NCPA - National Center for Policy Analysis

Type I Terrors

October 8, 2010

The U.S. Food and Drug Administration's (FDA) self-interest has caused soaring risk aversion, escalating development costs and fewer new products available to consumers, says Henry I. Miller, a fellow with the Hoover Institution.

A regulator can err by permitting something bad to happen (approving a harmful product, a Type I error) or by preventing something good from becoming available (not approving a beneficial product, a Type II error).

Both outcomes are bad for the public, but the consequences for the regulator are very different.

  • Type I errors are highly visible, causing the regulators to be attacked by the media and patient groups and to be investigated by Congress.
  • Type II errors are usually nonevents and elicit little attention, let alone outrage.

The FDA's approval process for new drugs has long struggled with this Type I/Type II dichotomy, says Miller.

Consider, for example, the FDA's approval in 1976 of the swine flu vaccine.  That approval is generally perceived to have been a Type I error because, although the vaccine was effective at preventing influenza, it had a major side effect that was unknown at the time of approval.  The result of the side effect was 532 cases of paralysis, including 32 deaths, from Guillain-Barré syndrome.

Type II errors in the form of excessive governmental requirements and unreasonable decisions can delay commercialization of a new product, lessen competition to produce it and inflate its ultimate price, says Miller.

  • Consider the greater than three-year delay in the approval of misoprostol, a drug for the treatment of gastric bleeding, a delay that is estimated to have cost between 8,000 and 15,000 lives per year.
  • Or the lag in the approval of streptokinase for the treatment of occluded coronary arteries, which may have caused the loss of more than 10,000 lives per year.

Source: Henry I. Miller, "Type I Terrors," Regulation Magazine, Fall 2010.

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