The FDA and Drug Preemption

Visiting Scholar
Tomas J. Philipson
In November, the Supreme Court will have the chance to lower drug prices, spur innovation and increase patient access to innovative new therapies by ruling in favor of Food and Drug Administration "pre-emption." It can do so by giving federal regulators, not judges and juries in 50 different states, the ability to make authoritative national rulings as to the warnings that should be included on drug labels.

This would be a long-overdue change. Currently, the tort system allows individual class-action lawyers, judges, and juries to second-guess FDA labeling decisions in emotionally fraught cases that penalize companies for behavior the FDA either allows or even mandates. Litigation pushes drug companies to flood labels with dubious warnings in the hopes of warding off lawsuits, and to abandon developing medicines for some diseases that are particularly litigation-prone, such as drugs for pregnant women.

Companies also spend billions of dollars every year fighting these cases, money that could be spent on finding new cures. Naturally, drug companies should still be held liable to the state and patients for many harmful activities, but pre-emption aims to make sure they are not liable for behavior that the FDA, acting on behalf of patients, already approved.

Policy-makers and the public need to be confident that the FDA has in place the right set of tools to ensure that medicines are reasonably safe and that innovative new therapies reach patients as rapidly as possible.

In defending drug litigation, advocates point to drugs that were withdrawn from the market (like Vioxx) due to unforeseen side effects. They then use these examples to paint the picture of a national drug-safety "crisis" and accuse the FDA of being captured by industry--with the lawsuits the only opportunity to compensate patients injured by unsafe drugs. The problem with this argument is that there exists little or no systematic evidence supporting it. The rate of drug withdrawals in the United States for severe side effects has remained basically unchanged since 1979. And the rate in Europe--where there is a different system of drug approval and monitoring in place--mirrors that of the U.S. The leap from drug withdrawal to the declaration of a drug safety crisis ignores the fact that FDA-mandated tests for drugs' safety are not meant to, and cannot, uncover all potential safety problems with a drug before it is marketed to the public.

Indeed, FDA-mandated trials for most drugs are small, involving a few thousand patients, compared to the masses consuming a drug after it has been approved. That means that some rare side effects will be discovered only after the drug has been taken by hundreds of thousands or millions of patients. Expanding the testing process to require more and larger clinical trials might uncover a few more side effects, but would also delay the introduction of valuable new therapies--as it is, drug development often takes more than a decade.

This confronts the agency with a speed-safety tradeoff: ensuring safer drugs entails a longer wait, and hence higher morbidity and mortality for patients in need of new treatments. The agency must thus balance speed of approval with safety. The FDA, although not perfect, at least has access to the right expertise to make science-based decisions on whether the existing speed-safety tradeoff is in the best interests of society. Courts and juries--who only see injured plaintiffs--are poorly positioned to second-guess those balanced decisions and will focus too much on liability rather than innovation.

It is theoretically possible that the threat of product-liability lawsuits could encourage firms to do even more safety testing than the FDA requires. In reality, few if any firms choose to go beyond FDA requirements just to avoid litigation. That's unsurprising: mandatory FDA testing is already extensive, time-consuming, and extremely expensive.

If they don't increase safety investments, lawsuits harm patients by lowering access to medicines through the higher prices that companies must charge to offset litigation costs. This was the dramatic experience in vaccine manufacturing during the 1980s, when liability raised prices of some vaccines by several magnitudes and nearly led U.S. companies to abandon the field when they couldn't recoup their costs.

In response, Congress enacted the National Childhood Vaccine Injury Act of 1986, which pre-empted most vaccine lawsuits through an administrative compensation program, but the FDA-mandated safety investments were kept intact. The vaccine experience is a powerful illustration of how the duplication of safety through both the FDA and product liability harms patient access.

Policy-makers and the public need to be confident that the FDA has in place the right set of tools to ensure that medicines are reasonably safe and that innovative new therapies for diseases like cancer and Alzheimer's reach patients as rapidly as possible. Both goals can be met through a sustained commitment to improving the FDA's ability to use the latest scientific discoveries in its rulemaking process. Earlier this year, the Supreme Court ruled in favor of pre-emption for medical devices. If the court interprets the law in favor of pre-emption for drugs as well, it will be a victory for patient access across the world.

Tomas J. Philipson is a visiting scholar at AEI.

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About the Author


Tomas J.
  • Tomas J. Philipson is a visiting scholar at AEI and the Daniel Levin Chair in the Irving B. Harris Graduate School of Public Policy as well as an associate member of the department of economics at the University of Chicago. He was a senior health care adviser to the 2008 presidential campaign of John McCain and served in the Bush administration as the senior economic adviser to the commissioner of the Food and Drug Administration from 2003 to 2004 and subsequently as the senior economic adviser to the administrator of the Centers for Medicare & Medicaid Services from 2004 to 2005. Mr. Philipson is an editor of Forum for Health Economics & Policy and is on the editorial board of Health Economics and The European Journal of Health Economics. He has twice been the recipient of the highest honor of his field, the Kenneth Arrow Award from the International Health Economics Association, in 2000 and 2006.  Mr. Philipson is the cofounder of Precision Health Economics, is an adviser to the Gerson Lehrman Group, and is a consultant for Compass-Lexecon and Analysis Group.
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