NCPA - National Center for Policy Analysis


May 17, 2007

The Food and Drug Administration (FDA) is supposed to judge whether a drug is safe and efficacious and that's all, says David R. Henderson, a research fellow with the Hoover Institution; and Charles L. Hooper, a visiting fellow at Hoover and president of Objective Insights.

In its literature, the FDA even agrees with this role, saying that, "Once a new drug application is filed, an FDA review team -- medical doctors, chemists, statisticians, microbiologists, pharmacologists, and other experts -- evaluates whether the studies the sponsor submitted show that the drug is safe and effective for its proposed use."  But the FDA slyly added a third requirement: Is a new drug better than what is currently on the market?

According to the law, this isn't part of the FDA's approval process:

  • It would be difficult and expensive to show, before it's marketed, that a new drug is better than all competing drugs.
  • It already costs on average just shy of a billion dollars to get a new drug approved.
  • A study by Joseph DiMasi, an economist at the Tufts Center for the Study of Drug Development in Boston, found that the cost of getting one new drug approved was $802 million in 2000 dollars ($956 million in 2007 dollars).
  • Most new drugs cost much less, but his figure adds in each successful drug's prorated share of failures.
  • And this $1 billion figure was before the FDA dreamed up this new requirement.

Other reasons why drug companies don't have to prove their drug is better than existing drugs:

  • People are capable of choosing what best meets their specific needs. 
  • Competition is good; a new drug that competes with existing drugs is likely to cause drug prices to fall and competitors to stay on their toes.

Source: David R. Henderson and Charles L. Hooper, "Our Lawless FDA," Wall Street Journal, May 17, 2007.

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