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The Funding Effect: How Drug Manufacturers Design Clinical Trials to Produce Favorable Results

By Ryan J. Duplechin

Many consumers are unaware that the U.S. Food and Drug Administration (“FDA”) does not test drugs in the approval process. Instead, drug manufacturers test their drugs and submit their own results to the FDA for review. Hoping to convince the FDA and investors of the safety and effectiveness of their new drug, manufacturers go to great lengths to report positive results in clinical trials.

According to the FDA, before a clinical trial begins, drug manufacturers develop a specific study plan, called a protocol. In this protocol, the drug manufacturers decide:

  • Who qualifies to participate (selection criteria);
  • How many people will be part of the study;
  • How long the study will last;
  • Whether there will be a control group;
  • How the drug will be given to patients and at what dosage;
  • What assessments will be conducted, when, and what data will be collected; and
  • How the data will be reviewed and analyzed;

In 2008, Dr. David Michaels, the longest serving Assistant Secretary of OSHA in U.S. history and current professor at George Washington University, published Doubt is Their Product: How Industry’s Assault on Science Threatens Your Health. In this book, Dr. David Michaels describes how product industries are influencing science in a way that undermines our health.

According to Michaels, in the FDA drug approval process, manufacturers have a strong motivation to promote the effectiveness of their drug, while downplaying the risks. He calls this “the funding effect” because of the drug manufacturers’ financial stake in producing safe outcomes. The funding effect occurs when scientists are hired by a firm with a financial interest in the outcome, then the likelihood that the results will be favorable to that firm is dramatically increased. When asked about the funding effect, Dr. Richard Smith, a retired lead editor of the British Medical Journal, said it took him “almost a quarter of a century editing . . . to wake up to what was happening.”

According to Smith:

The companies seem to get the results they want not by fiddling the results, which would be far too cruse and possibly detectable by peer review, but rather by asking the ‘right’ questions—and there are many ways to do this . . . many ways to hugely increase the chance of producing favorable results, and there are many hired guns who will think up new ways and stay one jump ahead of peer reviewers.

In other words, the peer reviewers are not necessarily in on the “funding effect.” The peer reviewers are reviewing what looks like excellent work because of the deliberate and calculated manner in which it was presented. The FDA-reviewers are reviewing results of clinical trials that were designed in a similar manner.

Out of the three clinical trial phases, Phase Three clinical trials are the most susceptible to influence by the drug manufacturer. For instance, the “randomized clinical trial” is far from random—people are included and excluded from participating based on certain set parameters.

The manufacturers also do not like to test new drugs on older patients—even if this is the population that will most likely use the drug once approved. Drug companies also disfavor head-to-head competition between their proposed new drug and an established one because the new drug might lose, which would compromise opportunities for touting superiority or at least comparability. For this reason, the drug companies prefer trials against placebos.

Michaels lists several strategies manufacturers use to design clinical trials to make their drugs look better than they are:

  • Test your drug against a treatment that either does not work or does not work very well.
  • Test your drug against too low a dose of the comparison drug because this will make your drug appear more effective.
  • Test your drug against too high a dose of the comparison drug because this will make your drug appear less toxic.
  • Publish the tests of a single multicenter trial many times because this will suggest that multiple studies reached the same conclusions.
  • Publish only that part of a trial that favors your drug, and bury the rest of it.
  • Fund many clinical trials, then publish only those that make your product look good.

According to Michaels, after clinical trials, manufacturers also influence the results by engaging in “data dredging.” Put simply, he calls this strategy “Texas sharpshooting” because if you fire a bullet at a blank wall then draw the bulls-eye around it, you could claim that was your target all along.

Similarly, manufacturers have mastered the strategy of presenting data to the FDA in a favorable light. Although the FDA requests the raw data from the clinical trials, it does not have the resources to redo drug manufacturers’ submitted work to ensure accuracy.

Drug manufacturers spend considerable resources to argue that, once the FDA approves its drug and makes a safety determination, they should be immune from product liability lawsuits filed by consumers. But how can we know a drug is actually safe if the testing and outcomes are driven by the funding effect? And once a drug is approved, what incentive does a drug manufacturer have to identify new risks and communicate those risks to physicians? There’s only one: to avoid tort liability. This is why mass tort litigation plays an important role in public health and serves as a powerful check on the pharmaceutical industry.


Ryan J. Duplechin is a member of the Mass Torts Section of Beasley, Allen, Crow, Methvin, Portis & Miles, P.C. Beasley Allen represents consumers in nationwide complex litigation.


The Petrie-Flom Center Staff

The Petrie-Flom Center staff often posts updates, announcements, and guests posts on behalf of others.

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