By Dov Fox
Yesterday, I wrote about Ryan Abbott‘s new article that proposes to use health information exchanges to improve the collection of data about the safety of approved drugs. Today, I want to address his recommendation that the government pay private parties to help the Food and Drug Administration conduct post-market drug surveillance.
The article argues that health information exchanges will make far more data available for observational research, but the current drug regulatory system is not structured in a way that would allow it to use the information effectively. This is because pharmaceutical companies have powerful incentives to emphasize data favorable to their products. (The FDA’s own research is dwarfed by comparison to what industry does and could do, while insurance companies and academics have weaker incentives to investigate.)
So Abbott suggests encouraging private parties to submit evidence that an approved drug is ineffective or unsafe. Under his proposal, if the FDA determines the evidence warrants a change to labeling or approval status, the submitting party would receive a financial prize. Its size would depend on how much the government saved by avoiding the costs of ineffective and unsafe medicines. Abbott suggests that the prize come from taxpayer dollars, unless it’s determined that the pharmaceutical acted negligently (or worse), in which case the company itself would be responsible for paying it.
It might make more sense to put the burden on pharmaceutical companies, even when they haven’t been negligent, given that it’s their products that are found to cause harm. Not only do they have the most opportunities to seek out problems early in testing and development; they are also the parties deriving the most financial benefit from medicine sales. Claims by pharmaceutical companies that they can’t operate with additional costs or regulation sound exaggerated, at least for many of those companies, given that the pharmaceutical industry has some of the highest profit margins of any business sector.
The bounty system nevertheless deserves serious consideration as an innovative proposal for harnessing market-based incentives to improve the regulatory surveillance of approved drugs. And it need not be restricted to health information exchanges. Abbott suggests applying this system to the way agencies deal with scientific questions generally. We might worry competitors might trump up data hostile to approved drugs. The provocative question that Abbott’s article invites us to ask is whether we are better off evaluating medicines under an inquisitorial system or an adversarial system.