This article originally appeared at Forbes and has been republished here with the author’s permission.
Bill McGurn in a recent Wall Street Journal column condemned the “soft despotism” in our government that has been created by “the unelected and increasingly assertive class that populates our federal bureaucracies and substitutes rule by regulation for the rule of law.” He cited an analysis from the Competitive Enterprise Institute which found that, on average, federal agencies produce 35 regulations for every law .
That’s bad enough, but often regulators don’t bother to go through the arduous, regimented, required rulemaking process; instead, they make policy by issuing documents variously called “guidance” or “points to consider.” Sometimes policies become evident only from agencies’ decisions to prosecute real or imagined transgressions of its regulations, or from the two extremes of inaction or excessive regulatory zeal.
Let’s consider some FDA examples.
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The Food and Drug Administration campus in Silver Spring, Md. (AP Photo/Andrew Harnik, File)
In 2009 Chicago federal appellate Judge Richard Posner blasted the government for bringing a case against a salad-dressing wholesaler that had changed the labels on more than a million bottles of dressing to extend their shelf life. (These dates are often arbitrarily chosen and actually have little to do with the healthfulness or wholesomeness of the food.) Judge Posner found that not only was there nothing in food law or regulations about “best when purchased by” dates but that there was little likelihood of endangerment of public health. Moreover, he said, “the testimony of the FDA’s employee was not just improper and inadmissible but incoherent.”
Through its inaction, FDA has almost eliminated the once-promising biotechnology sector called “biopharming,” the production of high-value substances in genetically engineered plants. The biotech company Ventria Bioscience genetically engineered rice to produce two human proteins, lactoferrin and lysozyme. Once grown and harvested, the rice kernel is processed to extract and purify the proteins for use in oral rehydration solution for treating diarrhea, which is surpassed only by respiratory diseases as the leading infectious killer of children under the age of five in developing countries.
The proteins have the same structure and functional properties as those found in natural breast milk, and the process for extracting them is analogous to that used routinely for the production of therapeutic proteins from organisms like bacteria and yeast. Research in Peru showed that fortifying an oral-rehydration solution with the proteins extracted from Ventria’s rice substantially lessens the duration of diarrhea and reduces the rate of recurrence–a near-miraculous advance in the developing world.
When Ventria approached the FDA for recognition that these proteins are “generally recognized as safe” (a regulatory term of art), it received no response. Without an endorsement by the FDA, the company was unwilling to market the product, and so it remains unavailable, tragically depriving children in developing countries of a life-saving therapy and discouraging development of similar products. Regulatory uncertainty is anathema to entrepreneurs.
Although the FDA’s primary enabling statute, the Food, Drug and Cosmetic Act, requires that new drugs be shown to be safe and effective in order to be sold, regulators have arbitrarily added new requirements without the chore of rulemaking. One new de facto condition of approval is post-marketing studies. (Whereas they were once a rarity, they are now required as a condition of more than three-quarters of approvals.)
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In addition, regulators have created yet another arbitrarily-applied criterion that could inflict significant damage on both patients and drug companies: Sometimes the FDA requires that new drugs be not merely safe and effective but actually superior to existing therapies, a new standard that is often difficult and extremely costly to meet. In April 2007, the FDA announced what appears to be a landmark decision. In denying approval of Merck’s new drug, Arcoxia, a COX-2 inhibitor for the relief of arthritis pain, the FDA said that Arcoxia needed to be shown to be superior to existing drugs to merit approval. Robert Meyer, then director of the FDA office that oversees arthritis drugs, claimed that the agency’s advisory committee had sent a clear message that “simply having another drug on the market…didn’t seem to be sufficient reason” for approval. But whether or not the advisory committee meant to convey that (and in any case, advisory committee recommendations are not binding), it is specious reasoning.
In fact, for a variety of reasons, having “another drug on the market” that appears from clinical trials data to be no better than alternatives may be important. First, there are important differences between drugs that act through similar mechanisms: Different COX-2 inhibitors and statins, for example, were shown long after the initial approvals to have distinct and critical advantages and disadvantages; physicians can select one over another, depending on how their patient respond.
Second, if two drugs are both effective in 40 percent of patients with a given symptom or disease, it may not be known whether they work in the same 40 percent. Thus, if the drugs are effective in different patient populations, the failure of regulators to approve the second drug could deprive a large number of patients of access to an efficacious drug. At best, practitioners would have fewer choices, and consumers would face higher prices because of a lack of competition.
Third, a substantial fraction of the prescribing of many drugs ends up being outside the primary indications specified in the original approval; these subsequent uses may be either approved or “off-label” indications (uses of the drug other than those listed on the official label). But if a drug is not approved for its initial indication because it is not sufficiently superior to a previously approved medicine, further testing might not be performed and other uses, therefore, never discovered.
We need to put a brake on federal agencies’ “regulatory creep,” excessive zeal and incompetence–which might actually be possible given the mindset of Congress and the appointees of the Trump Administration. Some mechanisms to review the actions of government agencies already exist, and others are in the offing. zFor example, there is the Congressional Review Act of 1996, which has been invoked only once in more than two decades, but never successfully (largely because the president can veto the congressional action), as well as the review of new regulations by the Office of Information and Regulatory Activities (OIRA), a component of the Office of Management and Budget. But these “checks” on the power of regulators apply only to published rules, not to the case-by-case decision-making that causes so much mischief. There is also, of course, Congress’ Constitution-based oversight over Executive Branch agencies, but this has been weak in recent decades.
Two new pieces of legislation, approved last week by the House of Representatives, could be major steps forward on regulatory reform. The first is the aptly-named Regulations from the Executive in Need of Scrutiny (REINS) Act, which would require affirmative congressional approval of any “significant” rule–defined as one that imposes compliance costs of more than $100 million a year. If Congress failed to approve a rule within 70 days after its promulgation, it would not become law. The “opt-in” nature of this legislation instead of the “opt-out” character of the Congressional Review Act would make it far more effective. Greater politicization of regulation is a risk itself, of course, but it’s a reasonable price to pay for curbing rogue regulators.
The second is the resurrection of the “Holman Rule,” which empowers any member of Congress to propose an amendment to appropriations bills that would single out a government employee for salary reduction or cut a specific program. A majority of the House and the Senate would have to approve any such amendment. That could be an important factor in redressing the excessive risk-aversion of many of our “gatekeeper” regulatory agencies.
Henry I. Miller, a physician, is the Robert Wesson Fellow in Scientific Philosophy & Public Policy at Stanford University’s Hoover Institution. He was the founding director of the FDA’s Office of Biotechnology. Follow him on Twitter @henryimiller.
