FDA’s Bad Medicine

How the Dispersed Knowledge Problem Affects Drug Safety Analysis

Full study available in pdf

The Food and Drug Administration’s (FDA) regulation of drugs and medical devices has long been characterized by three major problems: excessively long approval times, excessive costs, and flawed decision making. The last includes not only approving drugs that are later found to have serious side effects, but also failing to approve useful drugs, and inappropriately removing drugs from the market or restricting the use of approved drugs during post-approval surveillance.

Numerous reports over the past 30 years have found problems with FDA’s approval process and post-market drug surveillance programs, and experts have recommended changes to both. Nevertheless, the problems persist. The agency’s judgment and its ability to learn from its own experience or from outside advisors are compromised by its organizational structure and its value
system. These problems are compounded by grandstanding politicians, plaintiff attorneys, crusading journalists, and “consumer” groups. Ultimately, like all central planners, FDA faces the fundamental social problems of interest or bias and of dispersed knowledge.

FDA’s bias results from its organizational structure as an arm of the federal government, which makes the agency inherently subject to political pressure. If it approves a drug that later is found to be unsafe in any way, the news media, the public, and politicians blame FDA for the error. But if the agency delays when reviewing applications, the patients who need innovative new treatments are worse off, and some may even die waiting for FDA to act.

In both cases, people are hurt, but FDA is only criticized for approving medicines viewed as “too risky”—never for keeping beneficial ones off the market. As a result, the agency has developed an entrenched, progressively more risk-averse culture, so that it now requires longer clinical
trials, stricter post-marketing monitoring, and quicker drug withdrawals. All of these decrease patient options, contribute to raising drug prices, and lead to unnecessary suffering and death.

Even if that bias problem could be resolved, FDA still faces the problem of dispersed knowledge. Every day, thousands of physicians and patients make myriad choices from available drug options. They take into account differences in effectiveness, side effects, and drug interactions for
each individual patient. FDA scientists may know a lot about the drugs they evaluate and their average effects on thousands of users, but they know nothing about the individualized physiology of each patient. On the other hand, intensively trained clinical physicians, who do have knowledge of individual patients, are best able to advise them if a drug is appropriate.

FDA’s regulatory authority operates under a one-size-fits-all model, but every patient is different. This means that every decision to approve or withhold approval for drugs or medical devices will necessarily be seen as reckless by some patients, and too risk-averse by others. Of course, only when FDA keeps products off the market is decision-making power taken out of the hands of doctors and their patients. Those who have concerns about approved drugs or devices need not use them.

This paper takes a close look at FDA’s knowledge problem, and the effects it has had on its decision making regarding drug safety. It concludes that a market-based approach to drug safety information, combined with technological advances in diagnostic science, will lead to a more vibrant medical marketplace—and better outcomes for patients.