To what standard should the FDA hold new drugs? The FDA has a number of choices. Drugs companies could be required to prove that the drugs they make:
- Do no harm.
- Are more effective than placebos
- Are more effective than existing drugs
- Are more cost-effective than existing drugs, or
- Are both more effective and more cost effective than existing drugs.
For my money, I believe the standard should be the first and second ones. The drug company should simply have to show that the drug does no harm and is more effective than placebos.
Due to asymmetric information, however, the FDA could require the drug companies to compare their drug’s effectiveness against existing treatments or gauge the cost-effectiveness of the treatment. Although these effectiveness and cost-effectiveness tests need not affect drug approval, insurance plans could use this information to determine if they should cover the drugs.
GoozNews has some interesting commentary regarding calls for the FDA to perform Stage III CER testing.
“I do not support the position of advocates like former New England Journal of Medicine editor Marcia Angell who think new drugs should have to be proven better than what exists before they are approved. If companies want to bring comparable therapies to market, that’s their business. It may even be the case that some me-too drugs work in some sub-populations, but not in others. So if one drug fails to achieve lower cholesterol, or offer arthritis pain relief, for instance, the doctor can switch her patient to the newer drug. But if the new drug is not proven to be better than what exists in a large Phase III trial, then physicians, patients and payers will have the information they need to insist that people start on the cheapest, comparably effective medicine that is available. For most drug classes, that will mean a generic.“