FDA states cost 'not considered in any of our reviews'

Monday, August 9, 2010

WASHINGTON - America's ongoing healthcare debate has put the matter of medical costs at center stage. While the Obama administration and its critics sharply disagree over whether the reform act will increase or decrease costs, virtually all parties agree that cost reduction is a primary goal.

Except, it seems, for the Food and Drug Administration (FDA).

In a recent interview with Newsweek, two high ranking FDA officials stated that the agency does not consider cost when reviewing new drugs or devices:

Newsweek: ...as part of that deliberation process, when you guys are considering whether to approve a device or not, do you take into account the cost that would impose on companies or the general impact on the industry?

AG: No. No. Our review does not, no, we don't take into account cost.

EM: And Mary, that cuts agencywide. That is not considered in any of our reviews.

These statements apparently reflect actual FDA practice, as they were made by senior staffers Alberto Gutierrez, Director of the Office of In Vitro Diagnostics and Elizabeth Mansfield, Director of the Personalized Medicine Staff.

When presented with language on the FDA's website that appeared to demand cost-benefit analysis, Gutierrez and Mansfield countered that cost is only considered before a new rule or regulation is enacted, rather than on an ongoing basis while it is enforced. The officials further claimed that significant expansions of FDA authority, such as the recent proposal to regulate tens of thousands of clinical labs, are not covered under the narrow legal definition of "new rule or regulation" and therefore also not subject to cost-benefit analysis.

However, these claims appear to contradict official agency policy, which states: "we estimate both the incremental benefits and costs associated with increasing the stringency of regulation and the incremental foregone benefits and cost savings associated with decreasing the stringency of regulation."
Alberto Gutierrez, Director of FDA Office of In Vitro Diagnostics

In a Newsweek interview, FDA's Alberto Gutierrez stated "we don't take into account cost."

Gutierrez and Mansfield's declaration appears to validate the longstanding concerns of many libertarian-leaning FDA watchers, who generally fault the agency for not taking the impact of regulation on prices into account when approving new drugs and devices. Over the years, these critics have included Nobel Laureates Gary Becker and Milton Friedman as well as academics like Alex Tabarrok of GMU and former FDA official Henry Miller.

But the declaration also plays into an emerging narrative in which the FDA has increasingly run afoul of cost-conscious liberals, by opposing prescription drug re-importation and claiming that the Obama Administration's efforts to reduce costs by digitizing medical records require FDA oversight.

"[FDA Official] Jeffrey Shuren's campaign to expand the domain of CDRH [Center for Devices and Radiological Health] to encompass electronic medical records has met significant resistance from people who care deeply about using IT to reduce healthcare expenditures", noted a member of the Health IT Standards Committee. "The revelation that the FDA is statutorily prevented from considering cost is simultaneously breathtaking and unsurprising."

Several sources in Washington predicted a strong reaction to the comments.

"[Journalist] Michael Kinsley's definition of a gaffe is when a politician tells the truth", said a former FDA official from the Clinton administration. "By that measure, Gutierrez and Mansfield have committed quite a gaffe."

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