Its amazing how much a little thing like a congressional election has changed the direction of the most powerful federal regulatory agency, the Food and Drug Administration. For years FDA Commissioner David Kessler and his lieutenants worked tirelessly to increase the agency's powers. Now, suddenly, they are proposing reforms that reduce their regulatory reach. What's going on?
Since Kessler's appointment in late 1990, the FDA has imposed extraordinary burdens on the drug and medical device industries, with dire consequences for the patients served by these industries. For instance, in fiscal years 1991 to 1994 the agency approved, on average, only half as many new medical devices annually as it had in the preceding eight years. Waiting times quadrupled for marketing approval for new devices and doubled for improved versions of old devices. The FDA abruptly doubled the number of citations of manufacturers for violating "good manufacturing practice" rules -- mostly paperwork requirements.
By 1994 manufacturers, health care providers, and patients were fed up with the FDA's excessive, abusive regulation. Their complaints got a receptive hearing from the Republicans. The new Speaker of the House, Newt Gingrich, called Kessler "a thug and a bully" and described the FDA as "bloated and Stalinistic." In recent hearings, several of the new Republican committee chairmen have made it plain that, unlike their Democratic predecessors, they will focus on FDA abuses rather than alleged imperfections in industry.
In April the FDA itself announced an impressive-looking list of reforms. It proposes to exempt up to 125 categories of low-risk medical devices from premarket review; to conduct a pilot program in which marketing applications for certain devices would be reviewed by outside organizations; to ease export restrictions on products unapproved for sale in the United States; to issue licenses for the manufacture of genetically engineered drugs before the manufacturer has constructed a full-scale plant; and to make several other changes in its rules and procedures.
All of these changes are fine as far as they go, but they do not go very far. After the 125 exemptions, thousands of types of devices, including all the really important ones, would remain subject to lengthy and unpredictable premarket review. It never made sense to require exhaustive premarket reviews of such simple devices as oxygen masks and syringes in the first place. Nor was it appropriate to require FDA approval for the export of domestically unapproved products that foreigners want to buy.
The proposed pilot program, not slated to start until October, would involve only 100 to 400 applications (out of more than 6,000 annually) in a handful of low-risk product categories and leave final authority in the hands of the FDA. While requiring payments from participating firms, it would put genuine privatization on hold while wasting two years studying a question whose answer is already obvious -- yes, private organizations do operate more efficiently than government bureaus.
FDA's proposed changes amount to mere gestures. They are strategic concessions by which FDA surrenders a few ounces of regulatory power while retaining a ton.
The danger is that lobbyists for the drug and device companies will be so happy to have the tide turned in their favor that they will settle for token changes like those proposed by the FDA. Already some industry representatives have condemned more demanding FDA critics as extremists. Alan Magazine, president of the Health Industry Manufacturers Association, told a congressional committee, "We are all for a strong regulatory process."
Fortunately, FDA critics in Congress seem determined to institute real reform. Congressmen Thomas Bliley (VA) and Joe Barton (TX) and Senator Nancy Kassebaum (KS), whose committees will conduct hearings on the FDA, have indicated that they will not settle for cosmetic changes. Sen. Kassebaum told Kessler that the agency "must come to understand and believe that 'consumer protection' means not only protection of consumers from unsafe and ineffective products, but also ensuring that individuals have timely access to state-of-the-art improvements and breakthroughs" in health care technology.
Real reform requires much more than getting rid of the power-hungry Kessler. A new commissioner, confronting the same institutional incentives and constraints, would not behave much differently. FDA mistakes, excesses, and abuses are systemic. The old system must go.
Administrative changes by the FDA will not suffice. What the agency stops doing now, it can resume doing later; and it will unless the law is changed. The FDA could never have abused its powers so grossly if Congress had not given it so much discretionary authority. Real reform requires that Congress drastically curtail the agency's legislative authority.
Robert Higgs is Senior Fellow in Political Economy at The Independent Institute and Editor at Large of the Institutes quarterly journal The Independent Review. He received his Ph.D. in economics from Johns Hopkins University, and he has taught at the University of Washington, Lafayette College, Seattle University, and the University of Economics, Prague. He has been a visiting scholar at Oxford University and Stanford University, and a fellow for the Hoover Institution and the National Science Foundation. He is the author of many books, including Depression, War, and Cold War.
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