Prescription Remedies

A broad coalition of deregulators is gearing up to reform the FDA. How far will they go?

The Food and Drug Administration has made American drugs and medical devices the envy of the world," wrote Bill Clinton in his introduction to the March National Performance Review proposal to "reinvent" the regulation of pharmaceutical products and medical devices. "And we are going to stick with the standard we have—the highest in the world."

In mid-May, Rep. Joe Barton (R-Tex.), who chairs the House oversight subcommittee that keeps tabs on the FDA, offered a slightly different perspective. As recently as March, USA Today had reported that Barton was "not ready to call for massive [FDA] reforms." But times change. "After four months of being objective and unbiased, I'm not impressed [with] the agency's procedures or internal attitudes," he told the annual meeting of the Medical Device Manufacturers Association on May 12. Barton said he hadn't been looking for "good guys" or "bad guys" in the quarrels between the health care industry and regulators. "But from what I've seen," he said, "you [device makers] are innocent; the FDA is guilty until proven otherwise."

To an extent that was inconceivable before last November's elections, Barton's view of what he calls the "Foot Dragging and Alibi" agency is becoming the consensus on Capitol Hill. Even Democrats who have staunchly defended the FDA and its aggressive commissioner, David Kessler, are proposing to loosen the agency's regulatory stranglehold on the food, drug, and medical-device industries.

With the exception of a few agency insiders and Naderite holdouts, policy makers across the political spectrum plan to push the FDA to change its focus. Reformers want the agency to concentrate on more rapidly getting drugs and devices to doctors and patients rather than delaying, prosecuting, or otherwise scrutinizing the medical industry into bankruptcy.

But those who would remake the FDA face daunting challenges. The general public doesn't perceive a crisis in food, drug, and device approval, so there's no populist groundswell for systemic changes. Restructuring the FDA will require more than tweaking a few rules, because the agency operates separate divisions and issues unique regulations to control the food, drug, biotech, and device industries. And the industries under the FDA's thumb don't all support identical reforms: Food and additive suppliers are most concerned about labeling requirements; device makers, who weren't regulated by the FDA before 1976, would ideally remake the agency into a certifier, rather than an approver of products; and pharmaceutical companies would only tinker at the margins of reform—they've spent the past 30 years learning to game the system and gaining benefits from barriers the agency imposes on potential competitors.

Stories on the FDA's regulatory overkill abound. For instance, the FDA's Center for Devices and Radiological Health takes more than three times longer to approve a Class III or "substantial risk" medical device (such life-saving products as heart valves or CAT scanners) than do the agency's counterparts in Europe. As a result, U.S. device manufacturers are moving their product trials elsewhere. In the past 10 months, reports a survey published in June by the Health Industry Manufacturing Association, 50 percent of the more than 500 device makers surveyed had moved some clinical trials of new medical devices overseas; 56 percent refused to test new devices on Medicare patients; and 75 percent planned to move their trials to Europe.

Pharmaceuticals face similar delays. The average time it takes a drug company to develop and gain approval for a new drug has almost doubled over the past 30 years—from 8.1 years in the 1960s to 14.5 years today. And, reports the Pharmaceutical Research and Manufacturers of America (PhRMA), more than 60 percent of the new drugs and biologics (genetically engineered pharmaceuticals) approved here in the 1990s were first approved in another country.

The food industry is also eager to alleviate regulatory holdups. The Grocery Manufacturers Association says on average it takes the FDA more than five years to approve new food ingredients. And some ingredients have been kept off the shelves much longer; more than one-third of the food-additive petitions now pending at the FDA were filed between 1971 and 1989.

The American Enterprise Institute's Jack Calfee, former chief economist at the Federal Trade Commission, points out that food, drug, and device companies have little choice but to put up with such regulatory abuse. The FDA controls what a company can make; when those products can enter the market; how it manufactures those products; where it can sell them; where and under what circumstances it can promote what it makes; and even what its advertising and promotional literature can say.

Calfee argues that the only way to restrain the FDA's regulatory juggernaut is to break up the agency, placing food, drug, device, and advertising regulations into separate jurisdictions. Jeff Pierce, regulatory analyst for Citizens for a Sound Economy, agrees that serious regulatory reforms must get beyond finger-pointing and name-calling. Free marketeers and patient advocates have blamed FDA chief Kessler's headline-grabbing enforcement proceedings for causing much of the recent food, drug, and device delays. But, Pierce says, until the agency's power is reduced, even if a saint ran the FDA, unnecessary delays would continue.

Until this year, industry cries for congressional help had fallen mostly on deaf ears. The House subcommittee on health was chaired by Rep. Henry Waxman (D-Calif.), who would gleefully drag Kessler and his predecessors before the committee's klieg lights when an FDA-approved drug or device was recalled because it was less safe or effective than originally touted. Such scrutiny guaranteed front-page coverage for Waxman and his Naderite allies and gave the FDA big incentives to approve as few new drugs and devices as possible. Sam Kazman, general counsel for the Competitive Enterprise Institute, points out that "the easiest way to have zero recalls is to approve zero drugs and devices."

Since the November election, however, the mood on Capitol Hill has clearly changed. The rhetorical shift was best signaled at an April 6 hearing before the Senate Labor and Human Resources Committee. Sen. Barbara Mikulski (D-Md.), hardly a raving deregulator, upbraided Kessler for his agency's recalcitrance. "We need a sense of urgency, we need a commitment, we need a passion for change," she chided. "And if not, I think the Congress is going to roll right over you."

Congress started rolling a month later when, on May 11, the $16 billion 1995 rescissions package passed by the House and Senate killed funding for the agency's new home, an $810 million, 356 acre "campus" in rural Maryland. Citizens for a Sound Economy led the opposition to the new facilities, placing ads in D.C.-area publications comparing the campus to the Taj Mahal; having its chairman, former White House Counsel C. Boyden Gray, testify against the campus before congressional appropriators; and mobilizing its 250,000 members to contact legislators. The CSE-led opposition worked: The report issued with the rescissions package clearly stated that Congress wouldn't appropriate money for new FDA facilities before "any future FDA restructuring" took place.

Plans to restructure the agency are now circulating on Capitol Hill. The White House proposal would remove a few regulatory barriers and develop a "pilot" program to consider letting private parties review some low-risk medical devices. As with the rest of the National Performance Review, the White House wants to make the FDA more efficient, not necessarily less intrusive. Despite public endorsements of the plan by businesses, health care providers, and patient groups, in private few take this proposal seriously.

Meanwhile, Rep. Ron Wyden (D-Ore.), the self-described consumer advocate who five years ago used congressional hearings to call for tougher regulation of the $33 billion diet industry, has become a born-again deregulator. In early April, Wyden, the ranking Democrat on Barton's oversight subcommittee, outlined his proposals in an eight-page, single-spaced letter to President Clinton. Wyden decried the "bureaucratic structure of the FDA….Computers, biotechnology, and other innovations are producing better healthcare products which we can't allow to be stifled by a lethargic, slow-moving or insensitive approval process."

Among other reforms, Wyden would let outside reviewers approve low-risk devices, eliminate barriers that prohibit U.S. manufacturers from exporting devices that are approved for use in other countries but not yet approved here, and allow "breakthrough" drugs to be approved after one set of clinical trials, cutting approval times for those drugs by years rather than months. (Rumor has it that Wyden's newly found free market principles also coincide with his possible plans to challenge incumbent Republican Sen. Mark Hatfield next year.) Several trade-association representatives told me that, before the election, they would have been delighted to see the Wyden plan enacted. But they believe much more is now possible.

The most-sweeping FDA changes will probably come from the Medical Innovation Project, a collection of free market think tanks, academics, and trade associations assembled by the Progress & Freedom Foundation, a think tank that acts as House Speaker Newt Gingrich's brain trust. PFF Senior Fellow Tom Lenard, one of the project's leaders, argues that the FDA must eventually be replaced as a "politicized, risk-averse government-owned monopoly."

Lenard argues that developing public support for removing the agency's monopoly powers will take several years rather than a few months. "The public has to be assured that none of these changes will involve a dimunition of the standards under which drugs and devices are judged," he says. In July, the Medical Innovation Project plans to release a legislative agenda for private alternatives to many FDA functions.

In between the administration/Wyden proposals and those from the Medical Innovation Project are proposals the trade associations are coming up with themselves. Industry groups believe they can get substantive changes from this Congress, and they aren't willing to wait years for reforms to take effect. Yet there are striking differences over how far the different types of regulated firms will go. Brian Folkerts, a lobbyist for the National Food Processors Association, admits that "drugs and devices get most of the agency's attention, because the failure to approve them can lead to needless deaths." Even so, he says, the agency's "failure to act hurts our members' ability to provide healthy additives and ingredients." His group will prod the FDA to speed up approval of new items and push Congress to allow private groups to clear health claims made by food makers.

Pharmaceutical companies certainly have more regulatory hoops to jump through than food makers, so you might think they'd seek more thoroughgoing reforms. But they have benefited from the FDA's regulatory maze, which gives established drug companies a competitive advantage by erecting barriers to those firms that lack the expertise or patience to wait a dozen years to bring a new drug to market. "Successful drug companies can handle the approval process," one industry observer says. Drug firms would never advocate substantially loosening the FDA's bottleneck on approvals, the observer says, "because the current system lets [drug companies] earn near-monopoly profits."

PhRMA, the drug-makers' trade association, has indeed suggested ways to speed up drug approval—most notably by merging the separate FDA divisions that regulate drugs and biologics and requiring the agency to let independent reviewers gain FDA certification to conduct some drug-approval tests. But PhRMA would let the agency maintain its monopoly over approvals.

Device makers, by contrast, are less patient and much more willing to get in the FDA's face. Before Congress passed the Medical Device Amendments of 1976, the device industry hadn't been regulated at all, and until the Safe Medical Devices Act passed in 1990, the FDA's Center for Devices and Radiological Health paid scant attention to low- and medium-risk devices.

Before the 1990 device act passed, says Tommy Thompson, president of Quest Medical and chairman of the Medical Device Manufacturers Association (MDMA), the FDA could recall an unsafe device only after it was placed on the market; the new law forced device makers to submit their products for approval before selling them. "Although most changes in the SMDA didn't deal with product approval," says Thompson, "the FDA acted as if the SMDA dramatically expanded their authority."

Impatient device makers will attract a sympathetic hearing from congressional deregulators, including moderates and liberals, because they appeal to a motive everyone understands: self-interest. As many as 8,000 device manufacturers are scattered throughout the United States (and are thus located in many congressional districts); they employ 270,000 persons, comparable to the number who work in the semiconductor industry; and companies with fewer than 20 employees generate 64 percent of the industry's sales. As long as the preservation of "small businesses" and "high-tech" jobs remains politically sacrosanct, elected officials will scramble to mow down regulations that close down (or force overseas) cutting-edge companies in their districts.

It appears that the feisty two-and-a-half-year-old MDMA will get a more sympathetic hearing from Congress than the 700-member Health Industry Manufacturers Association (HIMA), which represents the industry's bigger, more-established firms. As trade associations are perceived, HIMA may be analogous to the U.S. Chamber of Commerce—solid corporate citizens who don't want to roil the political waters. MDMA is more like the National Federation of Independent Business, or even the Small Business Survival Committee—impatient and eager to mix it up with regulators if confrontation is needed to get products on the market. The 104th Congress, especially the pugnacious House, seems to revel in confrontation.

Both national associations agree on several reforms. They would eliminate controls that prohibit U.S. device makers from exporting devices that are approved in other countries but not here. They would allow all Class I, low-risk devices to reach the marketplace without the approval of the FDA, letting products such as toothpaste and contact lenses enter the market without first having to navigate the FDA bureaucracy. They would push Congress to develop a mission statement for the FDA and its device center, clarifying that the agency's purpose is to keep unsafe devices off the market while making new devices available as quickly as possible.

And along with the White House, HIMA and the MDMA want to eliminate the FDA's "Reference List." Under this internal policy, as described by several CEOs at the MDMA meeting in May, the agency often prevents a device company from getting approval for any of its new products if, in the past, the company has in any way violated manufacturing protocols. Once a device maker gets on the list, it tends to stay there, even after it resolves its problems and even if it develops completely different products. The administration promises that the agency will deny approval only to specific devices that don't meet agency standards, and not penalize those companies if they have other products in the pipeline.

Beyond these areas of consensus, HIMA and the MDMA take substantially different approaches on both the strategy and tactics of other FDA reforms. One contentious issue is "third party" approval of devices. Both groups oppose an administration plan that would impose "user fees" on companies that want to speed up the approval of new devices. HIMA would streamline the agency's device center, limiting its functions to reviewing devices and enforcing regulations; it would allow outside organizations to apply for FDA certification to review new devices. The MDMA, by contrast, would relocate the center as an independent part of the Public Health Service and completely privatize device approvals using independent outside reviewers.

In addition, both groups oppose the requirement that causes the biggest delay in device approvals: the FDA's demand that devices be regulated under the same "safety" and "effectiveness" standards as drugs. But the MDMA proposes changing the definition of "effectiveness" to encompass no more than truth in labeling. Under today's FDA standards, a device is considered to be "effective" only when, in the agency's judgment, it works as well as or better than other products on the market; the MDMA argues instead that a device is "effective" when it does what it says it will do. As long as devices are safe, the MDMA believes that doctors and patients, rather than the FDA, should decide which ones to use.

The MDMA spelled out its reforms in a 22-page blueprint published by the National Medical Device Coalition, an ad-hoc group of 10 national and regional device associations, representing large and small companies. The coalition shares one goal: to completely redesign the FDA's device center. The members include manufacturers of in-vitro diagnostics, dental implants, and contact lenses; the American Electronics Association; and the MDMA. Unlike HIMA, which hasn't reached far beyond its members to promote its reforms, the device coalition is actively approaching patient-advocacy groups and physicians associations to drum up grass-roots support for their legislative agenda.

The MDMA's approach appears to be working. Barton praised the blueprint at the MDMA meeting. And freshman Sen. Rod Grams (R-Minn.) chose that same gathering to announce the formation of the Senate Medical Technology Caucus, which will concentrate on FDA reforms.

To date, no one has drafted comprehensive FDA legislation. Barton will hold hearings throughout the summer, saying that Congress won't have time to concentrate on FDA reforms until the budget is passed. Bills do exist in both houses to repeal export controls, but not much more is out there yet.

Meanwhile, medical manufacturers have to hope the FDA will sway with the political breezes. Industry and advocacy groups are pushing devices the FDA hasn't yet approved as "poster children" for reform: the Ambu CardioPump, a CPR device that is available in almost every country but the United States; the Canadian-produced Inventive Products Sensor Pad, a 9-year-old breast-cancer diagnostic device which consists of two sheets of plastic with silicone inside that greatly enhances the ability of women to detect lumps in their breasts; and the "bipolar" shoulder implant, developed by Richmond orthopedic surgeon Richard Worland in 1990. Ten countries approved Worland's implant in less than two months, but the FDA still hasn't approved it here, four years after Worland applied for approval. Ironically, Worland suffers from rheumatoid arthritis, needs a shoulder replacement, and may have to go to England to get his own device implanted.

And then there's Mark White, one of 50 device-making CEOs the MDMA flew into Washington for meetings with legislators before the trade group's annual meeting. White, an emergency-room physician in Indianapolis, had designed and produced a quick, safe, one-handed method for physicians to recap needles and remove them from syringes after they've injected their patients—a real help to a harried doctor. White began producing his "cap cards," which are about as big as a credit card and twice as thick, after complying with Occupational Safety and Health Administration guidelines established in 1988. While not a breakthrough life-saving device like, say, a heart valve, the cap card quickly found a market. Drug companies and medical suppliers started ordering the cards in bulk, using them as an advertising vehicle, and giving them to physicians.

Glaxo Pharmaceutical was ready to place an order for the cards. First, however, it asked to see a copy of White's "510(k)," the approval form the FDA requires before a medical device can be sold. White had sold cap cards before and considered them safety devices subject to OSHA regulations, not medical devices under the purview of the FDA. He had never submitted a 510(k) before, and says one of his customers told him to forget about the potential Glaxo account—the hassle of dealing with the FDA would cost far more than he would receive from the pharmaceutical giant.

"I should have listened to him," White says. Instead, in July 1993 he submitted a 510(k) to the agency. And that's when Mark White's troubles began.

White says his cap card should be "what you'd consider a Class I no-brainer"—a device that, like a tongue depressor or bed pan, poses no threat to the health of the patient or doctor if used as intended. But the cap card is used to recap needles, and an inadvertent needle stick could transmit hepatitis or the AIDS virus. The FDA thus ruled the cap card a Class III device, whose use is potentially as life-threatening or life-sustaining as an artificial lung or a dialysis machine.

"They turned my 510(k) into a full-blown approval process," White says. Even though the FDA is supposed to approve devices within 90 days of the submission of an adequate 510(k), 22 months from the time he submitted his application, White still hasn't gotten approval.

After spending more than $30,000 in a tug-of-war with FDA reviewers, White came to Washington for the MDMA meeting. Bruce Burlington, head of the agency's device center, had just addressed the group and told them how his agency was becoming more flexible and cooperative. White met Burlington in the hall, and showed him the cap card.

"Dr. Burlington told me, 'This is pretty neat,'" White says. "I asked him why his center considered it a Class III device. He didn't look too happy then."

Rick Henderson ([e-mail]) is Washington editor of REASON.