The FDA, among other goals, is mandated by Congress to ensure that drugs are safe and effective. However, this directive has come at an unforeseen cost: delays that have resulted in preventable deaths, and drugs that are difficult for informed patients to obtain.
Examples include vaccines such as Fluad, which became available in the US 18 years after gaining widespread use in Europe, and peptides that demonstrate promising early results but face FDA distribution warnings.
These delays have potentially lost hundreds of thousands, if not millions, of life-years annually. Moreover, the FDA's centralized, inefficient processes stifle innovation, discouraging biotech investment and leaving society with fewer life-saving and life-enhancing options.
This essay advocates for dismantling the FDA's drug approval function and transferring this responsibility to privatized entities known as "Drug Certification Bodies" (DCBs).
Problem: The FDA holds a monopoly on drug approvals.
While the FDA does not explicitly make unapproved drugs illegal, its regulatory powers over manufacturing, marketing, and distribution render many drugs de facto impossible to obtain.
There is no natural counterbalance to the FDA's power. It has no economic competitors, and legal action against the FDA is impractical for bio companies, who risk retaliation and future delays. The major issues are as follows:
1. Time and Cost of Approval
Submitting a drug for review costs over $4 million in the United States, compared to less than $250,000 in Europe. On average, it takes 10 years and $1-2 billion to bring a new drug to market. This timeline includes not only the FDA's own review process but also the extensive trials and data collection required by the agency. These burdens result in fewer drugs funded and developed.
2. Economic Inefficiency
Since Congress has granted the FDA a monopoly, the agency has no incentive to maximize its ROI. Pharmaceutical companies must work with the FDA, allowing the agency to manually set "user fees" without market competition. These user fees—payments from drug companies for reviewing their products—make up ~45% of the FDA's $7.2 billion annual spend, which supports 18,000 employees.
While user fees have led to faster drug approvals, the lack of a competitive market means there's no standard for what these fees should be. For example, pharmaceutical companies might be willing to pay even higher fees to receive quicker reviews.
3. A One-Size-Fits-All Approach
The FDA's approval process generally applies the same standards to all patients, regardless of each patient's individual risk tolerance or demographic profile. This binary system, where a drug is either approved for all or none, ignores the diverse needs of patients and leaves many without viable options. While Congress allows the FDA to make limited exceptions for terminally ill patients and orphan drugs, these pathways are insufficient to address the broader systemic issues.
We should not eliminate all drug regulations.
A variety of approval models could be explored, but the first step is for Congress to relax the constraint that the FDA has final authority over all approvals. On the other hand, complete deregulation isn't likely to end well:
1. Private actors have demonstrated a poor track record in self-regulating, such as promoting unsafe drugs or inadequately testing devices before market release when not mandated. The FDA was initially created to address these misaligned incentives.
2. Laypeople are often unequipped to interpret statistical data on their own, so the laissez-faire market suffers from inefficiencies similar to those caused by imperfect information. The FDA acts as a trusted resource that the public relies on.
3. Eliminating the FDA runs the risk of enabling drug abuse. Addictive drugs are a national security and public health risk, e.g. the Opium Wars.
For these reasons, it is inadvisable to remove the FDA drug approval process with no alternative in its place.
Solution: Build a privatized FDA alternative.
My recommendation is for a competitive, privatized system of Drug Certification Bodies to be established. A Drug Certification Body (DCB) is a private sector entity that conducts drug approvals and subjects itself to relevant regulations.
DCBs should handle all drug approvals and adopt the following three reforms:
1. Separate the safety and efficacy approvals, where safety is the only requirement for usage: Safety and efficacy are inherently connected, as approvals weigh a drug's benefits against its risks. However, even when efficacy has not yet been demonstrated, drugs should be approved if they meet a sufficient safety threshold. This approach mirrors current off-label drug use practices, where 20-30% of prescriptions involve drugs prescribed for conditions beyond FDA approval. In such cases, physicians must assess whether the potential benefits justify the risks. Additionally, we might require that patients consuming a yet-to-be-proven drug consent to their physician sharing their medical records to build an argument for efficacy.
For instance, Tafamidis, a treatment for transthyretin amyloid cardiomyopathy (ATTR), could have reached the US market sooner. Initially, the FDA rejected Tafamidis as a safe but ineffective treatment for polyneuropathy. Later, it was found effective for a different condition, ATTR, and approved in the United States in 2019. During the interim, Tafamidis was only available in Europe pending its second FDA review. Such cases are common, as pharmaceutical companies investing billions in a safe drug are motivated to identify conditions where it proves efficacious.
DCBs can separately offer efficacy certifications. Efficacy will remain a desirable approval to receive, since insurers and payors will prefer to cover drugs that are proven to be effective. Safety approvals should allow for greater side effects when a drug's benefits outweigh its risks.
2. Adopt a heterogeneous review process, allowing for demographic-specific approvals: The current FDA review process is cumbersome and inconsistent, with multiple pathways. The timeline typically consists of preliminary tests and three phases of clinical trials (~6 years). This all leads to a 100,000+ page new drug application, which takes 1+ year to review alongside a manufacturing inspection.
Ironically, Congress implicitly acknowledges that a faster approval process is possible via the FDA's emergency pathways, such as the process for COVID-19 vaccines. Under a privatized system, DCBs will develop voluntary standards tailored to each drug's unique risks and benefits.
In some cases, DCBs might approve drugs for only subsets of the population based on available data, allowing faster access for targeted groups. New studies should include diverse demographic groups in line with the DEPICT Act of 2023, promoting equitable access, but this relaxation allows DCBs to utilize historical data, data from non-US jurisdictions like Honduras, or more unusual data that wouldn't meet the standard of a full clinical trial, such as human challenge studies for small target populations.
Some might argue that a lack of diversity in patient trials has led to failures in fields like oncology where studies did not generalize, but the real error is that the FDA granted efficacy approvals when only safety was properly supported.
3. Establish public credibility by bearing the cost of unsafe approvals & publishing results: A chief concern is that DCBs will only focus on minimizing approval times or offering competitive user fees, without prioritizing safety.
To align incentives, DCBs should offer liability insurance (up to a reasonable limit) to pharmaceutical companies for health hazards resulting from the use of approved drugs. The minimum required amount of liability insurance is to be determined.
All drug reviews should be published for public auditability. The results might be posted somewhere as simple as Arxiv.
How can this get congressional support?
The FDA should reduce its role to ensuring DCBs are run properly, similar to the regulation of credit rating agencies:
- Conflict-of-interest protections: DCBs must adhere to stringent rules, like those used by the Department of Defense, to prevent bribery or undue influence.
- Enforcement of labeling: Relevant marketing claims made by drug manufacturers must be approved by DCBs.
- Fraud prevention: Any data submitted to a DCB must be accurate.
With a more limited scope, the FDA can focus its resources on accomplishing the above efficiently, while DCBs focus on approvals.
To get widespread support, the model must first be trialed successfully. Precedents, such as the expansion of the Third-Party Review Program for Class II medical devices under the 1997 Modernization Act, offer a roadmap for scaling privatized reviews. This involved selecting a representative sample of Class II devices and providing access to FDA databases and review templates.
The logical starting point might be "wellness therapies." Congress defines a drug as anything intended to (a) treat or prevent disease or (b) otherwise affect the body's structure or function. Privatized approvals may be more suitable for drugs that solely affect the body's structure or function ("wellness therapies"), like peptide injections.
Wellness therapies often involve novel mechanisms, which means the FDA must commit substantial resources to their review, unlike generics. This category of drugs is underserved, since there are already existing pathways for expedited approvals and expanded access for terminal illness drugs or orphan drugs. Wellness therapies have lower risks associated with an erroneous approval or rejection, since the therapies do not directly treat diseases, and their consumers are often high-paying and informed. Lastly, this category naturally expands to cover other drugs like homeopathic treatments, which have a fraught history with the FDA.
I am interested in collaborating with others who are working toward FDA privatization. While this possibility has been discussed for decades, the next four years under the Trump administration present a rare opportunity to finally reform this broken process. This might involve spinning up the first DCB that functions as a true alternative to the FDA.
