Senator Cruz’s RESULT Act Contains a Particular View of the FDA’s Role – But What About CMS?

By Rachel Sachs

Last week, I blogged here about the introduction of the Reciprocity Ensures Streamlined Use of Lifesaving Treatments (RESULT) Act (text) by Senators Ted Cruz and Mike Lee. As I noted, the Act would require the FDA to speed review of drugs, devices, and biologics that are already approved for marketing in a particular list of countries, including EU member countries, Japan, and Canada. If the FDA declines to grant reciprocal marketing approval, the Act would permit Congress to override the FDA’s decision through a majority vote via a joint resolution.

My post, and additional commentary from numerous other outlets (including RAPS, Vox, and Marginal Revolution) largely focused on the Act itself – on the merits of the various provisions, and on whether those provisions would be effective at accomplishing the Act’s stated goals. But each commentator’s view of the situation depends in large part on their priors about what the purpose of the FDA is, and relatedly, how it should behave to achieve those purposes. In this post, I want to first briefly explain these different views about the purpose of the FDA before explaining the ways in which our views about pharmaceutical regulators are often tied to our views about public health insurers – a point which has largely gone unmentioned in the debate about the RESULT Act.

As Senator Cruz recently wrote for the National Review, “The FDA model is risk-averse, by its very nature obstructing promising innovations.” This is correct – but whether it is good or bad is not obvious. If you believe, as Senator Cruz seems to, that the FDA is preventing many safe, effective drugs from reaching the market (in other words, is making too many Type II errors), then you will be inclined to make the FDA review process less stringent in various ways, such as by encouraging reciprocal marketing approval. But if you believe that the FDA ought to focus on minimizing the number of harmful or ineffective drugs that it approves (if you think it ought to minimize its Type I errors), reciprocal marketing approval should worry you.

In one sense, this balance of errors is an empirical question. It’s also one that is really difficult to measure – we can often directly observe the (non-zero) number of unsafe/ineffective drugs approved by the FDA, but it’s much more difficult to observe situations in which the FDA has failed to approve a safe, effective drug. But in another sense this question depends on a range of other factors, including your views about whether consumers can gather relevant information about drugs, the role of the FDA’s reputation in ensuring public trust (Dan Carpenter’s book is the canonical work here), and the role of other agencies in this space.

This last point has largely been absent from the coverage of the Act, and I write here to highlight it: our views/priors about pharmaceutical regulators (like the FDA and its European analog, the EMA) and their function within society are often tied to our views about public insurers (in the US, the Centers for Medicare and Medicaid Services, or CMS) and their function. Senators Cruz and Lee seem to believe that the pharmaceutical regulators at the EMA or in Japan are less stringent in terms of their efficacy requirements than is the FDA. Even if this is true, part of the reason is that Japan and many European countries have much stronger gatekeepers at the payment level. Their national health insurance systems can set prices or even decline to pay for drugs which haven’t demonstrated sufficient efficacy or cost-effectiveness, in a way that Medicare and Medicaid in the United States cannot.

More specifically, because Medicare and Medicaid are in many cases required by law to pay for pharmaceuticals which have been FDA-approved and have limited ability to set or negotiate prices, stringent FDA approval serves a cost-saving function for the system as a whole. The effect of decreasing FDA standards would be to spend more public funds on health care. This does not necessarily trouble me, but I suspect it would trouble Senators Cruz and Lee. To put it a different way, if the Congressional Budget Office were to score the RESULT Act, they would recognize that it would lead to increased expenditures through Medicare and Medicaid – and on technologies that are likely to be of marginal benefit.

Whatever one’s views about the benefits of reciprocal approval when considered only in the FDA context, it would be a mistake to ignore the broader, systemic effects of such a proposal.  And the societal function of a pharmaceutical regulator like the FDA is often tied inextricably to the role played by public health insurers, in a way that affects the implementation of any such proposal.

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