NCPA - National Center for Policy Analysis

Make FDA Drop "Efficacy" Requirement

June 21, 2000

Since the 1960s, the Food and Drug Administration has been required to follow the standard that a drug must be effective as well as safe before it can be marketed. Critics say the efficacy requirement requires huge expenditures by drug companies for testing. They say it is also unnecessary, since patients and doctors are in a better position to evaluate how effective a drug is. In other words, let the market decide.

  • The average cost of developing a new drug is about $650 million -- less than $50 million of which is consumed in pre-approval safety studies, with the remaining $600 million spent on clinical human efficacy trials.
  • It takes 12 to 15 years to discover and develop a new medicine -- with efficacy trials at research institutes accounting for four to eight years of the delay.
  • Only one in 5,000 chemicals looked at in the laboratory ever gets to market and -- once approved by the FDA -- only three in 10 return more than the development costs.
  • Thus, 70 percent of drugs are rejected by the market as not being effective.

Those familiar with the approval process report that research institutes conducting efficacy trials often produce conflicting data. The conclusion often drawn is that more studies are necessary. That means that drug companies must send more money to research institutes.

If patients and doctors, rather than the FDA, were allowed to evaluate how effective drugs are, medication costs would plummet and drug development and approval would accelerate, analysts claim.

Source: William K. Summers (Alzheimer's Corp.) and James Driscoll (Log Cabin Republicans), "To Cut Drug Prices, Reform the FDA," Wall Street Journal, June 21, 2000.


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