Think about telemedicine and a personal health monitoring ecosystem built around smartphones and wearables:

In-Depth: What Texas's landmark telemedicine legislation means for the industry and the nation

By Jonah Comstock
May 26, 2017

In the State of Texas, a major piece of telemedicine legislation is sitting on Governor Greg Abbott’s desk. Known as Senate Bill 1107 and House Bill 2697, the bill abolishes the requirement that patient-physician relationships be established with an in-person visit before telemedicine can be used.

Texas is the final state of 50 to abolish this requirement, so the bill's passage will allow national direct-to-consumer telemedicine companies like Teladoc, American Well, Doctor on Demand, and MD Live to extend their video-based operations nationwide. Technically, there are still limitations in Arkansas and Idaho, as those states still have restrictions on phone call-only telemedicine.

As well as opening up this market and bringing telemedicine services to a large, geographically distributed population that could greatly benefit from them, this bill also signals the end of a more than two-year legal battle between Teladoc and the Texas Medical Board that culminated in what might have been a landmark antitrust case.

Read the rest here.

An article in the Wall Street Journal discusses how uncertainty surrounding the future of the ACA is creating challenges for health tech startups. One of the companies we profiled recently, Pillsy, is said to be focusing more on selling its products directly to consumers -- online and through pharmacies -- rather than through healthcare providers.

Other startups are finding it harder to attract funding. Perhaps that's because too many healthcare tech startups and healthcare tech investors are focused on opportunities they believe are created by healthcare laws and regulations. If your business plan is designed to exploit laws and/or regulations, then you risk disruption by new policies and legislation. Plus, you tend to compete by lobbying government officials and agencies. The opportunities created by laws and regulations could be called artificial markets as they are man-made and imposed by government rather than naturally occurring.

In contrast, companies that design their business plans around customer needs and direct marketing are less dependent on government decisions over which they may have little influence. They compete by developing products that are responsive to customers' needs and expectations. These natural markets can be served in many different ways. It's up to the creativity and perseverance of the health tech startups to transform raw customer needs into ongoing, profitable businesses.

So which is preferable?

Betsy McCaughey writes at Real Clear Politics about health insurance for people with pre-existing conditions. Obamacare was designed to pressure anyone not in a group plan to buy a plan on the individual market and pay pre-existing condition prices. It makes more sense, and is fairer, to cover people with pre-existing conditions separately. Before the ACA was passed, about two-thirds of the states had high-risk health insurance pools that used a combination of government and insurance company subsidies to ensure affordable rates.

Obamacare essentially penalizes healthy people who are self-employed, work for small businesses, or work less than full-time.

Excerpt:

The new House bill sets up a fairer way: a $130 billion pot of money, federally funded, to pay for people with pre-existing conditions. The entire nation chips in, not just people stuck in the individual market.

Under Obamacare, the healthy and the chronically ill paid the same premiums. It's called community pricing. Healthy people would never meet their sky-high deductibles. Instead the premiums extorted from them would be used to cover huge medical bills for the chronically ill, who consume 10 times as much medical care.

In fact, Aetna CEO Mark Bertolini reports that less than 5 percent of Obamacare enrollees consume over half of the health care.

Most healthy people saw that being charged the same as these sick people was fundamentally unfair and refused to sign up.

Read the entire article here.

A short but sweet commentary by Heritage Foundation policy analyst Aylene Senger gives eight reasons why Obamacare should be repealed. I can think of more -- though the first reason Senger offers is more than sufficient:

1. Costs
2. Choice and Competition
3. Exchange Enrollment
4. Exchange Websites
5. If You Like Your Plan, but the Government Doesn’t, You Can’t Keep It
6. Collapsed Co-Op Program
7. Dumping Millions Into Medicaid
8. Restricted Access to Providers

Beginning June 20, 2016, the Food Safety and Inspection Service (FSIS) under the U.S. Department of Agriculture will require establishments that grind raw beef to keep records (for at least one year) including "supplier lot numbers and production dates"; "the date and time each lot of raw ground beef product is produced": and "the date and time when grinding equipment and other related food-contact surfaces are cleaned and sanitized." The stated purpose is to more quickly stop foodborne illness outbreaks. FSIS investigators will check retail establishments to ensure they are in compliance. It seems a safe bet that the price of ground beef will increase as a result of the new rule.

SaniTrace, LLC, a startup based in Creve Coeur, Missouri, has developed a logging and labeling solution to ease compliance and provide notifications to consumers.

Consumers can be automatically notified if the meat they purchased is recalled -- provided that they scan the QR code with their smartphone's camera or text the identifier number from the label to a local phone number.

The final rule can be found here. The record-keeping rule applies to about 70,000 establishments -- most of them small businesses.

My recent OpEd at The Daily Caller:

Believe it or not, there is a battle underway in the U.S. over whether terminally ill patients who have exhausted all government-approved treatments have the right to try experimental drugs. You might think that in a country founded on the principles of limited government and individual rights, citizens would be free to choose any health remedy in a last-ditch effort to save their own lives. But that’s not the way it is: Congress gave the Food and Drug Administration (FDA) exclusive power to approve drugs, and the FDA believes that even people who are dying must be protected from unproven therapies.

What makes this all the more outrageous is that while terminally ill patients don’t have the right to take experimental drugs to save their lives, they do have the right to take drugs to end their lives. The United States Supreme Court upheld a state law permitting physician-assisted suicide in 2006, and it is now legal in four states.

Heartbreaking stories about dying patients pleading for access to promising but not-yet-approved drugs forced the FDA to act years ago. The FDA created an “expanded access” program in 1987 enabling patients to apply for special permission to try investigational drugs. But there were complaints that the FDA wasn’t giving all patients a fair hearing. That led to the Food and Drug Administration Modernization Act of 1997 establishing more formal expanded access program rules.

Nearly 20 years later, terminally ill patients and their physicians must still jump through multiple hoops with no reliable way of predicting the outcome. To have a chance, the patient must obtain the approval of a physician and an institutional review board (IRB). The FDA estimates it takes physicians on average 100 hours to complete the forms. (The FDA has been showing a draft form that it says can be completed in just 45 minutes since February 2015, but more than one year later the miracle form still hasn’t been released.) The IRB is a local committee established to protect research subjects from physical and psychological harm. Even if the physician and IRB recommend approving the patient’s application, the FDA reserves the right to say “no.”

The deck is clearly stacked against dying patients who must find physicians willing to work many extra hours with no guarantee of success.

The FDA points to the expanded access program as proof that it is compassionate. But for some patients the program has failed spectacularly. Kianna Karnes, a mother of four children suffering from kidney cancer, requested access to two promising drugs. She didn’t qualify to participate in clinical trials. Her family lobbied on her behalf for months and finally the FDA approved her application. But it was too late: Kianna Karnes died later that day. While the FDA’s defenders complain that activists are giving terminally ill patients false hope, both of the drugs that Karnes sought access to were eventually approved by the FDA for treating kidney cancer.

How did a federal agency acquire the power to decide who lives and who dies? The FDA is an ominous example of how a government agency can gradually accumulate the power to deprive citizens of their rights and hobble entire industries.

Over most of U.S. history, citizens were free to take whatever medicines they wished. Ironically, it wasn’t until effective and often life-saving drugs appeared in the 20th century that strict regulations were introduced.

Many federal drug regulations were created in response to widely reported acts of negligence or wrongdoing. Concerns about the safety of preservatives and other additives led to the Pure Food and Drug Act of 1906. During the mid-1930s, the S.E. Massengill Company introduced a sulfa drug in liquid form. The company tested the drug for safety but forgot to test the solvent. More than 100 patients died from kidney failure. That prompted Congress to pass the Food, Drug, and Cosmetic Act of 1938, a law requiring government approval of new drugs and medical devices. A series of amendments and additional laws expanded the FDA’s power. The 1951 Durham-Humphrey amendment gave the FDA the power to require prescriptions for certain drugs.

The 1962 Kefauver Harris Amendment was the turning point, however. Enacted in response to the thalidomide tragedy in Europe, it required manufacturers to prove not only that new drugs are safe, but that they are effective. This amendment is responsible for adding years of delays and $billions in cost to life-saving drugs. Worse, it led to the misguided notion that if a new drug only cures 5 percent of patients, then it should be denied approval.

Recently, terminally ill patients and their families have been fighting back. “Right to try” laws have been passed in 25 states. These laws have many of the same requirements as the FDA’s expanded access program. The biggest difference is that a state government rather than the FDA is in charge. Right to try laws work because state governments are less conflicted about granting dying patients access to drugs that have not yet been approved, and the FDA is reluctant to challenge states’ rights.

Why is this end run necessary? The FDA has a habit of implementing reforms and creating new programs with one hand, while obstructing and delaying with the other. Darcy Olsen, President of the Goldwater Institute and author of The Right to Try, likens the FDA’s behavior to the famous gag in the Peanuts comic strip in which Lucy holds a football for Charlie Brown to kick, but pulls it away at the very last instant, leaving Charlie sprawled on the ground.

The FDA claims that it “fast tracks” approval of promising drugs. However, that’s misleading: The FDA measures approval from the time that a new drug application (NDA) is submitted, but the NDA is actually the last step in a lengthy process. Companies don’t submit NDAs until the FDA tells them that they’ve met all research, development, and clinical trial requirements. For instance, the FDA claims that it took just six months and 24 days to approve Beleodaq (for treating peripheral T-cell lymphoma), but it actually took over nine years.

According to President Obama’s Council of Advisors on Science and Technology, it takes 14 years to bring a new drug to market in the U.S. — up from eight years in the 1960s. Right to try laws passed by states enable new drugs to start saving patients’ lives much sooner.

A compelling case can be made that some drugs and medical devices should be closely monitored for safety, quality, and accurate labels. Whether federal regulations or industry self-regulation works best is a debate for another time. But one thing is clear: the effectiveness of a medical therapy may vary from one patient to another, and in no case should a government agency’s assessment of effectiveness be allowed to deprive patients, companies, and entire industries of their rights.

Ira Brodsky is the author of The History & Future of Medical Technology.

Blood testing startup Theranos is in trouble with the FDA. As I pointed out in this essay at American Thinker, it is hypocritical (and cynical) to ask the FDA to relax regulations that get in your way while advocating new regulations to thwart your competitors:

Most conservatives believe that mountains of government regulations drive up prices, discourage innovation, and crush small businesses. So why aren’t businesses united in their opposition to oppressive regulations? Because many have discovered that they can use regulations as a weapon to fend off competition.

Consider the example of Elizabeth Holmes, the founder and CEO of Theranos, a Silicon Valley health care technology firm. Ms. Holmes boldly proposes that consumers should be able to get diagnostic blood tests without waiting for prescriptions from their doctors (How to Usher in a New Era of Preventive Health Care, Wall Street Journal, July 28, 2015). That’s an excellent idea for at least three reasons: the earlier medical conditions are detected the easier they are to treat, blood tests (like those developed by Theranos) that use a fingerstick rather than poking a vein with a needle are extremely safe, and eliminating unnecessary regulations benefits both consumers and entrepreneurs.

However, in the very same guest column Ms. Holmes recommends that all lab tests should be reviewed by the Food and Drug Administration (FDA). While Ms. Holmes wants to make it easy for consumers and partners to do business with Theranos, she wants to make it hard for anyone to compete with Theranos, calling for regulations that protect her company’s head start.

Theranos was founded to make blood tests simpler, less expensive, and more accessible. For example, Theranos has partnered with Walgreens, the largest drugstore chain in the United States, to make blood tests available at neighborhood stores during evenings and weekends (when most outpatient hospital labs are closed).

Traditional blood tests have drawbacks: they take too much time, are expensive, and there is a small but real risk of injury when blood is drawn from a vein using a needle. Requiring doctor’s prescriptions may avoid unnecessary blood tests, but it also prevents patients from being proactive. As Ms. Holmes explains, “…many of us get lab tests only when we’re showing symptoms, which means we may already be sick. And too many of us find out we’re sick when it’s too late to change the course of these conditions.”

Ms. Holmes understands that blood tests have consequences. She points out that a doctor may recommend the patient take medication, undergo a medical procedure, or be admitted to the hospital based on the results. Weighing the benefits against the risks, Ms. Holmes concludes that we should treat consumers like intelligent and responsible adults, letting them exercise their own judgement about when to get blood tests.

However, Ms. Holmes is more inflexible and one-sided regarding policies that affect competitors. She writes, “The FDA sets the gold standard for quality assurance. Its review is data-driven, objective and uniquely rigorous.” Yes, there is a legitimate argument for taking steps to ensure that lab tests are reasonably accurate and reliable. However, it’s not clear that a federal bureaucracy is best qualified to review lab tests. An industry that is constantly developing new tests and improving old tests probably knows more about the underlying technology. And an industry association with participants from regulatory agencies, competing vendors, and patients’ groups is likely to be fairer than a government bureaucracy targeted by lobbyists and politicians. Nor is it clear that a federal agency is most capable of striking the right balance between cost, time-to-market, and consumer safety.

Few people would deny that there is a role for federal regulations addressing the safety of health care products and services. For instance, physicians and consumers should be confident that any pharmaceutical marketed in the U.S. contains the type and quantity of active ingredients advertised. It’s also reasonable to require disclosure of all other ingredients to avoid adverse interactions and to protect patients with allergies.

However, there is reason to be skeptical of FDA regulations concerning effectiveness. In fact, it’s only through mission creep that the FDA became involved in determining effectiveness. Yet there is growing evidence that regulating effectiveness is counterproductive. Traditionally, the FDA gauged the effectiveness of a drug by studying its effect on a large population of patients. We’ve learned in recent years that some drugs may be ineffective for most patients but very effective for specific groups of patients. This has led to the common sense conclusion that it’s wrong to reject a drug merely because it is only effective for a small group of patients -- and has given rise to the new field of personalized medicine.

Ms. Holmes’ faith in the FDA’s lab test review process is misguided. There is no universally recognized standard by which lab tests can be evaluated. All diagnostic tests are subject to measurement errors and there is always a risk of false negatives and false positives. And lab tests are evolving. That’s not to suggest that blood tests shouldn’t be reviewed. But it does say that no one has a corner on objective and rigorous lab test reviews, and it’s reasonable to take speed and cost into account when deciding who should perform the reviews. Even if the FDA bureaucracy turned out to be most objective and rigorous, it is notoriously slow and expensive.

There is a troublesome explanation for why Ms. Holmes is so eager to have the FDA perform the reviews. As she states in her guest column, “…Theranos, the company I founded, voluntarily committed to submit all of its lab tests for review starting in 2013. On July 2 [2015], the FDA cleared the first of those tests, for herpes simplex virus 1, and the associated finger-stick blood-test technology and underlying system on which our tests are run.” If Theranos began submitting its lab tests in 2013 and received its first FDA approval in mid-2015, then it seems fair to conclude that a competitor submitting its tests for review today might not gain its first approval until 2017.

Government regulation works best when it is simple and direct. Even then, most of the responsibility for inspecting, reviewing, and certifying should be delegated to outside contractors who can be quickly replaced when there is evidence of negligence, incompetence, or corruption. Too much regulation drives up costs, delays new products and services from coming to market, and discourages innovation. Worse, convoluted regulations can be used by powerful companies as a club against their smaller or less experienced competitors. If Elizabeth Holmes trusts consumers to prescribe their own blood tests, then she should trust the health care industry to review lab tests provided that the review process is transparent and accountable.

Dr. Paul Hsieh writes about the health care debate in Australia, where very modest co-pays ($6) have been proposed for visits to general practitioners and (to keep people from routinely choosing ERs over GPs) emergency rooms.

Hsieh says the Australian debate offers two lessons for the US. The first is that once a government program is put into place it's very hard to reverse. You would think that a $6 co-pay would not be particularly controversial. But it is. Opponents argue that people should be able to go to the ER and not worry about paying anything. Never mind that visits to the ER are not free and are paid for through higher taxes.

The second lesson is that there needs to be a conversation about the proper role of government in health care. Namely, does ensuring that everyone has access to health care justify giving a government bureaucracy the power to determine "who can receive what services and when"?

Hsieh is heartened by the debate in the US over domestic surveillance. Most people believe there should be limits on what government can do surveillance-wise. Shouldn't there also be limits on how much the government can interfere with personal health care decisions?

Data from the National Association of State Comprehensive Insurance Plans shows that the high-risk pools in 35 states cost a grand total of $2.6 billion to operate--slightly more than half of which was paid by enrollees through premiums. Most of the remainder was paid by the insurance companies in the form of "assessments."

See in particular the tables Total Revenue by Pool (2011) and Total Expenses by Pool (2011).

Therefore, the pools cost 35 states a grand total of $125 million per year. Note that the Healthcare.gov website, alone, has cost taxpayers about five times as much.

In a brazen effort to further expand its empire, the FDA has ordered 23andMe to stop marketing its genetic tests to consumers. Don't underestimate the danger this move poses to individual rights.

23andMe does not sell nutritional or therapeutic products. There are no legitimate safety issues. 23andMe provides consumers with information. It's not a stretch to say that the FDA is denying the right of free speech to 23andMe and its customers. Halting the sale of 23andMe's genetic tests is tantamount to censorship.

The FDA argues that the information provided by 23andMe could be wrong or misinterpreted. The same could be said for any source of medical advice--whether it's an article found on Wikipedia or the recommendation of a licensed physician.

The FDA's complaint against 23andMe is disingenuous for at least two reasons. 23andMe does not provide specific diagnoses. 23andMe identifies genetic susceptibilities. As the Home page on its website says, "Find out if your children are at risk for inherited conditions...," "Understand your genetic health risks," and "Arm your doctor with information on how you might respond to certain medications." [My emphasis.] Plus, the dangers cited by the FDA are purely imaginary: consumers are not able to prescribe their own drugs or surgeries.

As the Wall Street Journal points out, "The FDA lacks any specific statutory authority to regulate genomic sequencing technologies... Yet in 2010 the FDA simply decreed by fiat that these tests are considered new medical devices that require premarket testing and approval."

It's the FDA that is circumventing the law, censoring free speech, and impeding innovation. Who will order the FDA to halt its illegal actions?

The public was told that we needed Obamacare to enable people with pre-existing medical conditions to get health care. That's not quite true.

Two-thirds of the states had high-risk health insurance pools for people with pre-existing medical conditions. These programs were severely undersubscribed. The average state had fewer than 10,000 enrollees. The total number of enrollees in the 30+ states was roughly 250,000. That's a small number compared to the 48 million Americans said to lack health insurance.

Obamacare also included an interim federal high-risk health insurance pool. That means that since 2010 anyone in the United States with a pre-existing medical condition could buy health insurance. The Pre-Existing Condition Insurance Plan (PCIP) was also severely undersubscribed. (The enrollee numbers were consistent with the state high-risk pool numbers.)

Comparing Obamacare plans to the high-risk pool plans shows that there is very little savings for people with pre-existing medical conditions. The premiums are about the same. The deductibles and copays for Obamacare appear to be slightly lower. However, in some scenarios a person with a pre-existing medical condition pays more under Obamacare.

For example, the Missouri Health Insurance Pool (MHIP) has a coinsurance requirement while Obamacare has a copayment requirement. Under Obamacare, a patient must pay a portion of the bill whenever they visit a doctor. Under MHIP, there is no copayment due at the time of the visit, but after the patient meets their deductible they are responsible for 20% of the bills up to a limit. Both Obamacare and MHIP have out-of-pocket maximums: The maximum under Obamacare is lower, but the patient starts paying out-of-pocket sooner.

A permanent federal high-risk health insurance pool would have ensured that anyone with a pre-existing medical condition could buy health insurance. This could have been accomplished without imposing mandates on employers and individuals, and without providing waivers to select companies and government employees.

Prior to the 20th century there were only a handful of truly effective drugs. Oliver Wendell Holmes, Sr. quipped, "If all medicines in the world were thrown into the sea, it would be all the better for mankind and all the worse for the fishes.”

The most potent medicines at the time included opium, quinine, and anesthetics such as cocaine, ether, and nitrous oxide. Acting independently, druggists created the United States Pharmacopoeia (USP) and National Formulary to promote standards for composition, purity, and strength.

Federal drug laws were often enacted in the wake of a tragic event. The Biologics Act of 1902 passed after several children died from contaminated smallpox vaccines and diphtheria antitoxins. The Pure Food and Drugs Act passed in 1906 after a group of volunteers demonstrated the harmful effects of specific additives and preservatives on their own (!) digestive systems.

Even most critics of today’s Food and Drug Administration (FDA) recognize that the Biologics Act boosted safety and the Pure Food and Drugs Act promoted accurate labeling. However, the U.S. Supreme Court ruled that the government could not prosecute manufacturers for making debatable therapeutic claims because efficacy is often a matter of opinion. There had to be evidence of intentional fraud.

Harvey Washington Wiley, the U.S. Department of Agriculture’s first chief chemist, campaigned vigorously for the Pure Food and Drugs Act. However, his career shows that he also believed in industry self-regulation. He left the USDA Bureau of Chemistry in 1912 to run the Good Housekeeping Seal of Approval program.

The Harrison Narcotics Act of 1914 initiated federal regulation of opium. The Act required prescriptions for products exceeding specific dosages—forcing physicians and pharmacists to keep accurate records. Though the U.S. Constitution doesn’t grant the federal government the right to regulate either drugs or physicians, Congress cited the Commerce Clause as justification.

(The Commerce Clause says that the federal government has the power to regulate trade between the states. It was obviously intended as a limited power. However, the Commerce Clause has repeatedly been stretched to assert federal power over products that are produced, sold, and used in more than one state.)

The FDA is Born
In 1927 the USDA Bureau of Chemistry became the Food, Drug, and Insecticide Administration. The name was shortened to Food and Drug Administration in 1930. By this time aspirin, codeine, morphine, digitalis, nitroglycerin, and insulin were added to the list of truly effective drugs. Sulfa drugs and penicillin were introduced over the next decade.

The FDA enlarged its power following yet another tragedy. The pharmaceutical firm Massengill introduced a liquid form of a sulfa drug that had already passed repeated tests. However, the company neglected to test the solvent. More than 100 patients died from kidney failure. The FDA argued that existing laws were insufficient because the drug did not contain additional regulated ingredients and the company had not made fraudulent claims. Though the company was successfully sued for gross negligence, Congress went ahead and passed the Food, Drugs, and Cosmetic Act of 1938.

The Food, Drugs, and Cosmetic Act required manufacturers to file new drug applications (NDAs) before marketing new drugs. If the FDA did not respond within 60 days, then the drug was automatically approved. However, labeling and prescription requirements were also expanded. The Act made it clear that (regardless of the Commerce Clause) the FDA’s authority extended over all drugs and many dubious medical devices. More important, the FDA was empowered to take action against what it judged to be false claims.

The Durham-Humphrey Amendment passed in 1951 expanded the FDA’s power. The FDA became the sole judge of whether a new drug required a prescription. Physicians benefitted from the arrangement: If a consumer wanted a prescription drug, then that consumer had to visit a licensed physician.

Over the next decade the FDA acquired powers over pesticide residues and additives in food. Meanwhile, the list of truly effective drugs continued to expand. In fact, there was exuberance for what some were calling “magic bullets.” But to others the pharmaceutical industry’s success justified more regulations. A few politicians demanded federal control over competition and pricing.

The proposed Kefauver-Harris Amendments promised mandatory patent sharing. The amendments also required manufacturers to prove that their new drugs were safe and effective. At first, the Kefauver-Harris Amendments seemed destined to fail, as supporters did not have enough votes.

Once again, proponents exploited a human tragedy to snatch victory from the jaws of defeat. This tragedy did not even occur in the United States. The West German pharmaceutical company Grünenthal GmbH introduced thalidomide in 1957 to relieve morning sickness during early pregnancy. By 1962 it was clear that the drug caused still births and arrested limb development. An NDA for thalidomide had been submitted to the FDA, but fortunately the FDA delayed approval to investigate an unrelated problem.

Though there really was no urgent need for additional action in the U.S., the media sensationalized the “Thalidomide babies” and the Kefauver-Harris Amendments were passed in 1962. Only now the provisions concerning pricing and patents were dropped and new provisions requiring more exhaustive testing and granting the FDA greater power over manufacturing were added. The net effect was that it became harder for pharmaceutical companies to gain approval for new drugs, depriving physicians and patients of additional choices. Meanwhile, the FDA entered a period of rapid growth, expanding from 1,000 to 6,500 employees over the next 20 years. The FDA’s authority to approve or deny new drugs based on efficacy was now firmly enshrined in the laws of the land.

The folly of testing efficacy is that a drug does not have to help all or even most patients to be of value. Plus, there is as much to learn about a drug after it has been introduced, but almost nothing is learned once it has been denied. As we will see in Part 2, the delays incurred performing exhaustive tests often contribute to the deaths of patients who have otherwise run out of options. The net effect of the Kefauver-Harris Amendments was that fewer new drugs were developed, and obtaining FDA approval now took as long as 20 years.

The FDA and Medical Devices
At first the FDA tried to regulate medical devices such as pacemakers simply by classifying them as drugs. That didn’t work—but the Dalkon Shield tragedy certainly did. The Dalkon Shield was a contraceptive intrauterine device (IUD). Manufactured by Dalkon Corporation and marketed by the A.H. Robins Company, the product caused severe pelvic infections, leading to more than 300,000 lawsuits.

The Medical Device Amendments of 1976 defined three classes of medical devices. Class I devices are disposable products such as gauze and are subject to Good Manufacturing Practices (GMP) regulations. Class II devices are subject to additional controls and include products such as surgical drapes and infusion pumps. Class III devices are products such as pacemakers that are used to sustain health. The approval process for Class III devices is as rigorous and extensive as the approval process for new drugs.

Bizarrely, all new medical devices were assumed to be Class III devices. If the manufacturer could show that a new medical device was “substantially equivalent” to a pre-amendment device or any currently marketed Class I or Class II device, then the premarket approval process could be avoided. However, “substantially equivalent” devices still had to comply with the 510(k) premarket notification process. And in another bizarre twist, the FDA failed to develop any medical device performance standards until 1997, rendering Class II irrelevant for the first twenty years.

Reversing the Damage
As the FDA’s power continued to mushroom, and as winning approval for new drugs and devices became more arduous, more patients suffered. The investment required to win approval for a new drug discouraged the development of drugs for niche markets—drugs for rare diseases (including, for example, cystic fibrosis) and drugs targeting a subset of patients.

The Orphan Drug Act of 1983 was designed to encourage development of drugs for conditions affecting fewer than 200,000 people in the United States. This was to be accomplished not by relaxing the approval process but by offering subsidies, tax breaks, and exclusivity (temporary monopolies).

Government regulations often have unintended consequences. Some companies discover ways around the regulations. Other companies find unanticipated ways to profit from regulations. While many drugs have been granted orphan drug status, not all deserved the perks. For example, a drug may be granted orphan status for one condition and then granted orphan status for another. And because orphan status is based on the U.S. market, there may still be a large global market for an orphan drug. Finally, the number of people who suffer from a condition may grow significantly over time. AZT started as an orphan drug but with the spread of AIDS has racked up sales in the billions of dollars.

Another problem caused by FDA regulations concerns patents. Drugs may be patented, but patent protection is only good for seventeen years. For most products seventeen years seems generous. But what about a drug that takes fourteen years to win approval? A generic version may be marketed by competitors just three years after the original drug is approved.

The Waxman-Hatch Act of 1984 extended patent protection for drugs delayed by the approval process. It also made it easier to gain approval for generic drugs (which up to then had to repeat much of the safety and efficacy testing performed by the inventor). Specifically, the Waxman-Hatch Act allowed the manufacturer of a generic drug to submit an abbreviated new drug application (ANDA).

The Drug Export Amendment Act of 1986 reversed the FDA decision that made it illegal for manufacturers to export drugs that had not been approved for sale in the United States. However, there were three major restrictions. The Act required that the manufacturer be actively seeking FDA approval, that the drug be covered by a U.S. investigational exemption, and that the drug be for export to a country that has already approved it through a regulatory process meeting specific standards.

Subsequent legislation repaired some of the damage caused by the FDA while inflicting new damage. The Safe Medical Device Act (SMDA) of 1990 finally enabled the approval of Class II products by facilitating performance standards and adding controls such as post-market surveillance. In other words, approval would be granted with the understanding that manufacturers would closely monitor the products in the field.

The Prescription Drug User Fee Act (PDUFA) of 1992 was designed to speed review of new drug applications. The FDA had a backlog of NDAs but Congress was unwilling to increase the FDA’s budget. The PDUFA allowed the FDA to charge pharmaceutical companies approximately $200,000 per application, which could be used to hire more application examiners. However, there was one catch: the PDUFA had to be renewed by Congress every five years. While the average time to review an NDA dropped from 30 months to 18 months, the user fees increased. However, there is evidence that the savings to manufacturers (due to faster drug approval) exceeded the added user fees.

Criticism from all Directions
The FDA aspires to do much more—to regulate more products and to educate citizens about more threats. However, the more power the FDA has to control products and tell citizens what to believe, the less freedom there is for individuals. A government can continue piling on laws and regulations in an effort to eliminate all safety hazards, but after the first layer or two there are diminishing returns. The only way to eliminate all product safety hazards is to eliminate all products.

Governmental zeal for teaching citizens what is and is not good for them is beyond the pale. At a minimum, it assumes that government knows what is best with absolute certainty. In the worst case, it puts the country on a path to totalitarianism.

The FDA has tried to regulate herbs, vitamins, and other dietary supplements since the 1950s. However, the FDA crossed the line when it prosecuted retailers for selling books along with vitamins, claiming that the books served as surrogate product labels. Many people saw these actions as an assault on freedom of speech.

Many of the same people who don’t trust pharmaceutical companies also don’t want the FDA restricting access to herbs, vitamins, and dietary supplements. After all, there have been conflicting studies regarding the efficacy of these products. Should the FDA be able to restrict access to specific products just because they have not been proven beneficial?

After 38 deaths were (falsely) attributed to L-tryptophan, the FDA announced plans to regulate a wide range of dietary and nutritional supplements. Millions of consumers were outraged. The Dietary Supplement Health and Education Act (DSHEA) of 1994 ordered the FDA to revoke its plans. The Act further allowed supplement manufacturers to make nutritional claims—but not disease-fighting claims. However, supplements making nutritional claims were required to include the disclaimer: “This statement has not been evaluated by the Food and Drug Administration. This product is not intended to diagnose, treat, cure, or prevent any disease.” (The first sentence is clearly true, but the second sentence is mere bluster.) The DSHEA also prohibited the FDA from taking action against retailers selling dietary supplements plus books and magazines about such supplements.

The FDA Modernization Act of 1997 was part of a larger deregulation push, though it ended up being a much tamer piece of legislation than its originators hoped. The Act mainly codified changes already being practiced and added a few half measures. It did not substantially rollback the FDA’s power.

How the FDA Got to Where It Is
The FDA’s history can be divided into three stages. The first stage, the period from roughly 1902 to 1930, saw the development of safety and labeling regulations that were for the most part beneficial. During the second stage, from approximately 1930 to 1983, the FDA exploited a few human tragedies to greatly expand its powers. The FDA even turned disastrous events in Europe to its advantage. During the third stage, the period from about 1983 to today, there have been multiple attempts to reform the FDA, with very little success. Only the dietary supplement industry has been able to muster the forces needed to resist FDA aggression.

The FDA remains extremely powerful and has successfully deflected efforts to enact badly needed reforms.


Sources:

Klein, Daniel B. and Tabarrok, Alexander, “History of Federal Regulation: 1902–Present,” The Independent Institute. http://www.fdareview.org/history.shtml

Madden, Bartley J., Free To Choose Medicine: Better Drugs Sooner at Lower Cost, Second Edition, LearningWhatWorks, Naperville, Illinois, 2012

“History of the Food and Drug Administration,” Wikipedia, https://en.wikipedia.org/wiki/History_of_the_Food_and_Drug_Administration


Next: How the FDA Harms Patients, Physicians, and the Health Care Industry