Is the FDA a Bargain?

In testimony before the Senate Appropriations Subcommittee, FDA commissioner Margaret Hamburg defended the agency's FY 14 budget - calling it a "true bargain among Federal agencies." Indeed, as Dr. Hamburg frames it: "at two cents a day [per-person]" Americans get quite a bit of value out of the agency. With tens of drugs approved each year (last year was a 10-year record, with a number of innovative drugs like Kalydeco) and a food supply that is among the safest in the world, the FDA appears to do a great job (and the 20% budget increase in the FY 14 budget is mostly made up of industry fees).

And to be fair, the agency falls between a rock and a hard place - ensuring that medicines and foods meet minimum safety requirements while at the same time encouraging innovation can put the agency in a situation where it just can't win. With that said, given the current climate of budget austerity, we should ensure that we are getting maximum value out of the agency.  Unfortunately, there's reason to think that we aren't.

For starters, although the agency has ensured that dozens of cancer drugs and AIDs drugs have been brought to market through its accelerated approval, fast track, and priority review pathways, they are less effective for primary care indications where there may be fewer "surrogate endpoints" that the agency trusts, or where reviewers are hesitant to approve drugs that may have benefits for sub-populations, like morbid obesity, but where the benefit-to-risk ratio is less in large populations (people who are merely overweight.)  Personalized medicine is another potential bright point at the agency, with voluntary genomics submissions soaring, but there are still complaints that the pathways for companion diagnostics are murky.   

A recently developed "breakthrough" designation, contained in the last PDUFA reauthorization, shows some promise - last year's cystic fibrosis drug, Kalydeco was the first to receive it; Pfizer's new breast cancer therapy combining palbociclib with letrozole recently received the designation as well.

The problem? These niche pathways, welcome as they are, don't eliminate the need for lengthy and expensive Phase III trials for the majority of indication, which can deter drug development (for instance, for neurological diseases, and antibiotics).

Better clinical trial designs (like more flexible, Bayesian trials), faster uptake of new surrogate and clinical endpoints beyond irreversible mortality and morbidity, and a focus on collaboration with scientific experts beyond the agency's walls would all markedly improve the status quo. And the agency knows this.  

Nonetheless, reform is slow. In her testimony, Dr. Hamburg notes that with the agency's limited resources, some of these responsibilities may be difficult to accomplish - she may be right; a $4.7 billion annual budget isn't very much given the overall size of the federal budget. But does this mean that we should increase the FDA's budget even further?

Maybe not. The FDA is designed to deal with food and drug safety - ensuring that drugs have the compounds that the label says, that nutritional counts on food labels are accurate, and that clinical trials are conducted accurately and meet the minimum threshold for approval. When it comes to dealing with innovation more broadly, or personalized medicine specifically, the FDA shouldn't be on the front line. Rather, other agencies, like the National Institutes of Health - with a roughly $31.1 billion budget, and much more experience with research across various disease categories - may be in a better position to drive translational science forward.  Other, disease focused organizations, like ASCO, may be in a better position to validate new clinical endpoints and trial designs for cancer. . Rather than trying to do everything under one roof, maybe the FDA needs to recognize where - like every other modern organization - it should outsource non-key functions and responsibilities. The FDA's core expertise - reviewing data and ensuring that companies follow best practices - doesn't mean that the agency has to or should develop all of those standards itself.  Far from it.

Notably, in the White House's latest budget, however, the NIH budget stays roughly flat.  And the NIH's National Center for Advancing Translational Sciences , NCATS, has very little funding to accomplish its stated goals - just $666 million for FY 14 (just 2 percent of NIH's total budget).  Considering it can take billions of dollars to develop a new drug, this is a pittance (the American pharmaceutical industry spent $280 billion on R&D in 2011).

Likely, for NIH and other organizations to make the critical leap we need to modernize drug development, industry, academic medical centers, and NIH will need to pool resources, rethink existing research silos, and develop new ways of sharing - and valuing - data.

Those topics are well beyond this post. But to answer the basic question of whether the FDA is a bargain, the answer is probably yes.     The social value of having a safe food supply and non-contaminated medicines is likely in the trillions of dollars. But paying for drug innovation on the cheap, and asking the agency to do things that strain its organizational capacity and expertise, is pennywise but pound foolish. 

Related Entries:

keep in touch     Follow Us on Twitter  Facebook  Facebook

Our Research

Rhetoric and Reality—The Obamacare Evaluation Project: Cost
by Paul Howard, Yevgeniy Feyman, March 2013

Warning: mysql_connect(): Unknown MySQL server host '' (2) in /home/medicalp/public_html/incs/reports_home.php on line 17
Unknown MySQL server host '' (2)


American Council on Science and Health
in the Pipeline
Reason – Peter Suderman
WSJ Health Blog
The Hill’s Healthwatch
Forbes ScienceBiz
The Apothecary
Marginal Revolution
Megan McArdle
LifeSci VC
Critical Condition
In Vivo Blog
Pharma Strategy Blog
Drug Discovery Opinion