NCPA - National Center for Policy Analysis


August 6, 2004

The Food and Drug Administration acts as a monopoly in preventing consumers from obtaining a variety of affordable drugs, says researcher Bartley J. Madden.

The FDA creates a monopolistic market in two ways: by making drugs more expensive through the requirements of huge clinical trials needed for approval, and through the time delay it takes for beneficial drugs to get to patients.

Madden proposes an alternative "second-track" route, which would allow patients to purchase drugs that have completed the first phase of the FDA's three-phase approval process.

  • Consumers could access information about Phase I drugs through up-to-date Internet information provided by the FDA.
  • Data from patients and doctors who have tried the first-phase drugs could supplement the conventional clinical trials.
  • Second-track patients could act as a feedback mechanism for tracking the cost of the FDA's approval process as compared to the benefits.

Suppose a drug has completed Phase I of a clinical trial and is in the process of Phase II with favorable results. At that point, the drug manufacturer would have the option of participating in the second-track route by providing data on the Internet. A government agency would be responsible for how the data should be presented so that consumers can understand and evaluate it.

Moreover, consumers would agree in contract with drug developers assume the risks of adverse consequences, and such contracts would minimize the opportunity for lawsuits, which drive up drug prices. Prices would be held down by the incentive for drug developers to attract second-track consumers, says Madden.

Source: Bartley J. Madden, "Breaking the FDA Monopoly," Regulation Magazine 27, no. 2, Cato Institute, Summer 2004.

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