THEODORE W. RUGER
IN THE past decade and a half, the U.S. Food and Drug Administration (FDA) has been buffeted by and largely weathered a number of discrete and high-profile episodes of public concern over arguable regulatory failures involving pharmaceutical and food products. These episodes have generated headlines, provoked pointed criticism of FDA, and catalyzed congressional and broader public oversight of the agency’s functioning (Coglianese & Ruger 2013; Harris 2004). Yet FDA is likely to recover from any dip in its prestige caused by this round of public concern just as it has overcome past chapters of momentary public concern to maintain its primary reputation as a guardian of product safety. The deeper threat to FDA’s role in the regulatory firmament of the twenty-first century is not that it is inadequately performing its core functions in assessing the safety of food and therapeutic products but rather that this focus on product “safety”—at least in the relatively acontextual manner FDA has tended to assess that variable—is increasingly unimportant in a new world of focus on product cost, consumer behavior, and consumption patterns. How well or how poorly FDA is able to realign its mission to take account of these shifting regulatory priorities will have much to say about whether its prestige in the next fifty years approximates its status over the past fifty years.
For more than half a century, FDA has been a high-status icon of the federal administrative state. Few agencies have been as successful at achieving their stated regulatory goals, and few have enjoyed the reputation for technocratic expertise that the FDA has long held among the press and the public. The regulatory regime overseen by FDA has produced sizeable public health gains over the past sixty years by virtue of ensuring safer food and therapeutic products for U.S. consumers. In recent decades FDA has done much to ameliorate a countervailing critique that it has been too careful and too slow in approving new therapeutic products—the “drug lag” in U.S. approval times relative to other nations’ gatekeeping agencies has largely disappeared since the 1980s (Olson 2004; Hilts 1989). Even the rare instances of high-profile failure by FDA in the past several years, when unsafe foods or pharmaceuticals have slipped past the agency’s scientific safety net, such as with Vioxx in 2004, the Salmonella outbreak in peanut products in 2009, or October 2012’s pharmacy compounding tragedy, have been met by responsive and targeted congressional and administrative action, suggesting that relevant institutions are able to learn from and swiftly correct problematic gaps in FDA’s regulatory oversight (FDA Food Safety Modernization Act, Pub. L. No. 111-353, 124 Stat. 3885; Herper 2007). FDA’s long track record of regulatory achievement has translated into significant reputational gains, and FDA ranks highly in public opinion polls of the most trusted, effective, and independent federal agencies. As Daniel Carpenter has written, FDA has “consistently been named or identified as one of the most popular and well-respected agencies in government” over the past several decades (Carpenter 2010:12).
FDA’s longstanding stature and reputation in the American regulatory state will likely persist through the first decades of the twenty-first century or beyond. Yet if there is a looming risk to FDA’s prestige and relevance in the coming decades, it is one born not of systemic regulatory incompetence but rather of an increasing marginalization from the most pressing regulatory problems involving food and drugs in the United States. The food supply of the United States is statistically as safe as it has ever been, if safety is defined by an absence of pathogenic or chemical contamination. However, illnesses relating to the consumption of food still represent the greatest preventable health problem the nation faces, attracting increasing institutional attention outside of FDA. Likewise for pharmaceuticals and other therapeutic products, the greatest challenges going forward involve allocation, price, and cost-effectiveness, as opposed to abstracted notions of “safety” and “efficacy.” Yet FDA is jurisdictionally limited and bureaucratically disinclined from addressing such issues. The end result going forward is an apparent mismatch between FDA’s core regulatory competencies and the most urgent policy issues in its broader domain. This dichotomous functional dynamic suggests that FDA’s unmatched ascendency in the area of food and drug regulation is likely to wane as other institutions take up an increasing share of the new century’s evolving regulatory challenges in this field.
To illuminate this dynamic of increasing regulatory multiplicity, this chapter first summarizes the twentieth-century development of FDA as an agency with formidable authority over the nation’s food and drug supply, but also as an agency with authority and institutional competence directed at the commodified products themselves, abstracted from behavioral concerns relating to use, consumption, and societal allocation of those products. It then introduces the shifting nature of the current policy challenges relating to foods and drugs, many of which relate to issues of end-stage pricing, allocation, and consumption as opposed to the intrinsic safety (or lack thereof) of the product abstracted from the context in which it will be used, and concludes by discussing the new shape of food and drug regulation in the twenty-first century and the relatively diminished role FDA can be expected to play.
I. THE FDA CENTURY
Federal regulation of foods and drugs in the United States took shape in incremental form but early on placed FDA in a primary role for ensuring the safety of the nation’s food and therapeutic products. The Pure Food and Drugs Act (PFDA) of 1906 established a predecessor office to FDA housed within the U.S. Department of Agriculture, and then the Food, Drug, and Cosmetics Act (FDCA) of 1938 fully realized the federal regulatory framework. The latter statute is, according to one leading scholar, “one of the most important regulatory statutes in American and perhaps global history” (Carpenter 2010:73). The original FDCA included almost all of the key elements that would shape FDA’s regulatory posture and preeminence for the remainder of the century: the absolute gatekeeping authority over new drugs, the emphasis on technocratic assessment of product safety, and the regulatory focus on products rather than on firm or individual behavior.
Both the FDCA and its precursor, the PFDA, reflected a regulatory concern for products rather than people—for things and words about things rather than primary conduct by producers and consumers. The FDCA’s statutory language created a set of adjectival standards to be applied to products that are abstracted out of the stream of commerce: new drugs must be proven “safe” and, after amendments in 1962, “effective” before marketing, and foods must not be “adulterated” or “misbranded” or else face the prospect of government seizure (21 USC §§ 321, 355 (2006 & Supp. III 2009)). Relatedly, FDA’s ample authority bears on the regulated products most heavily at temporally distinct moments in a particular product’s life cycle: at the moment before initial marketing for new drugs and devices and at the period of retail sale for foods. With some exceptions, more diffuse patterns of consumption and off-label use, by individual physicians and consumers, have generally been beyond FDA’s jurisdictional ambit.
This product-specific focus of FDA’s jurisdiction was essential in the constitutional culture of its creation, and the agency’s early power and prestige derived in part from its ability to enforce food and drug standards directly against offending products. Before the late New Deal Supreme Court reversed its earlier restrictive Commerce Clause rulings to permit greater national regulatory power, the federal government’s authority over conditions of manufacturing and other features of firm behavior was extremely limited, even as applied to the largest companies (Hammer v. Dagenhart 1918:251). The PFDA and the FDCA avoided this problem for the FDA and its predecessor by giving the federal government authority to proceed directly against offending products in interstate commerce through in rem1 seizure and condemnation proceedings. Beyond generating a bevy of memorable case names, such as United States v. Two Barrels Desiccated Eggs (1911:302), this in rem authority lent FDA ample power to enforce that was undiminished by the Supreme Court’s crabbed and categorical reading of the “commerce” power in the 1920s and 1930s. It also helped foster a regulatory dynamic that would persist long after the Commerce Clause was broadened by the Court—FDA through the twentieth century continued to regulate products more tightly than it did firm or consumer behavior. Focusing on products rather than people was originally a constitutional necessity, but it became embedded in the agency’s statutory architecture and institutional culture long after such doctrinal imperatives faded away and persists to a significant extent even today.
The result, then and now, is a drug regulatory regime administered by FDA that is curiously dichotomous, with substantial gatekeeping authority over certain aspects of new therapies (safety and efficacy) and virtually no authority over other crucial variables, such as a drug’s pricing or conditions of use. This dichotomy, and the resultant jurisdictional incapacity on the part of FDA, is largely driven by statute. Nevertheless, in important if more nuanced ways, the agency’s own practices have extended and perpetuated the acontextual nature of its approval decisions. For instance, over a half century ago, Senator Estes Kefauver and others recognized the perverse effect on overall prices of permitting approval and full patent protection of new drugs that offered only marginal gains, if any at all, over existing therapies. Many current critics have urged FDA to do more by way of requiring comparison studies before filing of a new drug application for approval of a new entity (O’Connor 2010). By continuing to adhere to placebo-controlled trials as the gold standard of safety and efficacy research, a choice invited by past agency practice but not necessarily dictated by express statutory terminology, FDA has extended a regime where new compounds are tested abstractly against a placebo rather than comparatively against existing medicines.
This dichotomous regulatory uncoupling of safety and cost is mirrored in FDA’s hands-off approach to regulating the actual conditions of use of pharmaceuticals even as it exercises up-front gatekeeping authority over the ex ante safety and efficacy of those products. FDA requires scientific proof of safety and efficacy of new drugs under specific conditions of use for treatment of a specified medical condition, but once approved, physicians are free to use marketed drugs for treatment of other ailments, in dosages, durations, combinations, and patient populations dramatically different from those of the controlled trials used for approval (Washington Legal Foundation v. Henney 1999:81). Early on, this agency disinterest in regulating “off-label” use was a necessary compromise against physician resistance to regulation of the “practice of medicine,” and it has persisted as a central limitation on FDA control of drug safety. In recent years, FDA has taken some steps to depart from this basic model and set conditions or warnings for actual use by physicians, for instance, through its Risk Evaluation and Mitigation Strategy (REMS) programs (Baker 2010), but the basic terms of this regulatory compromise remain.
FDA’s regulation of food products during the twentieth century has evinced a similar product-focused dynamic. Such a regulatory posture was exemplified by FDA’s ambitious midcentury effort to develop dozens of “standards of identity” for common foods, essentially commodifying large swaths of the American food supply (Merrill and Collier 1974). This effort was based on the premise that American consumers desired and were best served by a safe supply of uniform and fungible food products that were disconnected from the particulars of their agricultural production.
In sum, in its focus on technical and scientific expertise, neutrally applied to products abstracted from the stream of commerce (and the related complexities of production, consumption, and price), FDA has been the quintessential twentieth-century agency, ideal for a world of unbounded consumerism and optimistic faith in the perfecting power of impartial science. The second half of the twentieth century witnessed the apogee of the “consumer’s republic” (Cohen 2003), and FDA was the ideal bureaucratic steward for a nation experiencing sustained growth in both purchasing power and scientific expertise. It is no accident that the agency’s most triumphant moment of public acclaim—the 1961 ceremony honoring FDA pharmacologist Frances Kelsey for her role in preventing thalidomide’s marketing in the United States—took place at the Kennedy White House, which was also responsible for the Apollo space program. The National Aeronautics and Space Administration (NASA), like FDA, reflected an optimistic faith in the virtues of scientific achievement to meet society’s most urgent goals. Like NASA, FDA’s fundamental role and its agency culture developed in a time relatively unconcerned with the harsh realities of resource constraints, allocative choices, and trade-offs grounded in relative benefit assessments.
II. TODAY’S FOOD AND DRUG POLICY PROBLEMS
FDA was instrumental in creating a safe and plentiful supply of food and drugs over the past century. Yet it has had relatively little to say about allocating, constraining, or encouraging firm or individual behavior along the way. The product-specific focus that was essential to FDA’s developing constitutionality and institutional prestige has become a potential hindrance in the twenty-first century, when the most pressing problems involve the end-stage use and price of the regulated products rather than their abstracted safety. In this changing world, FDA’s core competencies in abstract, acontextual assessment of product safety are increasingly anachronistic.
This point is illustrated by the paradox of the food “safety” situation in the United States today. By many statistical measures, the American food supply is as safe as it has ever been in history. The risk of severe pathogenic food poisoning is extraordinarily low, accounting for only a few thousand deaths per year in a nation of 300 million (Scallan et al. 2011). Even this relatively low risk will drop further with the enhanced FDA inspection and recall authority granted through the Food Safety Modernization Act of 2011, which implements changes designed to make FDA more vigilant and responsive to food safety at the factory level.
Yet on a different metric, food in the United States is far from “safe.” Food consumption patterns are the single biggest consumer product threat to population health in the nation today, exceeding even tobacco in their effect on mortality and morbidity. Obesity, type 2 diabetes, coronary disease, and other health conditions related to the overconsumption of food are the largest cause of preventable deaths, accounting for over half a million deaths each year (Heron 2011). Many millions more suffer adverse health effects that impact their productivity and daily functioning. These food-related illnesses are a major driver of ever-increasing health care costs in the United States, by some measures accounting for almost a hundred billion dollars in additional medical expenditures each year (Finkelstein et al. 2009). For all of the evident urgency of addressing this obesity epidemic, FDA’s core regulatory paradigm is of only marginal utility; diseases of overconsumption arise from consuming products that are neither “adulterated” nor “misbranded” by the FDCA’s standards. The FDA has recently increased its information-forcing role in addressing obesity concerns, for instance, by issuing menu-labeling rules for chain restaurants requiring calorie disclosure (FDA 2014), but aside from promulgating such labeling and disclosure rules, the agency will likely play only a limited role in addressing this major public health crisis.
A similar story of mismatch between FDA’s traditional jurisdiction and core competence is apparent with respect to the most urgent problems in pharmaceutical policy today. Although occasional failures in the FDA-administered drug safety regime do periodically rise to great public salience (e.g., the recent NECC meningitis outbreak), FDA continues to perform well in assessing the abstracted “safety” and “efficacy” of new drugs before they enter the market. Yet most current policy discourse about pharmaceuticals emphasizes drug pricing and comparative effectiveness as the key questions for public and private regulation, and these considerations are outside of FDA’s traditional regulatory interests. Despite arguably possessing broad statutory authority to define efficacy as including a comparative component, FDA has codified by longstanding regulation a policy of assessing efficacy against placebo controls (O’Connor 2010).
This willful ignorance to comparative efficacy and cost is at odds with current health policy consensus. Policy scholars, including key architects of the 2010 Patient Protection and Affordable Care Act (ACA), have identified variations in physician practice—including in the use of pharmaceuticals—as a major drag on health care quality and a major driver of increasing health costs (Fischer et al. 2003). FDA’s historical inability (or unwillingness) to specify precise conditions of use for the drug products it approves has facilitated the regime of diffuse individualized physician practice that gives rise to such suboptimal variation. Although FDA has in the past decades tentatively done more to structure conditions of use for limited categories of products, the most important structures for public or private regulation that would smooth out such variation in the delivery of pharmaceuticals within the health care system look to institutions other than FDA, like public and private payors, to fix this problematic authority structure.
Looking ahead, even as FDA continues to perform its traditional function in assessing the abstract safety and efficacy of marketed products, it is operating in a world where such concerns, when divorced from the realities of price, comparative effectiveness, and physician usage, are progressively less important. As some scholars of this phenomenon have recently described, “[t]o gain market access, most prescription drugs will need to obtain a positive reimbursement or coverage decision from payers in addition to satisfying requirements for quality, safety and efficacy as assessed by drug regulatory agencies” (Eichler et al. 2010). In the future, ex ante FDA approval will cease (if it has not already) to be the most important regulatory event in a new therapeutic product’s life cycle; far more important will be the decision by public and private payers to include that product on their reimbursable formulary.
In this new world, FDA’s reluctance to embrace comparative effectiveness analysis places it at the margins of current policy thinking about comparative efficacy, which has become a central subject of inquiry in the health research and health care delivery systems in the United States and elsewhere. Exemplifying this disinclination to innovate, FDA in 2008, in issuing new regulations on the conduct of foreign clinical trials, flatly rejected a recommendation to require new drugs to be tested against existing therapies, explaining that “[w]e believe that [a requirement of drug–drug trials instead of placebo control] is inconsistent with U.S. law and policy because it would impose a standard for the design of clinical trials that is different from the standard of ‘adequate and well-controlled investigations’ which the act requires us to apply” (FDA 2008). As explained earlier, the strong-form endorsement of placebo control is more entrenched in FDA regulations than in the FDCA itself (O’Connor 2010), and FDA’s reluctance to reconsider is perhaps explained by its statement in the same regulations that the issue of requiring comparator drugs as controls “invokes issues of health care policy that are not directly related to FDA’s mission of ensuring that medical products are safe and effective” (ibid.). FDA’s narrow interpretation of its mission contrasts with the embrace of comparative effectiveness analysis by other key public and private actors, resulting in “an asymmetric playing field: policy and reimbursement decisions will be made in one agency [the new federal CER body] based on data that a sister agency [FDA] judges too unreliable” (Commission Regulation (EC) 726/2004, 2004 O.J. (306) 22). Such bifurcation and inconsistency already characterizes the European pharmaceutical landscape, where market approval decisions are made for the entire European Union by a central European Medicines Agency (EMA) “on the basis of the objective scientific criteria of quality, safety and efficacy…to the exclusion of economic and other considerations” (Eichler et al. 2010) while simultaneously coverage decisions and allocative trade-offs are made at the national level by a different set of agencies, like the United Kingdom’s National Institute for Health and Clinical Excellence (NICE), which quite explicitly applies cost-effectiveness metrics in making coverage recommendations for specific products.
This central dichotomy in pharmaceutical policy will only become more structurally entrenched in the next few decades of the twenty-first century as trends in cost containment, health system reorganization, and payer sophistication will greatly amplify the significance of the institutional coverage determinations that may or may not follow from ex ante market authorization. The ascendance of this bifurcated regime has several key implications for patients, providers, and the pharmaceutical industry going forward. First, the existence of sequential and independent gatekeepers controlling access to pharmaceuticals negatively affects both national uniformity and (relatedly) distributional equity in the allocation of expensive therapies. A measure of FDA’s prestige historically derived from the fact that the agency was highly unusual within American medicine’s diffuse authority structures—its drug and device approval decisions were national in scope even when most medical decisions remained at the bedside. This national standard-setting role will be blunted substantially as a multitude of public and private payers make (and are already making) disparate decisions about whether approved products are relatively effective enough to justify inclusion in a formulary mix sensitive to price concerns.
This in turn may lead to new problems of distributional equity. For most of the late twentieth century, FDA’s approval regime had a democratic character to it—lenient payer reimbursement policies meant that for most Americans with employment-based insurance, having private insurance was tantamount to having access to all but the most expensive or experimental new pharmaceutical therapies. This realm of patient and physician choice within existing insurance structures no longer exists, and going forward one’s access to particular products will depend increasingly on the variable choices made by private insurers, state Medicaid administrators, and federal agencies. One predictable silver lining for the FDA in this new regime is that much of the public and congressional ire about suboptimal “access to medicines” that is often directed at FDA’s approval process can be expected to be channeled in the future toward the public and private entities making these coverage decisions.
The increasing bifurcation between market approval and coverage has other implications for industry product development, research, and marketing. The twentieth-century world of a highly centralized FDA approval regime coupled with a highly diffuse prescribing regime (driven by individual doctors and their patients) was instrumental in shaping the structures and practices of both R&D and marketing in the pharmaceutical industry. Industry research on new chemical entities (NCEs) was tailored primarily to fit the standards and demands of FDA, and the prodigious amounts spent on marketing were directed at influencing individual physician behavior and consumer choices. These modes will remain important in the future, but industry increasingly faces both research and marketing challenges in realigning their message to operate in a world of two gatekeepers rather than one. The research challenge is particularly pointed in that private payers are demanding precisely the kind of comparative studies that FDA has deemphasized. As the formulary director of one national insurer recently opined, “we’ve been really hungry for head-to-head data….It will be difficult for drugs to get front-line consideration [for reimbursement] unless they have that kind of data available” (Wang et al. 2012).
How these dynamics play out in actual operation remains to be seen, and much uncertainty remains. What is certain is that the twenty-first-century world of pharmaceutical regulation looks to be a great deal more institutionally complex than the prior half century. FDA’s traditional focal points of therapeutic safety and efficacy will continue to be necessary benchmarks for marketed products, but meeting such standards will no longer be sufficient to create a presumption of broad access. FDA is hardly relegated to the sidelines in this regime but to a greater extent than in past decades shares the field of play with several other increasingly important players. This regulatory multiplicity may ultimately be the right solution but only if other public and private entities achieve the success in these new functions that FDA has enjoyed in fulfilling its traditional ones.
III. POTENTIAL NEW DIRECTIONS IN FOOD AND DRUG REGULATION
In a world where patterns of consumption, pricing, and production of food and drugs have become imperatives, FDA will continue to maintain a role, but a diminished one. Two policy responses are already emerging that may prefigure the shape of a twenty-first century food and drug regulatory regime—one with a continuing but less predominant role for FDA.
The first of these, the phenomenon of multiplicitous and multimodal regulation, involves numerous public and private entities at the state and federal levels that work in loose concert toward a given regulatory end. The progress made in reducing youth smoking rates over the past fifteen years illustrates the power of such a coordinated, multiplicitous approach while also revealing FDA’s relative marginality on the issue. In the 1990s, smoking was identified as the leading preventable cause of death and disease in the United States. Under Commissioner David Kessler, FDA famously took action to address this public health crisis, issuing new proposed regulations in 1995 that asserted agency jurisdiction over tobacco and ambitiously aimed to cut youth smoking in half in the seven years after promulgation of the new rules—only to be thwarted by the U.S. Supreme Court in the Brown & Williamson ruling (2000). Yet even though FDA was pushed to the side by the Court, the agency’s stated goal of dramatically reducing youth smoking was almost fully realized in a decade (Centers for Disease Control 2008).
How did this happen? The answer lies in the range of institutional strategies and governmental interventions that emerged to fill the void created by FDA’s ultimate lack of jurisdiction. Aggressive countermarketing campaigns by state governments, local bans on the sale or use of tobacco in public places and workplaces, employer disincentives for smoking, innovative state lawsuits, and continued Federal Trade Commission restriction of tobacco marketing all coalesced to achieve substantially the same goal that FDA had sought in its assertion of regulation. This story of multiple and decentralized institutions has clear implications for the pressing policy battle in the decades ahead against obesity and its related health complications.
The second new direction in regulation that will reduce FDA’s primacy in pharmaceutical regulation is an already emerging dynamic of regulation by payment, in which rules for primary conduct are enforced not by traditional coercive regulation but rather by strings attached to government or private payment streams. In the United States and throughout the developed world, various public and private institutions are spending increasing amounts of money on food, pharmaceuticals, and medical care, and these institutional payers are becoming increasingly aggressive at attaching policy-related conditions to the funds they disburse.
Today in the health care field, although the federal government remains (for now) reluctant to use its ample purchasing power to force price concessions from manufacturers or to encourage shifting to cheaper generics, state governments have already asserted authority through their Medicaid reimbursement policies to shift physician and patient behavior in the area of prescription drugs. Such efforts have produced a tangible policy payoff: from 2005 to 2009 the percentage of total prescriptions nationally that were filled with brand-name drugs fell from 40 percent to 25.6 percent (National Conference of State Legislatures 2010). Similar reimbursement incentives and restrictions have been implemented by private health insurance companies and stemmed the tide of pharmaceutical cost growth.
In this world of restrictive and cost-conscious reimbursement policy, it is possible to imagine what would have been unthinkable only a few decades ago—namely, that within ten years the most important agency with jurisdiction over pharmaceuticals will not be FDA but rather the Centers for Medicare and Medicaid Services or some successor or state entities that decide which subset of approved drugs are cost-effective enough to include on the shrinking public and private formularies. This regulatory divergence and disuniformity is already on display in the European Union, which has centralized and standardized drug safety determinations but devolved coverage, payment, and cost-effectiveness determinations for pharmaceuticals to national or subnational units—leading to wide discrepancies in the public formularies of different nations.
Many of the same shifting priorities also apply in the realm of food. Although most individual food purchases are not directly subsidized by third-party payers, federal and state governments are actively involved in purchasing or subsidizing billions of dollars of food for segments of the population, and here too payers are beginning to exercise a more active or directive approach. As an example, the U.S. Department of Agriculture (USDA) spends 3.5 times more annually on subsidized school lunches ($14 billion) than the entire yearly budget of FDA ($4 billion), and with this huge funding stream comes the opportunity to compel healthier menus at tens of thousands of local schools. Under the Obama administration, the USDA has begun to require that recipient school districts offer a menu of healthy options for their students and remove foods and beverages that increase public health risks (Cohen et al. 2014). State and local governments are enacting similar policies for both school lunch and food stamp programs. In the years ahead, these funding restraints will likely perform functions relating to public health and food consumption that are as important as the work of FDA.
IV. CONCLUSION
Despite the increasing shift of policy relevance to institutions outside of FDA, on many issues touching crucial food and drug policy questions FDA retains significant discretionary authority, which it could use to remain an important player in addressing the major public health issues of the twenty-first century. However, the shifting imperatives of food and drug policy in the twenty-first century have created a policy world where FDA will cede at least some of its traditional predominance. Today’s most pressing food and drug problems arise from the way we use, consume, and pay for such products, and these are variables outside of FDA’s traditional jurisdiction and core competency. In the next century, FDA will be a key partner, but less of a leader, on the key regulatory choices the United States makes in food and drug policy.
NOTE
1. In rem proceedings are actions against physical objects (not persons or their conduct); the more common in personam actions are brought against individuals or entities.
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