Privatize the FDA, Save a Million Lives

--“Faked X-ray reports. Forged retinal scans. Phony lab tests. Secretly amputated limbs. All done in the name of science when researchers thought that nobody was watching.”

This is, says Charles Seife in a Slate article titled Are Your Medications Safe?, the dark side of modern science. Data are falsified. Study results are tweaked. Biases are unconsciously (or even consciously) used to morph and twist reality into false conclusions.

But this isn’t shocking. Scientists are human. And humans are imperfect beings.

Which is why, of course, we have governments. And almighty regulation!

… Right?

What should shock those who put all their faith in strangers with inordinate amounts of power (see: the government official) is the real insight honed by Charles Seife in his article: “When the FDA finds scientific fraud or misconduct the agency doesn’t notify the public, the medical establishment or even the scientific community that the results of a medical experiment are not to be trusted.”


OK. Let’s back up for a moment. Let’s see how Seife came to this conclusion.

--Meet Charles Seife, a professor at NYU. He leads an investigative reporting class and spends much of his time exposing, he says, “follies, foibles, and fraud in science…”

He also, as a sidenote, worked for the NSA in 1992 in the Director’s Summer Program for math majors. And then, later, for the Department of Defense.

Today, he’s one of the most credible voices for reining in the NSA’s power. But that’s a story for another time.
The FDA…

A couple of years ago, after catching wind that FDA agents were possibly falsifying or covering up data whenever FDA drug approvals turned sour, Seife decided to take a look under the agency’s hood.

“So,” he explained, “as part of my investigative reporting class at New York University, my students and I set out to find out just how bad the problem was — and how much important information the FDA was keeping under wraps.”

It didn’t take long, he said, to discover the FDA was hiding evidence of bad — and even corrupt — science. And it wasn’t just a series of isolated incidents… the evidence turned up everywhere.

The conclusion of the investigation, therefore, was: “For more than a decade the FDA has shown a pattern of burying the details of misconduct. As a result, nobody ever finds out which data are bogus, which experiments are tainted, and which drugs might be on the market under false pretenses.”

Catch that? If not, Seife goes on to leave no room for ambiguity. In no uncertain terms…

The FDA has repeatedly hidden evidence of scientific fraud not just from the public, but also from its most trusted scientific advisors, even as they were deciding whether or not a drug should be allowed on the market. Even a congressional panel investigating a case of fraud regarding a dangerous drugs couldn’t get forthright answers.

It gets better. But we’ll get to that in a moment.

First, this is, by the way, part two of Friday’s missive titled Caveat: How to Get Away With Killing Your Customers (if you missed it, it’s in your inbox).

On Friday, we promised to show you why we believe privatization of the FDA would not only be a vast improvement — but a literal life-saver of millions. And we also mentioned that the corrupted nature of the FDA isn’t the result of a few “bad apples” that need to be weeded out — it’s simply the nature of the beast.

Allow us to explain both points…

--To start, we’ll rewind back to when the FDA first received such an iron glove in the regulation of the pharmaceutical industry. 

This story begins in 1962, when Congress passed the Kefauver-Harris Amendments, which mandated the FDA regulate pharmaceutical companies.

The amendments were a reaction to a sleep drug called thalidomide.
Considered safe as a sleep aid, the drug was widely adopted throughout Europe. Pregnant women soon discovered it staved off morning sickness. So the manufacturer of the drug began marketing the curious side-effect as another benefit.

But there was a problem…

Though thalidomide was safe for adults, it was nothing of the sort for fetuses. Women who had taken the drug within the first couple of months of pregnancy were having children with… missing limbs.


Of course, this was very frightening for everyone. Fortunately for the across-the-ponders, the dangers had been discovered before thalidomide hit U.S. markets. Understandably, the American people wanted to make sure this didn’t happen to them, hence the Kefauver-Harris, which tightened restrictions on drug companies.

The amendments first demanded stringent testing for drugs before they hit the market. Prior to the amendments, you see, drug companies simply passed their information to the FDA and that was usually it. So long as the FDA didn’t object within a specified amount of time, it was OK. No news was good news. Following the amendments, though, someone at the FDA had to sign off on the drug.

Meaning, if the approved drug had side effects, the person who approved it could be held responsible for allowing it into the market. (In theory, of course. In reality, no one person would be held accountable for any mistakes.)

And this is where the problem began.

--Think, for a moment, about what was being asked of the FDA…

The FDA was tasked to approve only drugs which were 100% safe and 100% effective. Since there is no such thing as a 100% safe and 100% effective drug, it was being asked to perform the impossible.

You see, although the story of thalidomide is tragic, Kefauver-Harris wouldn’t have prevented thalidomide from entering the market. Simply because we didn’t know what we didn’t know.

We had no idea that drugs which were safe for adults could be harmful to unborn children. Today, we’re not as naive. Which is why the “Do not consume if pregnant” warning label is so prevalent.

But the new standards made the FDA careful — too careful. And these impossibly high expectations, we submit, created the monster we see today.

But before we get to that, there’s something else…

At passage of the amendments, the FDA was also forced to oversee all manufacturing. Because some manufacturers were forced to halt production and wait for FDA approval, or were judged by arbitrary regulations for which they had no time to prepare, half of the manufacturers at the time were immediately snapped out of business.

And because the Kefauver Amendments were open-ended, the regulations kept piling up. And more and more businesses were put out of business. And more and more potential businesses with the ability to innovate, compete and create new drugs were locked out.

As a result, the number of new “chemical entities” in the market — new drugs — quickly plummeted by about half. And, of course, the prices of pharmaceutical drugs began to rise.

--Then came more unintended consequences. And, as it goes, government intervention beget more government intervention.

First, the drug companies who were actually innovating claimed they weren’t making enough money to stay in business due to all the red tape.

Because of the hurdles to create new drugs, most of the surviving market turned into a copycat machine for already approved drugs. The copycatters, therefore, were cutting into the bottom line of the innovators. In a free market, it would be more lucrative to innovate. In the tethered market (of which we still have), on the other hand, there is more incentive to create new forms of old drugs.

In response, to keep the industry from collapsing, Congress kept having to extend patent laws on drugs. (Although Congress even admitted that 84% of the drug development time were due to regulations.)

And then, of course, the black market started to fill in the gaps.

The most popular example of this was adapted into a movie called The Dallas Buyer’s Club.

Since the FDA took so long to approve an AIDS drug — called AZT — that had been shown to prolong the lives of AIDS patients, a group of activists smuggled it from abroad. They later, to fill the enormous demand in the States, hired black market chemists to create it.

And here’s what’s interesting about this underground operation…

First and foremost, despite having to operate completely underground, it was quite an elaborate performance. Even so, it had great safety records. Those responsible for running the buyer’s clubs kept close track of everything, including patient reactions to AZT and swapped information with other clubs in the nation.

In the process, club members became extremely knowledgeable of the drug and AIDS in general. In turn, they were able to inform newcomers of the risks and help them avoid the common side-effects and make informed decisions. In the end, though, they made it clear: Here are the risks. Should you choose to take the medication, you must take full responsibility. It is at your own risk. (Which, in truth, isn’t everything?)

And the clubs were successful. How successful, you ask? By the time the FDA approved the drug, everyone they could find who would’ve needed it were already resistant to it.

The FDA literally had to wait for new patients to be diagnosed with AIDS to do regulatory testing because everyone with AIDS had already taken the drug!

The ideology behind the “buyer’s club” movement was that individuals have the right to self-medicate with any [expletive deleted] thing they please. At least, that became the ideology.

In reality, the clubs were centered on survival — living to see another day.

The poster boy for the movement, Ron Woodroof, didn’t hesitate to admit that forming the buyer’s club was an act of “enlightened self-interest.” He sold the medication to others so he could afford to buy the medication for himself and stay alive.

But that doesn’t, of course, make the underlying ideology any less important. What people — especially dying people — choose to put in their bodies is none of the government’s business.

Ultimately, though, the buyer’s clubs proved that private individuals, working with medical professionals, can successfully manufacture, distribute and test new therapies quickly and effectively. And do so safely with minimal side effects. And, oh yeah, without the help of the government.

--That’s one part of the story. The other part is why centralized regulatory agencies — especially in a place as large as the United States — simply don’t work.

In the FDA’s case, the cost of regulating the pharmaceutical industry isn’t worth the payoff. Nearly a million people have died in the past decade because of pharmaceutical drugs. Why? Because the FDA’s approval, we submit, gives the medical community — and its patients — false confidence in the drugs in the market. And, let’s not forget, the FDA regulations have created an industry of protectionism over innovation.

FDA regulations decimated at least half of the industry’s capacity for innovation and skyrocketed the costs of existing drugs. Moreover, millions of lives have been lost in the past half-century because the life-saving drugs people needed were tied up in red tape.

Tomorrow, we’ll talk about why corruption, negligence and incompetence is essentially inevitable in any centralized regulatory agency.

And we’ll also show you what a privatized pharmaceutical regulatory system would look like. And why it would be lightyears ahead of what we have now.

Until then,

Chris Campbell
Managing editor, Laissez Faire Today

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Chris Campbell

Written By Chris Campbell

Chris Campbell is the Managing editor of Laissez Faire Today. Before joining Agora Financial, he was a researcher and contributor to