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Abstract

Sometimes drug innovation seems to happen in reverse. Patients enjoy a treatment for years even though the treatment has not been approved by the FDA or proven safe and effective to the FDA’s standards. (Sometimes this happens because the FDA has declined to take enforcement action.) The agency encourages companies to perform the work necessary to satisfy the United States “gold standard” for new drug approval, however, by promising exclusivity in the marketplace. When a company does this work, at considerable expense, the results are predictable. The new drug is expensive, and patients and payers (and sometimes policymakers) are outraged. To them, it seems like nothing more than a sudden and significant price increase in a drug that was already widely available.

This reverse sequence happens regularly. Doctors all over the country prescribe medicines for a variety of ailments, not realizing the medicines are supposed to be approved by the FDA—but have not been. Every time a company finally does the research that the FDA requires and enjoys the reward of exclusivity in the marketplace, the public cries foul. Today doctors administer fecal microbiota therapy, using an unapproved stool preparation that has been shipped by a company in Massachusetts. But companies are studying new drugs based on the principle. A recent New York Times article described the looming controversy, quoting doctors and patients who seem to question whether the new drug approval process will be worth its cost.

These scenarios force us to confront basic questions about the cost and the benefit of the new drug framework. This article examines the new drug authorities with fresh eyes, with the added benefit of these unusual scenarios where in a sense the gatekeeping mechanism has failed. Its principal insights are that, in addition to ensuring the production of high quality evidence about treatments in the marketplace, the new drug authorities: (1) ensure the disclosure—and provide a mechanism for close regulation of the disclosure—of that information, and (2) give federal regulators a leash on new drugs, and the companies who market them, through the life cycle of those drugs. It explores the costs of error and delay associated with new drug approval and alternatives that some scholars and policymakers have proposed, ultimately arguing that— though aspects may need tweaking—the new drug approval paradigm is worthwhile.

But these access-before-evidence scenarios bring home the point that the new drug approval standard does not, itself, ensure high quality innovation is performed. Something else must provide the encouragement. It concludes that those who object to temporary exclusivity for new medicines that complete the approval process (and the high prices they make possible for a while) must ask themselves whether they value the new drug framework (including good evidence) as much as they thought.

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