A Junk Science Principle and a Proposal for FDA Reform
By Thomas R. DeGregori
Posted: Monday, January 1, 2001

ARTICLES
Publication Date: January 1, 2001

Economists refer to investigational inadequacy that allows the entrance of a harmful product into the marketplace as a type 1 error, and to the unnecessary delay (or prohibition) of such entry of a beneficial product as a type 2 error. They are trained to be continually on the lookout for opportunity costs. In the case of a type 2 error, the opportunity cost would consist of the potential benefits of getting the product into the marketplace without useless delay.

The job of regulators is to appraise the risks of using particular products or engaging in specific activities and then to try to manage those risks, as by limiting product use or mandating special labels. Regulatory agencies and the public give short shrift to opportunity costs in a sociopolitical climate marked by an inclination toward the precautionary principle and toward zero tolerance concerning innovative products and processes. But caution concerning the introduction of such products that does not factor in ample consideration of the potential consequences of non-introduction—say, of a unique and likely pharmaceutical for a refractory disease—is hostile to society.

In the mid to late 1980s, both the medical community and the public (particularly individuals who had tested positive for HIV) considered HIV seropositivity the equivalent of a death sentence. With each announcement of any discovery that might be useful in the treatment of HIV infection came the qualification that only after 2 to 5 years of investigation might patients with HIV benefit from the discovery. Such news brought indignant responses from persons with AIDS, including newspaper ads through which victims indicated willingness to become guinea pigs irrespective of the risks.

Irregular Regulation

Perhaps no American regulatory agency has been more perversely cautious than the Food and Drug Administration (FDA). And no critic of the practices of such agencies has been more trenchant in his criticisms than Hoover Institution scholar Henry I. Miller, M.D., a molecular biologist with long experience as a federal regulator. In recent years Miller has focused on various regulation issues, including those of human gene therapy and gene-spliced (genetically modified, or GM) crops and foods. Miller condemned the National Research Council (NRC) report Genetically Modified Pest-Protected Plants, released in April 2000. The fine print of this report conveyed what had been found in other NRC studies: that gene splicing is just a refinement of traditional techniques, and that one would not reasonably expect significant harm from the introduction of GM food plants—indeed, that such plants are more predictable, and thus are safer, than their conventional counterparts. Yet the committee responsible for the report agreed to an approach whose regulations for gene-spliced products are more stringent than its regulations for their non-gene-spliced counterparts.

Caution concerning the introduction of [innovative] products that does not factor in ample consideration of the potential consequences of non-introduction . . . is hostile to society.

As Miller points out, regulation should be commensurate with risk. The extremist environmentalists are advocating biotech regulation inversely proportional to risk. The major purposes of complying with their demands are: (1) to appease persons to whom nothing less than an outright permanent ban on GM products would be acceptable, and (2) to make GM foods more marketable by allaying consumer fears about such products. But to allay such fears it would be far better to debunk the rhetoric of the extremists than to comply with their demands little by little.

Miller's Proposal

The pace of inspecting new drugs of certain kinds can be a life-and-death matter. Current incentives promote misguided caution, and thus delay, in the investigating of new drugs. Because Americans have long put up with bureaucratic delays, U.S. regulators are rarely, if ever, called to task regarding unnecessary, or even counterproductive, delays. But when FDA approval of a drug after a lengthy, rigorous process causes unexpected harm, the participant regulators are excoriated, and their careers can be impaired. Because this difference is not lost on regulators, they go to great lengths to avoid type 1 errors, at the expense of committing type 2 errors. As Miller indicates, any workable proposal for regulative reform must address the dissimilarity between the potential occupational consequences of committing type 1 errors and those of committing type 2 errors.

In To America's Health: A Proposal to Reform the Food and Drug Administration (Hoover Institution Press, 2000), Miller argues the need for fundamental reform of the FDA and outlines a proposal for such reform. The FDA does not perform drug experiments. Rather, it sets the ground rules for such testing; evaluates data from such studies; and certifies or withholds certification of drugs on that basis. Miller has proposed that the FDA turn from a certifier of drugs to a certifier of drug certifiers. Ac-cording to his plan, private FDA-certified bodies—which he calls "drug certifying bodies," or "DCBs"—would oversee drug development. More specifically, the DCBs would certify, or withhold certification of, steps in this process and would recommend particular drugs to the FDA for its approval. The FDA would continue to set criteria for experimentation and for drug safety and efficacy; would seek to ensure that DCBs comply with those criteria; and, ultimately, would continue to give, re-fuse, or rescind permission to market any particular drug (though refusal or rescindment would require the FDA's rebutting the DCB's recommendation for approval). Such has been tried successfully in other countries.

Competition among DCBs would expedite approvals of drugs the FDA would otherwise have approved. Deterrents to inadequate (e.g., biased) DCB reviews would include the DCBs' need to retain FDA certification, the advantage of having a reputation for reliability, and the possibility of incurring a lawsuit.

The extremist environmentalists are advocating biotech regulation inversely proportional to risk.

The Bottom Line

The United States introduced many of the medical wonders of the last century, but it has also created a system for the regulation of drug development that operates slowly and is extremely expensive. It is high time for reform of the sort Henry Miller has proposed.

ACSH advisor Thomas R. DeGregori, Ph.D., is a professor of economics at the University of Houston, in Houston, Texas. His Web homepage is http://www.uh.edu/~trdegreg. Thomas DeGregori is the author of Bountiful Harvest: Technology, Food Safety, and the Environment.
 
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opportunity cost: That which is surrendered (or which would be surrendered)—an advantage, a potential advantage, or the principal advantage—because of choosing an alternative. Opportunity costs are assessed as estimates of the cost of passing up the option considered the next best potential use of the same resources.

precautionary principle (precautionary approach, principle of precautionary action): The proposition according to which one should try to prevent, eliminate, control, or abate any possible pathogenic or adverse environmental effects of human actions even when a causal relationship has not been determined.

zero tolerance: Policies according to which (1) the circumstances of improper behavior are not taken into consideration and/or (2) no crime is overlooked.

(From Priorities, Vol. 13, No. 1)