FDA versus cost/benefit analysis

As you hopefully know, I’m a huge fan of applying cost/benefit (and especially efficiciency) to not just public policy problems, but life in general.  But, yeah, especially public policy problems.  Like, whether the FDA should act in due haste in in a rapid approval of the Covid vaccines.  Gives those priors of mine (and you know how I feel about the FDA), I really loved this Yglesias post on the FDA having a huge problem in not taking a cost/benefit approach where it should (and this is the rare free post, so I strongly encourage you to read all of it):

The two critiques of the FDA

The way the FDA thinks about this is that there are certain scientific criteria a drug has to meet in order to qualify as approved, and then there is a factual question as to whether or not a drug has in fact met that standard. The FDA then takes two forms of criticism.

One, which is popular in the lefty nonprofit space and the public interest community, is that the FDA is too captured by industry and too eager to give drugs the thumbs up. These critics tend to point to things like the approval of Aducanumab, excessive enthusiasm for prescription opioids, and a tendency to go soft on copycat drugs that provide on-patent alternatives to cheaper medicines without necessarily offering commensurate benefits. The other critique, which is popular among libertarians, is that the FDA is too slow and too hesitant to approve drugs.

If you dive into the guts of these criticisms, the critics are in many ways actually saying the same thing, which is that the FDA is not applying a cost-benefit lens to these decisions. And in their defense, as best as I can tell, that’s not their statutory mandate. So in the sense that the FDA is a bunch of human beings with jobs to do, I am not sure they are actually doing anything wrong at all. And I want to be clear about that — I’m not here to insult people or impugn their work… [emphasis mine]

I’m dwelling on the benefits because to me, that is the issue — we should give the vaccines the regulatory treatment that is most likely to be beneficial to society.

But trust me, it’s not that I “don’t understand” that this isn’t how the process works. I am saying the process is bad…

Officials in Canada and the UK are, I think, more accustomed to thinking of healthcare as a resource-optimization problem because they have single-payer systems. So they looked at the data and saw that a single mRNA shot clearly does provide a meaningful degree of protection and opted for a “first shots first” strategy, prioritizing getting as many people as possible a single shot before looping back to get boosters. Canada does not have a vaccine manufacturing industry, and the United States initially banned vaccine exports, so we started with a large vaccination lead. But then you can see how first shots first worked by looking at how they caught up to and then surpassed us.

This, to me, is the kind of flexible decision-making that we need from our public health authorities. It is absolutely reasonable to ask drug companies to preregister their dosing designs and to have some skepticism of proposals to deviate from that. But a public health agency does not have to act like it’s populated by robots who only know how to follow the established procedure. A holistic look at the data supported a deviation, so Canada deviated…

Superficially, the left’s critique that the FDA approves too many drugs is the opposite of the right’s critique that it approves too few. But we are really talking in both cases about a failure of cost-benefit analysis.

Suppose I created an All-Purpose Miracle Pill that, regardless of patient health status, extended life by somewhere between four and eight months in all cases. Unfortunately, the Miracle Pill costs $10 million and also often causes headaches and nausea. The questions of “should this pill be illegal?” and “should Medicare pay $10 million for this pill?” are really totally distinct.

But because we created the FDA, then created Medicare, then created the Medicare prescription drug purchasing program with a stipulation that Medicare won’t “bargain” with drug companies, we have a situation where the FDA is both a consumer safety regulator and also a de facto price regulator. So a common sense category of “look, we’re not telling you it’s so dangerous that it should be illegal, but we don’t really think we should pay for it” doesn’t exist…

Lots of the public sector in the United States is conducted by institutions that are not particularly technocratic in their design or their operation. But the Fed and the FDA are. These are institutions that employ a lot of technical specialists and that have a tradition of independence from the White House. In the long run, I think the way technocratic institutions safeguard their independence and build their legitimacy is by doing a good job. You want people to think “these guys seem like they know what they are doing.”

And to me, the pattern of ignoring first-order cost-benefit considerations and then appealing to public confidence as the explanation of why that’s okay does the opposite. It suggests that the large-ish minority of people who are quantitatively competent need to all be doing their own analyses of issues like supplementing an initial J&J dose with a booster, and that basically every policy decision needs to be litigated and re-litigated in the public square. That’s not going to foster long-term confidence. If you want that, you need to make decisions that are justifiable on the merits.

So, to really TL;DR Yglesias central point, which I strongly agree with… The FDA does not do cost/benefit analysis, but it really should.  And the current situation with the slow approval is making that case manifest.  (Also, more good stuff very much worth reading in the full post)

And while we’re at it, the newly-energized TNR (the excellent Michael Tomasky is editor now) with a good piece, “What the $%&! Is Going On at the FDA? Experts want to know why the agency approved a questionable Alzheimer’s drug but has withheld full approval from Covid vaccines.”  And here’s an area where I think Biden deserves some serious criticism:

Six months into Biden’s presidency, the FDA is in turmoil; the administration still hasn’t even named a commissioner to lead the agency. The hasty Aduhelm approval shocked observers, in part because the agency has yet to offer full approval to Covid-19 vaccines despite millions of successful and safe vaccinations. With Pfizer expected to file within weeks for another emergency use authorization for a third Covid booster shot, and the highly contagious delta variant spreading, fully approving the Covid vaccines could offer the country a much-needed vaccination boost. “The FDA is close to hitting rock bottom,” Gonsalves said.


The lack of a nominated commissioner, during one of the most turbulent times in recent history, could have long-term implications for the agency. Without a confirmed commissioner, it’s difficult for the agency to form and execute policy. “We have leaders for a reason. And the FDA right now has no leader,” one longtime representative for pharmaceutical companies and other FDA-regulated industries, who asked not to be identified by name, told me. “I don’t think the FDA is going to get out of this mess until they get a confirmed commissioner.”…

But now that there’s ample evidence the vaccines are both safe and effective, the agency’s failure to offer full approval for the Pfizer-BioNTech, Moderna, and other vaccines also puzzles experts. “Why they haven’t issued the approval, I simply don’t understand it,” the observer said. “I can’t imagine anything that’s a higher priority.”…

Dr. Eric Topol, director and founder of the Scripps Research Translational Institute, has argued for the vaccines’ approval, in large part to improve vaccination rates in the United States. “I do think that’s the biggest thing we can do right now to get the United States on track,” he told me. Once the vaccines are approved, employers and organizations—from hospitals to schools—can require either vaccination or masking with frequent testing, he said. “The day that happens, with full FDA licensure—which should’ve happened by now—we will see a big jolt. Tens of millions of people who get vaccinated because they realize there’s no way out, because they don’t really want to wear a mask and get a swab up their nose frequently.” As the highly contagious delta variant spreads, the country desperately needs the vaccination jump that full approval would offer.

“There’s just no excuse anymore, just no excuse,” Topol said. (He has said he was approached as a potential candidate for the commissioner job, but he declined.) “And here they approve the Alzheimer’s drug, which had no data yet, and they approved that based on 3,000 people—and here we have hundreds of millions of people where the proof is there of the safety and effectiveness” of vaccines, he said. “I’m extremely frustrated. Every day I get more frustrated, because that is the singular thing that could change this thing around.”…

In the long term, good regulations help the pharmaceutical industry enormously. Undermining regulations, or pushing out drugs that don’t actually work, could undermine the credibility of the entire industry. And approving drugs in the hope that they might work could do more harm than good.

“Patients need more than hope,” Gonsalves told me. “Patients need drugs that keep them alive.”What troubles him about the FDA’s seemingly arbitrary approval pattern in the past year is that it frequently seems to serve pharmaceutical companies rather than patients. AIDS activists, he recalled, quickly abandoned the push for FDA authorization in favor of demanding more funding and better research from the National Institutes of Health. But drug companies had already latched onto the idea of a fast track: “We got hijacked by the pharmaceutical industry and its allies to use our early, most naïve moment as their own rallying cry today in the most cynical way,” he said….

The irony is that Covid vaccines really do seem to be one such blockbuster. (They, too, took time: almost a decade of research since the first SARS outbreak, as well as years of work on platform vaccines.) Why the FDA has withheld approval from them while offering it to Aduhelm is a question people will be puzzling over for a long time to come. At this critical moment in FDA history, the choices the agency makes—and the Biden administration, in nominating a leader—could reverberate for decades.

My take?  Oh, you know that.  Approve the damn things already. If they get approved tomorrow, Fox may say, “oh, no, a politicized process!” but let’s be honest, they’d say that in a year.  So, just get them approved.

About Steve Greene
Professor of Political Science at NC State http://faculty.chass.ncsu.edu/shgreene

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