people have heard of the thalidomide tragedy. Few people have heard that that tragedy led lawmakers to cause an even bigger tragedy. In short, there were two thalidomide tragedies.
In the first one, babies were born with severe deformities after their mothers took the drug. The second tragedy was more serious and damaging. Lawmakers used thalidomide as an excuse to pass legislation that would have done little or nothing to prevent the first tragedy but has led to six decades of lost lives. Those lives were lost because the legislation led to fewer beneficial drugs being developed and sold.
These are the two opening paragraphs of Charles L. Hooper and David R. Henderson, “Two Thalidomide Disasters,” Regulation, Winter 2024-2025. It’s the lead article.
Another excerpt:
The FDA’s rules were altered with the Kefauver–Harris Amendments of 1962. These amendments required drug companies to prove both safety and efficacy before a new drug could be marketed.
Note the irony. What kind of problem did thalidomide have? An efficacy problem? No; it did what it was supposed to do: treat anxiety and morning sickness. A safety problem? Yes. The FDA already had rules in place to prevent unsafe drugs. The FDA could have rejected thalidomide based on rules that had been on the books since 1938.
Anticipating by nearly half a century Rahm Emanuel’s maxim that “You never want a serious crisis to go to waste,” Congress and President Kennedy didn’t waste this one and the Kefauver–Harris Amendments were passed. The opportunist Kefauver got his bill because of the thalidomide tragedy even though his bill had almost nothing to do with the thalidomide tragedy. (italics in original)
And:
Part of the reason for this slowdown is the much higher cost of drug development after Kefauver–Harris. In the subsequent decades, capitalized drug development and approval costs per approved drug have increased at 7.5 percent per year in real terms: $179 million in the 1970s, $413 million in the 1980s, $1.04 billion in the 1990s through early 2000s, and $2.56 billion in the 2000s through early 2010s (all in 2013 dollars).
If this 7.5 percent annual growth rate were to persist, costs would more than double every 10 years. But the cost increase seems to be accelerating: The annual growth rate over the last decade has been 8.5 percent. The cost today is probably already at least $8 billion (in 2024 dollars).
In short, we have fewer drugs and the cost per drug has exploded. Is this attributable only to the bad drugs that were weeded out by the new rules? Multiple researchers have concluded that the answer is no. Peltzman came to this same conclusion, seeing the culling as if “an arbitrary marketing quota … had been placed on new drugs after 1962.” The adjective “arbitrary” isn’t something a supposedly scientific organization strives for.
Read the whole article.
The picture is of Estes Kefauver.
READER COMMENTS
Mactoul
Dec 26 2024 at 11:41pm
Not real lives but statistical lives that is results of some modeling exercise, the same type of modeling that has created huge PM2.5/particulate hoopla, the covid hoopla, not to mention climate change hoopla.
It is, I submit, invalid to take on the same footing, the actual lives lost/ruined because of thalodomide and the hypothetical lives lost due to hypothetical drugs being not delivered. One exists and the other never did.
David Henderson
Dec 26 2024 at 11:46pm
So government never stops things from happening?
Jon Murphy
Dec 27 2024 at 7:04am
Modeling is an important part of scientific advancement. Indeed, such abstract thinking, I’d posit, is what separates humans from other animals and allowed us to become so advanced.
Just like anything, modeling can be done well or poor. This is why debate matters. But just because there are poor models out there, that doesn’t imply all modeling should be tossed.
robc
Dec 27 2024 at 9:05am
Mactoul apparently does not agree with me that Bastiat’s That Which is Seen and That Which is Not Seen is the most important economic treatise ever written.
Jose Pablo
Dec 27 2024 at 5:22pm
But it most definitely is!
Bastiat’s “That Which is Seen and That Which is Not Seen” is (one of) the most relevant treatises ever written and “opportunity cost” is the most relevant economic concept.
Bad news for people convinced that “headlines reality” contains all relevant/useful information.
Alan Goldhammer
Dec 27 2024 at 10:28am
David and Charlie write, “In short, we have fewer drugs and the cost per drug has exploded.”
There is more nuance to this. In many therapeutic categories drug development has essentially ceased because the current drugs are just fine (most if not all are now generic and cost way lest than when they were introduced on the market; this should be factored into any economic analysis of the pharmaceutical development as a cost savings). Do we need any new cardiovascular drugs?
A lot of the increased cost in drug development was all the VC money poured into biotech companies that really did not have a viable product. The small handful that did were quickly acquired by big pharma companies. Though even some of those acquisitions ended up being failures and had to be written off. There is a very nice article about Jeffery Flier (who overlapped with me for one year at NIH where we were both fellows) about how he approached Pfizer about developing a GLP-1 drug almost 50 years ago. Pfizer looked at it but after about a year declined to pursue it. In retrospect this was an epic failure.
For me one of the bigger failures by FDA was removing the good COX-2 inhibitors from the market leaving on celicoxib which is really not very efficacious.
The real bottom line is that insurers want someone to show that a drug works before they will reimburse for it. If we removed the efficacy standard, who would do this and how long would it take. I’ve advocated in the past that FDA should make more liberal use of the treatment IND regulations that allow companies to recoup manufacturing and development costs while continuing to pursue clinical development. One could expand this in a broad scale release in somewhat the same way it was done for experimental HIV therapies in the early 1990s. Companies could use this expanded access to acquire real world data and demonstrate that the drug works. At that point they could raise the price accordingly.
Kevin
Dec 28 2024 at 12:17am
In other words, insurers have a strong financial incentive to make sure drugs are effective before they cover them, so in the absence of the FDA’s efficacy requirements, there would be a market for this kind of information.
Why couldn’t the people who currently work at the FDA or the independent experts to whom it routinely asks for help create a company, or several, that do this? They could then sell that information to doctors, insurers, pharmacies, etc.
The FDA is a government monopoly. If we remove it, there would be space for multiple companies that offer these services, just like there are multiple companies that offer expert knowledge on a variety of complex topics. For all we know, we’d be able to get safe and effective drugs to patients much faster.
Alan Goldhammer
Dec 28 2024 at 8:49am
I’ve seen proposals for this type of approach, and I guess it would look something like bond rating agencies. Their track record is not terribly good. I worked on the initial user fee program back in 1992 and the subsequent five reauthorizations while still working in the biopharma industry. We had an enormous amount of data from FDA and were able to cost out a typical drug review. The review process involves numerous people with a variety of different backgrounds. We instituted performance metrics jointly with FDA and the Agency met the metrics greater than 90% of the time.
In most cases when there are review issues it is because the sponsor’s clinical data only shows marginal efficacy. FDA is in a difficult position in terms of whether to approve the drug or not. The classic example was a huge controversy when FDA approved Adulhelm for Alzheimer’s Disease over the dissent from the advisory committee. The drug was rejected for approval in Europe and eventually abandoned here in the US when subsequent trials showed the drug really wasn’t good. I don’t know how many patients ended up being treated but there was an economic loss in terms of wasted money on an ineffective treatment.
It’s not likely than an independent review body would be as efficient as the FDA.
steve
Dec 29 2024 at 8:57pm
All these studies Dave cites assume that clinicians would be just as wiling to use drugs if testing was eliminated. That we would somehow know things like dosing and drug efficacy without studies being available, or that we would be willing to base major decisions on a single study.
Steve
David Henderson
Jan 8 2025 at 3:26pm
You write:
I have no idea how you came to that conclusion. The issue is the FDA requirement for testing that satisfies the FDA. That’s what I advocate getting rid of. There will certainly be testing. All you need do to see that is look at the other areas of life where there is no requirement approval before it’s sold. You’ll see that in many cases, the producers test to make sure it works. That’s what Underwriters Laboratories [UL] is all about.
Mactoul
Dec 27 2024 at 9:02pm
Medicine works well in acute situations but not so well for chronic problems.
For example, cholesterol-lowering medicines are based upon wrong paradigm (see Dr Malcolm Kendrick’s Cholesterol Con and The Clot Thickens) and are essentially a total waste of billions.
Same goes for diabetic medicines since diabetes is best managed by low-carb diet. This is not to mention that the diabetic epidemic is largely a creation of modern medicine’s recommendation to substitute cholesterol-lowering unsaturated fats in place of saturated fats.
Americans consume and spend more medicines than peer countries while having little to show for that. No lives saved.
In particular, America spends more on mental health medicines than probably the rest of the world together but who would claim that it translates into greater mental health?
Alan Goldhammer
Dec 28 2024 at 8:51am
For example, cholesterol-lowering medicines are based upon wrong paradigm (see Dr Malcolm Kendrick’s Cholesterol Con and The Clot Thickens) and are essentially a total waste of billions.
This is utter nonsense!!!! Cholesterol lowering drugs, as well as other cardiovascular drugs have markedly reduced morbidity and mortality.
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