In search of a winner: the hidden costs of FDA deregulation

For years politicians, and especially congressional Republicans, have argued for fewer regulations on industry, asserting that a reduction in restrictions would increase the pace of business deals, which would in turn encourage job growth, lift the economy, and give the U.S. an international reputation for ease of doing business. It is clear, however, that despite the projections of the Trump Administration and conservative policy wonks, the agenda being proposed, which includes “simplification” of the FDA’s approval process for drugs and devices, carries hidden costs that have not been clarified.

What is being broadly suggested would affect one or more important steps in the approval process, be it preclinical testing, clinical testing or adverse event reporting. It amounts to a process that would result in a lower bar for efficacy, a reduction in the number of patients required, and less toxicological studies required. Obviously, we don’t as yet know what changes will be in effect, but they will most likely be in one of those categories, potentially making approved drugs less safe and less efficacious.

Politics, the public, and science Pressure in Washington to change how drugs are approved comes from companies and constituents alike. Politicians like to tell the story of patients removed from successful study drugs, or not receiving a possible life changing treatment due to delays in approval. Patients and their families, meanwhile often clamor for fast approval of experimental drugs that show promise. As we know, there are certain processes in place, such as “fast track” and “orphan” drugs, for specific disease and drug cases, which make exceptions to the rules and are in place for a subset of patients with rare diseases who have out of options.

The problem we face is that any widespread change in regulatory policy will affect drug innovations with a far wider reach than the orphan drugs which have already been approved. Generally, it seems clear that the public at large is in favor of more drugs and faster approvals, but regulators need to have a longer view of history. There have been far too many public health disasters to permit a looser policy without clear and transparent guidelines. Some examples of such disasters from the not-so-immediate past, of approved drugs that have caused serious health reactions for patients, including death are not just footnotes from that history: POSICOR (mibefradil), BAYCOL (cerivastin), VIOXX (rofecoxib) and MERIDIA (sibutramine).

A decrease in regulations will affect both small and large companies If certain regulations are lifted, or if regulatory policy becomes looser, how will this affect life science companies? For starters, ironically, having fewer regulations will put added pressure on each company’s regulatory and development departments, as they determine the fastest path to market. Small and mid-size healthcare companies might get a leg up because fewer regulations will save them a few dollars in development costs.

A faster regulatory process will affect the big players in the industry by increasing the workload on their regulatory departments as they figure out how to protect their companies and stay competitive in an ecosystem with fewer regulations.

Healthcare Insurance Companies will drive up prices due to risk, while pharma companies will be the ones left holding the bag and the FDA could be put at the center of the circle of blame In theory, a drop in regulations could see a drop in drug development costs and drug pricing, but there are, as they say, no guarantees. Most of today’s drug pricing is determined not by the company, but by the payer; i.e., health insurance companies. With less regulated drug development, health insurance companies may rightly perceive greater risk, which may, in turn, drive an increase in pricing to accommodate the priced-in risk dictated by the insurance industry. In other words, the new model under fewer regulations will have to include risk, which will add yet more cost to the product, and could push new therapies, medicines and procedures further out of American consumers’ financial reach.

Meanwhile, in the event that a VIOXX-type disaster occurs, the insurance company is likely to pass the buck to the company, rendering the latter liable. And companies in turn, may pass the buck to the FDA, the agency responsible for approving the drug in the first place.

So the tension is palpable. Policy makers want to be able to take credit for drugs approved quickly.  Meanwhile, the FDA is, understandably, risk averse and seeks to maintain a robust safety/toxicology regime. Neither side wants to be held responsible for approving the next retracted drug.

Innovation could stall and consumers will end up with the short stick

Ironically, fewer regulations could mean a market where companies play it safe on novel developments. We will probably see the repackaging of “me too drugs” (generics), and the repurposing of drugs already on the market that are marketed for other ailments.

When it costs well over a billion dollars to get a drug to market, the added risk of the drug being a public health hazard or, in the best case scenario, the drug being a dud, is not very attractive to companies with a bottom line. Without the protection of regulations, companies are looking at the kind of class action lawsuits that may well drive many of them into bankruptcy. For this reason, a lot of the riskier and maybe more innovative projects will be halted and more “softballs” - drugs that have a mild safety profile or involve repurposing previous compounds, etc. – may end up being pursued.

Another consideration that adds concern about looser regulation or faster approvals (which sometimes do not mean the same thing) is the industry’s increase in biologic and biosimilar projects. We are entering a world in pharma that could be seeing the end of the small molecule drug due to shorter patent life and exclusivity, encroaching generics, off-target toxicity and poor ADME profiles. While biologics are better targeted and more effective, they have major immune response risks. Biosimilars require safety testing that goes well beyond the basis for generic drug regulation due to many of these complications. Would fewer regulations push innovative drugs to the market before their time, or would companies abandon such endeavors, due to heightened risk resulting from lack of regulation? The outcome for consumers very well may be that we do not see more drugs, but fewer.

The GLP and GMP practices for manufacturing these larger drugs require very stringent regulations to avoid serious adverse events. If FDA loosens regulations just as the influx of biologic applications is skyrocketing, the potential danger to patients deeply troubling.

Change will take time The one thing to remember is that it does take a tremendous amount of effort and coordination between the different branches of government to decrease FDA regulations. It is unlikely that we would see any major changes in the next few years. Small changes will occur that impact the FDA, companies, and the public in different ways. Significant regulatory changes in the direction of looser regulation will take a much longer time.

But the continued calls for a new regulatory regime from consumers, public officials, business lobbies, including small, innovative companies, suggest that change is coming and it’s promising to be a bumpy ride.

Charles Caldwell is a bioscience professional with a multi-faceted career in the industry that includes working with incubators, running a successful startup and serving on science advisory boards. He also received a master’s degree in regulatory science and is currently a PhD candidate at the USC School of Pharmacy.