David R. Henderson  

Hooper and Henderson Do Want the FDA Another Way

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In a comment on my co-blogger Alberto Mingardi's post on the FDA, AlanG writes:

FDA has to evaluate new drugs based on their risk/benefit profile. Large clinical trials of new vaccines destined to be administered to healthy children are required to really understand what risks might be present. Would you want this any other way?

Yes, I would. So would my friend and co-author Charley Hooper.

Here's part of what I wrote in my health care chapter in The Joy of Freedom: An Economist's Odyssey:

These delays are killing people. In December 1988, for example, the FDA approved Misoprostol, a drug that prevents gastric ulcers caused by aspirin and other nonsteroidal anti-inflammatory drugs. In some other countries, Misoprostol was available as early as 1985. Using the FDA's own estimates, Sam Kazman, an FDA expert at the Competitive Enterprise Institute, a public-interest lobby in Washington, concluded that Misoprostol would have saved 8,000 to 15,000 lives a year. Thus, the FDA-caused delay cost over 20,000 and as many as 50,000 innocent lives. And that's just their delay on one out of hundreds of drugs.

The tragedy is that these regulations are not necessary. The FDA may have some expertise when it comes to drug safety and efficacy, but on the only issue that matters--your tradeoffs between various risks--you are the expert, and the FDA's scientists are rank amateurs. Earlier in this chapter, I mentioned my friend Charles Hooper, who also happened to be one of my star undergraduate students and who is now a partner in the biotech consulting firm Objective Insights. Charley wrote:

The choice a patient makes between therapies (with the help of his agent, the doctor) is based on many variables: efficacy, tolerability, side effects, riskiness, monetary cost, nonmonetary cost (e.g., hassle), speed of action. These drug costs and benefits must be judged within the context of many personal values and tradeoffs: the fear of death, the fear of surgery, the fear of the hospital, potential pain, and the individual's health profile, financial status, value of time, value of health, and risk tolerance. For the FDA to decide what compounds pass this complex tradeoff is preposterous, given that the FDA can never frame the problem from the individual patient's perspective. One individual's best alternative could be another's worst. We have seen this with AIDS patients: "I don't care if I develop cancer and this costs me $20,000 a year because without it I'm dead in 6 months." If, instead of medical therapies, they were telling us what kind of washing machines to buy or where to go on vacation, we would consider it laughable. This is what von Mises [Ludwig von Mises, the noted Austrian economist who showed that information problems would prevent socialism from working] said. Centralized bureaucrats cannot make the proper decisions for individuals because they lack the requisite information.

Note: Commenter Don Boudreaux also addresses this issue.

Comments and Sharing

COMMENTS (25 to date)
AlanG writes:

David - you and other have missed the main point and not answered any of the questions I posed. I was not talking about drugs that treat illnesses but vaccines that are administered to otherwise health individuals (mostly children).

BTW, I know Sam Kazman quite well and have been an on and off contributor to CEI. Some of their stuff is very good and some of it is just junk masquerading as science. Sam was wrong on the issue he discussed as the key point there is the massive overuse of NSAIDS.

Charley Hooper writes:


For whatever type of drug or vaccine we are discussing, there will be some level of evidence required before a particular physician will prescribe it for a particular patient. The possibility that the FDA might not be there to require certain clinical trials does not mean that pharmaceutical companies, physicians, payers, and patients would not find those clinical trials useful, and therefore decide to do them even absent the FDA's requirements.

Further, even if the same level of efficacy and safety is demanded with or without the FDA, there might be much quicker and more efficient ways of determining that safety and efficacy. The fact that the FDA is aiming toward "safety and efficacy," does not mean that it is picking the best way of getting there.

What if we could have the same level of "safety and efficacy," or better, in half the time with half the cost?

AlanG writes:

Charley and David,

Thanks for responding to my post on the other thread. Setting aside the issue to expanded access to investigational new drugs (of which there are currently mechanism in place at the FDA), here are some questions that I have for the libertarians. If you have answered these questions in a prior post or publication please direct me the source. They are serious and deserving of a response so that I can better understand where you and others might be coming from.

At what point in clinical development should a new drug be available for purchase? What type of data, if any, should support that decision and who would be responsible for reviewing it?

Is it contemplated that drugs would continue to be distributed in the same manner as they are today, requiring a doctor’s prescription and dispensing by a pharmacy? Will there be Over the Counter drugs under this schema and if so, who makes that decision?

Currently when a drug is approved for marketing by FDA it is accompanied by the drug label that provides the necessary efficacy, dosing, and safety information of the drug. Is it expected that the drug label will continue (it has quasi-legal authority and has been successfully used in tort liability cases)? If so, what entity will issue it?

With respect to the drug label, it is frequently updated when both new therapeutic indications and drug safety issues are identified? How would this type of new information be communicated under the new schema? (Safety issues are particularly important as even under the current FDA process not all of the safety issues have been identified. Companies currently have safety divisions that collect, identify and analyze safety data coming in. This information is submitted to the FDA on a regular basis and the drug label updated as necessary. In some cases a Black Box warning highlighting critical safety information is issued.)

With respect to safety, is there a proposed entity that will collect, analyze and issue safety information? Both FDA and companies spend a significant portion of time separating spurious safety reports from those that are real.

If it turns out that a drug really does not work, are there provisions to prevent its future sale? Similarly, if the drug turns out to be too toxic or the safety issues cannot be adequately managed can the drug be withdrawn from the market?

Manufacturing of some drug products (particularly biotechnology products) are strongly process dependent. Right now FDA reviews and approves both the manufacturing process and the facility. In the absence of the FDA, who takes over this responsibility? Do they have legal authority to shut down a plant if there are violations of Good Manufacturing Processes? Is the facility inspected for compliance on a regular basis?

Finally, and perhaps most important, do you think 3rd party payers that are integral to the healthcare system in the US will accept a non-FDA model and pay for drugs under this approach?

I just don't see what type of organization will substitute for FDA. FDA is seldom the choke point in drug development. Most of the time is is insufficient efficacy data so it's not a question of "half the time and half the cost." FDA review times for important new drugs are completed faster than any other regulatory agency at this point in time.

Thanks for taking a look at these questions.


Jake writes:

I am envisioning an FDA that helps research and provide good information for the market, but without the paternalistic approval power.

In the Misoprostal example, imagine the FDA stating something like:

"Research exists on Misoprostal to the effect of X, performed by Y institution, and patients currently using the drug are experiencing Z. At present the drug has not received FDA approval but is under review."

So the FDA presents facts and gives an opinion (or lack thereof) but patients are still free to choose. Best of both worlds perhaps?

robc writes:



That is the model I would like to see. Also note, they have never approved a turkey fryer. Yet, you can still choose to buy and use them.

AlanG writes:


I'm well aware of UL and the work that they do. I've also been a member of several standards setting organizations in several technical areas. Could an organization such as UL play a role? You would have to define the questions that they would have to answer. In the pharma space they are not needed to develop standards as that is already the responsibility of the USP who prepare drug monographs (with the assistance of the manufacturer), and standards for lots of stuff that is used in manufacturing.

Here is a list of four critical items that have to be addressed (There are a lot more but this should give you an idea of what needs to be done. I am making no judgement as to the point a drug can be sold to the public):

1. Who reviews the clinical safety and efficacy data to assure quality and make the determination the drug can be sold? What kind of information must accompany the drug so that it is properly prescribed?
2. Who reviews the manufacturing process to assure the drug can be made free of contaminants (really critical for facilities that produce sterile products)? How is the shelf life stability assessed?
3. Who inspects the manufacturing facility to assure it is in compliance with Good Manufacturing Processes?
4. Who collects reported adverse drug reactions when the product is on the market and updates the prescribing information to account for this?

At present the FDA does all of these jobs. I've not even discussed issues such as recalls or periodic inspections which take place all the time. No single outside organization could do these jobs. UL does not have the necessary expertise to do any of these at present and perhaps only #3 might fall under their purview.

#1 requires expertise in a variety of fields that are not present in any standards organization that I am aware of. #4 is absolutely critical and I am most interested in hearing from folks as how this can be done absent the FDA. What happens if people start bombarding the Internet with spurious reports of side effects (this already happens, witness the ongoing vaccine/autism debate which has been thoroughly debunked). If there is no entity that will update safety labeling, you cannot make an informed decision and people will get hurt.

The bottom line is that you will have to recreate a private FDA like entity to do this stuff. My question is why bother?

Charley Hooper writes:


You obviously have a good background in this field and you have a number of questions. If you will, let me come at this from a different perspective. Imagine that the government controls all aspects of our lives and that some person thinks, and argues, that the government should control us less.

Here's what a skeptical person might ask:

The government currently examines and certifies potential romantic partners. If the government stops doing that task, how will I know that my potential romantic partner will be polite, friendly, interesting, clean, safe, etc.?

The government currently approves cars. If the government stops doing that task, how will I know which cars are good?

How will I know where to buy my refried beans? How will I know which microwave oven to buy? How will I know the good places to go on vacation? How will I know which movies to watch?

How would you answer this person?

All of these problems require information and, where there is a need for information, sources of information aren't too far behind.

robc writes:

Why bother?


And the point of bringing up UL wasn't that they would do it. They were founded because there was a need for them.

If you eliminated the FDA, an organization that filled the needs of the pharma industry would fill the gap. And it would have to fill the needs of the industry and the consumers or it will be ignored (by one or the other).

Drugs are not some special case product.

And the F part of FDA may be an even bigger joke, if less directly dangerous.

Charley Hooper writes:


I want to comment on one specific thing you said.

I laugh when other national approval is mentioned as most important new drugs are approved in the US first (this comes from FDA's own data). FDA is constantly in discussion with the European Medicines Authority on important issues. IMO, this is just a false issue.

This does not mean that the FDA is the model of efficiency. The U.S. market is the brass ring for drug companies (a big, rich country with relatively free pricing) and the only way to reach American patients is through the FDA. Companies might spend an order of magnitude more time and effort trying to keep the FDA happy than some regulatory agency in another country. The end result is an approval by the FDA before EMA, PMDA, or Swissmedic.

To compare the FDA to other drug approval agencies, we need to set up an apples-to-apples comparison. With denationalized drug approvals, drug companies would quickly find the best agency and, coincidentally, would save a lot of time and money currently wasted on submitting duplicative drug applications.

AlanG writes:

Charley Hooper writes: "To compare the FDA to other drug approval agencies, we need to set up an apples-to-apples comparison. With denationalized drug approvals, drug companies would quickly find the best agency and, coincidentally, would save a lot of time and money currently wasted on submitting duplicative drug applications."

When I was running regulatory affairs at PhRMA we were in constant dialogue not only with the FDA but other major regulatory bodies overseas. The whole concept behind the International Conference on Harmonization (ICH) was to come up with a common technical document that would serve as the base dossier to get approval. This has been largely accomplished but some regions still have specific requirements that they would not concede on.

You are absolutely correct about the wastefulness of all the reviews that get done before a company can market a drug in all the regions they would like. It's also made more complicated by the need to negotiate pricing in all regions save the US (though with President Trump's statements we don't know where the US is going to end up). The trouble is that nobody wants to cede authority to another country's regulatory agency. The EMA and FDA are going to be with us for a while (though the EMA may be relocating from London pending a decision on Brexit).

Most of the creative work on biomarkers, toxicology, and other endpoint approaches is taking place her in the US. Both industry and the FDA are part of these consortia. IMO, better guidance on clinical development comes from the FDA than other agencies.

You are correct about the US being the primary market (I would call it a "gold" ring rather than "brass") but it's usually the practice to file simultaneously for market approval across the major regions. Certainly, for most of the innovative biotech products US approval has been first.

Regarding your early post this afternoon, I think you should acknowledge that drugs are different from cars, romance, and most other consumer products. Most individuals cannot make informed decisions regarding drug therapy just as they cannot about other complicated things such as jetliner maintenance or a variety of financial products (MBS, CDOs, etc) as we saw during the 2008 debacle (in fact even experts failed badly at this). Even OTC drugs are risky (heapatotoxicity with acetominophen; gastric bleeds and cardiac problems with NSAIDS). Ask most people about this and their eyes will glaze over.

Mark Bahner writes:
Regarding your early post this afternoon, I think you should acknowledge that drugs are different from cars, romance, and most other consumer products. Most individuals cannot make informed decisions regarding drug therapy...

Yes, and 40 to 50 percent of marriages end in divorce.

Adults should be free to put in their bodies whatever substances they think best, just like they should should be free to marry whomever they think best.

robc writes:


I think you should acknowledge that drugs are different from cars, romance, and most other consumer products.

Nope, as I said before that:

Drugs are not some special case product.

You are an expert in the area, I am in other areas. It is hard for me to recognize that my areas of specialty aren't actual special. I think you are blinded by your knowledge.

robc writes:


Just as a nitpick, the stats on FIRST marriages aren't nearly that bad. Its the serial marriage/divorce people screwing up the stats.

Interestingly, more and more people after the first or second divorce are now giving up on marriage and just cohabitating, making the overall divorce rate number come down.

AlanG writes:

I'll make this my last post as I still have not seen any responses to the fundamental questions that I posed other than "adults should be free to take what they think best." This begs the question of how to deal with children who don't have the ability to make such decisions.

Until those of you who maintain that position (and there is nothing wrong with it as it is my position regarding "illegal" drugs as the war on drugs as been an abject failure) can illuminate me as to how you will gain the necessary information to make an informed decision in the absence of the FDA I will remain unconvinced that this is a rational choice.

Charley Hooper writes:


Does this correctly represent your view? If a substantial proportion of the population doesn't understand something, those people can't make informed decisions about it, and therefore everyone should be regulated by a government agency that acts as a gatekeeper.

How many people understand how a computer works? How the Internet works? How an airplane flies? How a automobile engine works? Why some people fall in love and others don't? How a digital camera works? How the free market works? How language develops? How our DNA combines to make babies? Heat transfer? Calculus? Comedy? Gravity? How LED lightbulbs work? How oil is refined? How bread gets moldy? How carbohydrates affect our bodies?

Most people don't understand most things. Should all these things be regulated by government agencies?

AlanG writes:

Charley Hooper - what you write does reflect my view on some things where the technology is so complex and people might be harmed. For example, I support the regulation of nuclear power plants, trained inspection of jetliners, regulation of pesticides, to cite but three examples in addition to pharmaceuticals.

The examples you cite in your 2nd paragraph for the most part are not regulated other than airplanes which have to conform to a great many governmental regulations. Some are subject to the laws of nature (I include math, physics, and DNA recombination in that category. Most of what you note are not regulated by government agencies though aspects are (authomobiles and oil refining). Would you want an oil refinery to have the freedom to spew out pollutants into the air. Would you like cars not to have safety features?

I don't believe you can say the same thing about pharmaceuticals as such products are capable of causing danger and even death. Say you had a gram positive bacterial infection. You knew you were sick and that it was probably bacterial but you took the wrong antibiotic; that's not a good thing. We have lots of data about drug induced injury (#1 example is acetaminophen poisoning which is why it is only OTC in the US; most other countries have it behind the counter).

As I said in the 4.03 pm post from yesterday, there are some aspects of pharmaceutical development that require some form of regulations. Would you want a vaccine to be manufactured in a plant of questionable sterility? We already saw how this impacts health with the New England compounding pharmacy lab that formulated contaminated corticosteroid solutions for injection.

My question back to you and others is whether you believe that no aspects of pharmaceutical R&D are deserving of regulation. If you don't like the FDA, provide a reasonable mechanism by which it might be accomplished (don't say Good Housekeeping or UL as the are ill equipped to do this). As I said above, you would have to recreate the FDA.

The other key question I have is how does the libertarian approach apply to children who don't have the knowledge to make such decisions. We already have seen examples of children being denied vaccines by their parent who don't understand the science.

Mark Bahner writes:
Until those of you who maintain that position (and there is nothing wrong with it as it is my position regarding "illegal" drugs as the war on drugs as been an abject failure)...

So you agree that adults should be free to put whatever drugs that are currently illegal into their bodies as they choose? But you don't agree that adults should be free to put whatever drugs that are currently legal into their bodies as they choose?

...can illuminate me as to how you will gain the necessary information to make an informed decision in the absence of the FDA...

I obviously don't speak for any others...just myself. I don't have a major problem with the FDA providing all the information it currently provides. I have a big problem with the FDA having approval authority for anything.

To take the very good example of marijuana and any products derived from any ingredients therein: I think it is absolutely wrong for the FDA to have any approval authority for marijuana and any products derived from any ingredients therein.

If you agree that no one should have approval authority for marijuana the illegal drug, wouldn't you also agree that the no one --including the FDA--should have approval authority for products derived from marijuana, i.e., products containing various amounts of the 100+ cannabinoids in marijuana?

Charley Hooper writes:


In 2009, Sacramento radio station KDND held a contest to see how much water someone could drink in the studio. It was called “Hold Your Wee for a [Nintendo] Wii” and 18 people entered, including 28-year-old, mother of three, Jennifer Strange. Strange drank nearly two gallons of water on the show, joked about her large belly, won second place, and then just hours later died in her bathroom. She died from hyponatremia, or water intoxication.

How many people know that water can be deadly? Not many. How many people know how much water they can drink before it kills them? Not many.

Therefore, we can conclude that water can be deadly and there's an information problem.

Should the purchase and consumption of water be regulated? How is water different from drugs? It isn't

Here we have something that can be dangerous (water and drugs) and a shortage of good information in both cases. Government regulation is just one way to solve the problem. But there are others, too. And if they don't exist today, because of the crowding-out effect of the FDA, they would arise in the future.

AlanG writes:

Charley Hooper - I'm not sure why you keep posting false equivalences. We know water is deadly by several mechanisms including the anecdote that you noted. I wonder whether the radio station alerted contestants to the possibility of danger in that contest. Water intake is self limiting from a physiological perspective unless one engages in foolish behavior. Drink when you are thirsty and if you are in the desert, drink some more even if you don't think you need it.

The case of prescription drugs is totally different. Look at any drug label and you have a list of all the possible side effects that might range from mild up to and including death. The reason that this data exists is because of the FDA. You say mechanisms would arise in the future in the absence of the FDA but don't say how this would happen. Count me as very skeptical. Who is going to collect adverse events and sift through them to figure out what is real so that safety label can be updated. Let's look at the case of childhood vaccines. There is still a significant number or people who believe autism to be associated with certain of these vaccines (perhaps including our President). We I to rely on a website of vaccine deniers I would be getting 'Fake News' about vaccines. I am not saying that we should become a "nanny" state but only that there are examples where we have to defer to experts. The FDA does this for pharmaceuticals; the FAA does this jetliners.

@Mark Bahner - you want the FDA to have information and process it but not approve anything? How is this supposed to work? Do they simply say this drug doesn't work yet allow the manufacturer to sell it anyway?

Marijuana is another false equivalency. I think I am now permitted to grow pot in Maryland (not that I intend to, I've been drug free since 1973 once my lab colleague in grad school showed me how high the level of carcinogens was in marijuana smoke) and could smoke it to enjoy the high marijuana brings. One might look at this as a dietary supplement (though getting the munchies might lead one to put on too much weight) and not subject to FDA regulation (don't raise the tobacco issue with me as I thought that was the wrong move by then FDA Comissioner Kessler; it's a public health issue but not one the FDA should deal with).

If someone is purifying a plant metabolite from Cannabis sativa, doing clinical studies and then want to sell it as a drug that is no different from anyone of the countless other metabolites from both plants and microorganisms that have been regulated as drugs over the years (almost all antibiotics, some cardiovascular drugs, a bunch of steroids, etc). It's the intent that matters.

Charley Hooper writes:


You may be a good person to ask this.

After the FDA's powers were expanded in 1962, Sam Peltzman found that the number of new chemical entities approved by the FDA fell by 60%. That makes sense.

But, the argument goes, safety and efficacy should have improved. Do you know of any data that shows that safety and efficacy are better now than before 1938 or 1962?

AlanG writes:

Certainly predictive safety is much better today. What you don't see are all the drugs that are dropped out of clinical trials because the safety cannot be managed. Most of this is liver and kidney toxicity (the two major organs were drugs are metabolized). These will never show up in FDA data. Pre-1962 saw the approvals of lots of drugs that just didn't work. Some of them are just now coming off the market as FDA is getting around to this; that's what was responsible for the drop in approvals. Very few drugs are pulled off the market for safety reasons these days. There is much better education for the drugs that do have safety issues which I think is to FDA's credit. Thirty years ago they probably would have acted in a more hasty manner.

Certainly efficacy is much better. If you look at the post 1962 drugs we have almost solved all the cardiovascular disease things with control of blood pressure and cholesterol. Maybe the new biotech products can make a dent in this we'll have to see. We probably have all the NSAIDS we will ever need and there are some other therapeutic categories that there is little research going on because existing drugs are just fine.

I had a longer post addressing your previous one and hope that it did not get gobbled up in the ether.

robc writes:


Russ Roberts answered this question 18 years ago. And I think his answers are about right.

Final paragraph:

Would a world without an FDA and prescriptions be a better world? The answer depends on how many lives would be lost from mistakes and how many lives would be saved by the wider and earlier availability of drugs. It would also depend on the value you place on putting responsibility in our own hands rather than having the government take responsibility for us.
Charley Hooper writes:


Thanks. That's true.


You've described a correlation, not cause and effect.

I live near Alexander Rossi, the winner of last year's Indy 500 race. Can I claim credit for his win? That answer depends on what I did and whether he would have won without me around.

To answer the FDA question, we would need to determine what would have happened absent the FDA. We are so much richer and science has progressed tremendously since 1962, so many of the advancements you identify would undoubtably have happened anyway.

AlanG writes:

Charley Hooper and others - This will be my final post since there doesn't seem to be any way to understand where each person is coming from. I honestly don't understand what you mean in terms of a "correlation, not cause and effect." You have worked in the pharma industry and still consult there; do you not have an understanding of the development process and the roll of FDA?

I'll only add some things from my experience. Since the User Fee program was established in 1992 and subsequently reauthorized four times (I was involved in the 1992 negotiation as well as the next three), performance metrics were established that FDA has met well over 90% of the time. A complete review of all priority drugs (and this includes oncology and other drugs for life saving conditions) within the six month time frame. If the data is good, those drugs are approved. Companies that have good clinical programs and regulatory affairs groups get their drugs approved at this point in time. It's hard for me to think of an important drug that was not approved first in the US during this time period.

You ask what would happen in the absence of the FDA? Do you really want to go there? Who would do the job of the FDA in assessing safety, efficacy, review the manufacturing process AND continue to track adverse drug reactions and update the prescribing information? If nobody does this, people die or their medical condition doesn't improve as they are taking non-efficacious medicine or their medicine is adulterated.

I am disappointed that nobody provided a reasonable schema for how this can be done.

Regarding individual responsibility and the ability to take what you want, that's a practice of medicine issue and not one for the FDA. Do you want everything to move OTC which would be the ultimate in personal choice or do you want to continue with the "learned intermediary" model. I have not heard an answer to that either.

I'm happy to continue this discussion with anyone who wishes. Just contact Alan Goldhammer through LinkedIn and we can exchange emails. We have already made this thread way too long.

Mark Bahner writes:
@Mark Bahner - you want the FDA to have information and process it but not approve anything? How is this supposed to work? Do they simply say this drug doesn't work yet allow the manufacturer to sell it anyway?

Isn't that exactly what they do with cigarettes? Everyone knows that cigarettes are unsafe, but the FDA doesn't stop sale of cigarettes.

If someone is purifying a plant metabolite from Cannabis sativa, doing clinical studies and then want to sell it as a drug that is no different from anyone of the countless other metabolites from both plants and microorganisms that have been regulated as drugs over the years (almost all antibiotics, some cardiovascular drugs, a bunch of steroids, etc). It's the intent that matters.

So if someone smokes marijuana to get high, the FDA and the rest of the federal government should back off? But if someone takes the components of marijuana like cannabidiol and tries to use them as anti-inflammatories or anti-pain medications, the FDA should step in and prohibit anyone from using the medications until the FDA approves?

If your answer to both of those questions is "yes," what is the logic there? That it should be easier to get high than to relieve inflammation or pain?


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