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The FDA’s Accelerated Approval Process: Does the Pharmaceutical Industry Have Adequate Incentives for Self-Regulation?

Published online by Cambridge University Press:  24 February 2021

Vivian I. Orlando
Vivian I. Orlando*
Affiliation:
University of Southern California, Biological Sciences; Georgetown University, Boston University
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Extract

Prompted by criticisms of long delays in its drug approval processes, the Food and Drug Administration (FDA or the Administration) took a number of measures in recent years to expedite access and increase availability of new drugs for terminally ill patients. These reforms began in the late 1980s, as acquired immune deficiency syndrome (AIDS) advocacy organizations openly criticized the FDA, noting that its policies were insufficient to address the prevalence of AIDS and the lag time for FDA approval of new AIDS treatments. The FDA's primary responsibility is to promote efficacy and ensure safety of new drugs. Consequently, the FDA must balance patients' desires to obtain new medications to treat serious and lifethreatening illnesses against government's desires to protect patients from abuses of the new drug approval process. The structure of the FDA's regulatory procedures is, therefore, essential to providing safe, effective medical treatments to patients. FDA regulations and guidelines set forth standards and practices that pharmaceutical companies must follow to gain approval of newly developed drugs.

Type
Notes and Comments
Information
American Journal of Law & Medicine , Volume 25 , Issue 4 , 1999 , pp. 543 - 568
Copyright
Copyright © American Society of Law, Medicine and Ethics and Boston University 1999

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References

1 See Expanded Availability of Investigational New Drugs Through a Parallel Track Mechanism for People With AIDS and Other HIV-Related Disease, 57 Fed. Reg. 13,250 (1992) (notice of final policy statement Apr. 15, 1992); New Drug, Antibiotic, and Biological Drug Product Regulations; Accelerated Approval, 57 Fed. Reg. 58,942 (1992) (codified as amended at 21 C.F.R. §§ 314.500-.560, 601.40-46 (1999)).

2 See, e.g., New Drug, Antibiotic, and Biological Drug Product Regulations; Treatment Use and Sale, 52 Fed. Reg. 19,466 (1987) (codified as amended at 21 C.F.R. § 312 (1999)) (authorizing treatment with investigational new drugs (INDs)).

3 See Lisa Terrizzi Survey, The Need for Improved Access to Experimental Drug Therapy: AIDS Activists and Their Call for a Parallel Track Policy, 4 Admin. L.J. 589, 597 (1991); see also Ronald Podraza, The FDA's Response to AIDS: Paradigm Shift in New Drug Policy, 48 Food & Drug L.J. 351, 352-53 (1993) (discussing the Food and Drug Administration’s (FDA) relaxing of policies, particularly since 1987, as pressures on the FDA from acquired immune deficiency syndrome (AIDS) activists rose as a result of AIDS becoming recognized as an epidemic). Ronald Podraza also noted that the pressure for relaxing FDA policies stemmed from conservatives, who were critical of the FDA policies for determining access, availability and risks that terminally ill patients may take with respect to new pharmaceuticals. See id. at 352. For a discussion of the FDA’s accelerated approval process of AIDS treatments, the development of protease inhibitors and the conflicting concerns of AIDS patients balancing safety and efficacy of new AIDS treatments, see Stephen Fried, Cocktail Hour, Wash. POST, May 18, 1997, (Magazine), at W10.

4 See 21 U.S.C. § 393(b) (codifying the FDA’s function and mission, including its duties to review clinical research and marketing of regulated products, as well as to monitor safety and efficacy of drugs).

5 See Podraza, supra note 3, at 351, 354 (discussing generally the tension between safety and effectiveness of drugs, and access to drugs, particularly in the AIDS context); see also 21 U.S.C. § 393(b) (discussing the FDA’s mission).

6 See 21 U.S.C. § 393(b). Further, § 393(0 provides that the “Secretary [of Health and Human Services], after consultation with appropriate scientific and academic experts, health care professionals, representatives of patients and consumer advocacy groups, and the regulated industry, shall develop and publish in the Federal Register a plan bringing the Secretary into compliance with each of the obligations of the Secretary under this chapter.” Id. § 393(f).

7 See 21 C.F.R. §§ 314.500-560; see also William F. Fox, Jr., Understanding ADMINISTRATIVE Law § 2, at 8-9 (3d ed. 1997) (noting that businesses look to regulation to provide them with guidance, to reduce liability and to provide security in transactions).

8 See regulations cited supra notes 1-3.

9 See Lois K. Perrin, Note, The Catch-22 for Persons with AIDS: To Have or Not to Have Easy Access to Experimental Therapies and Early Approval for New Drugs, 69 S. Cal. L. Rev. 105, 108 (1995) (discussing AIDS advocates’ concerns about the expedited approval process at a parallel track market endorsement of stauvidine, a parallel track drug).

10 See discussion infra Part III.

11 See Perrin, supra note 9, at 108.

12 See discussion infra Part III.

13 See generally 21 C.F.R. §§ 314.500-.560 (noting that certain new drugs may prove beneficial to patients who are unresponsive to available drug therapy).

14 See id. § 314.510 (noting that marketing approval is contingent on adequate clinical trials). The FDA requires pharmaceutical companies to continue clinical testing and to verify actual clinical benefits when the new drug is approved based on surrogate endpoints. See id. Continued testing is required for a company to maintain the drug’s accelerated approval status. See id. When relying on surrogate endpoints, approval is contingent on reasonably likely effects, based on epidemiological, therapeutic, pathophysiological evidence, rather than clinical endpoints based on clinical studies of morbidity and mortality. See id. The FDA conceded that approval based on surrogate endpoints required exercising greater judgement than approval based on pharmacologic activity evidence, as ordinary approval required. See New Drug, Antibiotic, and Biological Drug Product Regulations; Accelerated Approval, 57 Fed. Reg. 58,942, 58,944 (1992). However, the FDA also noted that in the past, approval of several drugs was based on surrogate endpoints. See id.

15 See Restatement (Second) of Torts § 402A cmt. k (1965).

16 See generally Federal Food, Drug, and Cosmetic Act of 1938, Pub. L. No. 75-717, 52 Stat. 1040 (codified as amended at 21 U.S.C. §§ 301-95 (1994 & Supp. Ill 1998)). In 1906, Congress began to regulate food and drugs, enacting the Pure Food and Drugs Act of 1906 (PFDA). See Pub. L. No. 59384, 34 Stat. 768 (repealed 1938). Generally the PFDA prohibited misbranded food and drugs from being introduced into interstate commerce. See id. However, it did not provide safety requirements such as initial testing. See id.

17 Federal Food, Drug, and Cosmetic Act of 1938, Pub. L. No. 75-717, 52 Stat. 1040 (codified as amended at 21 U.S.C. §§ 301-95 (1994 & Supp. Ill 1998)).

18 See 21 U.S.C. § 393 (1994 & Supp. Ill 1998).

19 See id. § 393.

20 Drug Amendments of 1962, Pub. L. No. 87-781, 76 Stat. 780 (current version as amended at scattered sections of 21 U.S.C.).

21 See id. § 102, 76 Stat. at 781-82 (current version as amended at 21 U.S.C. §§ 321(p), 355 (1994 & Supp. Ill 1998). The amendments to the Federal Food, Drug, and Cosmetic Act (FDCA) codified new requirements that the FDA monitor safety and efficacy of new drugs. See id.

22 See Lisa C. Will, Note, Accelerated FDA Approval of Investigational New Drugs: Hope for Seriously III Patients, 94 DICK. L. Rev. 1037, 1037 (1990) (discussing the history of the Kefauver- Harris Amendments and their effects on approval time for new drugs). The Kefauver-Harris Amendments generally rose out of concerns over the thalidomide tragedy of 1961. See id. at 1038. In particular, the Amendments added the requirement of efficacy but added little to the safety requirement. See id. The Amendments marked the rise of the FDA’s role in regulating drugs and a shift from control of drug safety and efficacy by market forces to regulatory control. See id. at 1039.

23 See Podraza, supra note 3, at 351-53. Podraza notes that the interest groups used the media to wage a full-force attack on the FDA in the mid 1980s. See id. at 352. In particular, groups attacked the restrictive nature of the FDA’s clinical testing process, claiming that the FDA was responsible for foot dragging and regulatory overkill. See id. at 353.

24 See, e.g.. New Drug and Antibiotic Regulations, 50 Fed. Reg. 7452 (1985) (codified at 21 C.F.R. § 314). This new regulation marked the beginning of significant changes that were to follow in altering the FDA’s approval processes. See infra Part II.B (discussing recent developments in the FDA’s fast track approval process).

25 New Drug, Antibiotic, and Biological Drug Product Regulations; Treatment Use and Sale, 52 Fed. Reg. 19,466 (1987) (codified as amended at 21 C.F.R. § 312 (1999)).

26 See 21 C.F.R. § 312.34(a). This section provides that drugs used to treat serious illnesses may be made available during Phase 2 or 3. See id. Further, this section provides that a drug for treating an immediately life-threatening disease may be made available even earlier than Phase 2. See id. For a discussion of the various phases of clinical drug testing, see infra Part III.A.l.

27 See id. §§ 312.34(b)(l)(ii), (b)(2), (b)(3)(i).

28 See id. § 312.34(b)(l)(iv).

29 See Expanded Availability of Investigational New Drugs Through a Parallel Track Mechanism for People With AIDS and Other HIV-Related Disease, 57 Fed. Reg. 13,250 (1992) (notice of final policy statement Apr. 15, 1992).

30 See id. Although the FDA limited the parallel track process to AIDS and human immunodeficiency virus (HIV) treatments, it suggested that the parallel track process might be expanded to other life-threatening diseases in the future. See id. This suggestion was based on comments that the HIV and AIDS parallel track serve as a “pilot project to work out specific appropriate administrative procedures.” Id. The FDA pointed out that agreements between the National Cancer Institute and FDA, and the availability of INDs, may suffice until the parallel track process can be fully evaluated. See id.

31 See id. at 13,257.

32 See id. at 13,253.

33 See id. at 13,251.

34 See id. at 13,253.

35 See Perrin, supra note 9, at 135.

36 See id. See generally New Drug, Antibiotic, and Biological Drug Product Regulations; Accelerated Approval, 57 Fed. Reg. 58,942 (1992) (codified as amended at 21 C.F.R. §§ 314.500-.560, 601.40-.46 (1999)) (codifying the FDA’s accelerated approval policy for drugs used in treating serious or life-threatening illnesses).

37 See 21 C.F.R. § 314.500.

38 See id.

39 See id.

40 See id. §314.510.

41 See id. §§ 314.510, 314.530, 314.80(c).

42 See Restatement (Second) of Torts § 402A cmt. k (1965). Comment k states in relevant part

There are some products which, in the present state of human knowledge, are quite incapable of being made safe for their intended and ordinary use. These are especially common in the field of drugs… . Such a product, properly prepared, and accompanied by proper directions and warning is not defective, nor is it unreasonably dangerous… .

It is also true in particular of many new or experimental drugs as to which, because of lack of time and opportunity for sufficient medical experience, there can be no assurance of safety … but such experience as there is justifies the marketing and use of the drug notwithstanding a medically recognizable risk. .. . The seller of such products… is not to be held strictly liable for the unfortunate consequences of their use, merely because he has undertaken to supply the public with an apparently useful and desirable product, attended with a known but apparently reasonable risk.

Id.

43 See id. § 402A.

44 See id.

45 See id.

46 See Patty Coleman Selker, Comment, An Escape from Strict Liability: Pharmaceutical Manufacturers’ Responsibility for Drug-Related Injuries Under Comment k to Section 402A of the Restatement (Second) of Torts, 23 DUQ. L. REV. 199, 209-14 (1984) (discussing different approaches courts have taken to the strict liability problem in pharmaceutical cases).

47 See id.’, see also Christopher J. Albee & Dawn Kilgallen, Comment, Providing Blanket Comment k Immunity to All FDA Approved Ethical Drugs: The Defect in Grundberg v. Upjohn Co., 7 St. JOHN’S J. Legal comment. 475, 494-95 (1991) (suggesting that comment k may often be interpreted too broadly and that comment k was intended to protect only those drugs that are unavoidably unsafe). Courts should employ a case-by-case approach to determine if comment k applies. See id. at 494; see also Restatement (Second) OF TORTS § 402A cmt. k (1965); Brody v. Overlook Hosp., 332 A.2d 596, 597 (N.J. 1975) (holding that comment k exemption from strict liability for unavoidably unsafe biologies applied in the case of blood transfusions infected with hepatitis). But see Shanks v. Upjohn Co., 835 P.2d 1189, 1197-98 (Alaska 1992) (rejecting comment k on three separate grounds and holding that manufacturers may be protected from strict liability under design defect theories).

48 751 P.2d 470 (Cal. 1988) (holding that comment k immunity should be expanded to all drugs, not just those that are unavoidably dangerous).

49 See id. at 476.

50 884 F.2d 1064, 1069 (8th Cir. 1989) (holding that comment k immunity should be limited to only unavoidably unsafe drugs).

51 See id. at 1069.

52 See Perrin, supra note 9, at 108.

53 See 21 C.F.R. §§ 314.1,314.500.

54 See id.

55 See Perrin, supra note 9, at 112.

56 See id.

57 See id.

58 See id. at 112-13.

59 See id. at 113.

60 See 21 C.F.R. § 314.500.

61 See William f. Samuelson & Stephen G. Marks, Managerial Economics 263-65 (3d ed. 1999). “A sunk cost is a cost that has already been incurred and cannot be recovered.” Id. at 263. In an economic sense, the cost of research and development (R & D), a sunk cost, should not weigh into a firm’s current decision to proceed with a project. See id. at 263. Therefore, R & D is considered irrelevant to the decision to proceed with a project further, but may be a factor when a firm considers pricing decisions and how much the firm would like to generate as profit. See id. at 263-65.

62 For an interesting discussion of the high R & D expenses pharmaceutical companies incur, and the percentage of such costs passed on to consumers, see Stewart O. Schweitzer & William S. Comanor, The Cost of Pharmaceuticals, in Changing The U.S. Health Care System: Key Issues in Health Services, Policy and Management 101, 104, 108, 116 (Anderson et al. eds. 1996); .see also Veronica Henry, Problems with Pharmaceutical Regulation in the United States: Drug Lag and Orphan Drugs, 14 J. Legal Med. 617, 617 (1992) (stating that it costs “approximately $231 million and takes approximately 10 to 12 years to develop a new drug in the United States”). For a discussion of the high costs of developing drugs such as azidothymidine (commonly known by its acronym “AZT”), and the incentives pharmaceutical companies have to recover these costs, see id. at 623-28. Pharmaceutical companies lose millions of dollars per month awaiting FDA approval. See Lars Noah, Administrative Arm Twisting in the Shadow of Congressional Delegations of Authority, 1997 WlS. L. REV. 873, 882 (1997).

63 See discussion infra note 123 (discussing the FDA’s subsidizing of the high costs of pharmaceuticals by allowing accelerated approval drugs to enter the market more rapidly than usual).

64 For a general discussion of earnings per share (EPS) and other economic ratios that may be affected by discovery of adverse side-effects and subsequent removal from the market of accelerated approval drugs, see Clyde P. Stickney & Roman l. Weil, Financial Accounting: an Introduction to Concepts, Methods and Uses 274-321 (8th ed. 1997). EPS of common stock is a measure of profitability of a firm. See id. at 294. EPS is generally reported in two forms: basic EPS (determined by dividing the weighted average of the number of common shares outstanding during the period, into the sum of the net income minus the dividends declared) and fully diluted EPS (which takes into account convertible bonds and other stock options that can be converted into common shares of stock and dillutes the EPS by increasing the number of common shares outstanding). See id. at 295.

65 Capital gains are the proceeds in excess of cost or basis from the sale of a capital asset. See id. at G-15. Assets held for a sufficiently long time, prior to sale, are taxed at a lower rate than other gains and standard income. See id. If the value of a stock increases, then the sale of the stock will result in a net positive gain when the stock is sold. See id. at 275, 319. If the stock price decreases, the difference between the eventual selling price and the purchase price will be negative, resulting in a capital loss. See id. at 275.

66 Goodwill “indicates the value of good customer relations, high employee morale, a well respected business name, and so on, all of which the firm or analyst expects to result in greater-than- normal earning power.” Id. at G-46. Patents may not appear on a company’s books but may be a factor in the company’s selling price as goodwill. See id.

67 Willingness of investors to buy shares or bonds in a company is partially based on their perceptions of the company in addition to the company’s financial ability to repay debt or make profits. See Stephen A. Ross et al., Corporate Finance 371,559 (4th ed. 1996) (discussing long-term debt and bond risk).

68 See Richard J. Nelson, Note, Regulation of Investigational New Drugs: ‘Giant Step for the Sick and Dying’, 77 Geo. L.J. 463, 488 (1988) (expressing concerns about the potential dangers of the Fda’s Ind approvals in Phase 1).

69 See id.

70 See id.

71 See id.

72 See id.

73 See id.

74 See id.

75 See id. at 487-88.

76 See id.

77 See Sheila R. Shulman & Jeffrey S. Brown, The Food and Drug Administration's Early Access and Fast Tract Approval Initiatives: How Have They Worked?, 50 FOOD & DRUG L.J. 503, 516 (1995). The FDA is focusing on establishing therapeutic value of new drugs, rather than on making new drugs available rapidly. See id. The primary source of this réévaluation stems from concerns that “the FDA has departed too radically from its traditional evidentiary standard for approval.” Id.; see also Matthew C. Lovell, Second Thoughts: Do the FDA‘s Responses to a Fatal Drug Trial and the AIDS Activist Community’s Doubts About Early Access to Drugs Hint at a Shift in Basic FDA Policy?, 51 FOOD & Drug L.J. 273, 274 (1996) (discussing AIDS advocates’ rising concerns about accelerated approval).

78 See Shulman & Brown, supra note 77, at 516-17.

79 See Perrin, supra note 9, at 145.

80 See id. at 144.

81 See id. at 144-45.

82 See id. at 145.

83 Interestingly, although most private companies’ decisions are based on a profit-maximization theory, see Samuelson & MARKS, supra note 61, at 9, the government’s drug regulation decisions are based on a cost-benefit analysis theory. See discussion infra note 123.

84 In theory, clinical trials are supposed to continue during the accelerated approval application according to the FDA’s determination of necessity. See 21 C.F.R. § 314.510.

85 See Perrin, supra note 9, at 145.

86 See id. at 145-46.

87 See 21 U.S.C. § 371 (1994 & Supp. Ill 1998).

88 See U.S. CONST, art. I, § 8, cl. 18.

89 For a general discussion of agency law, including the controversy surrounding legislative veto provisions, see Immigration and Naturalization Serv. v. Chadha, 462 U.S. 919, 944-59 (1983).

90 See 21 C.F.R. §§ 314.540, 314.80-.81.

91 See id. § 314.540. Although drugs may be approved under the accelerated approval process, they will still be subject to postmarketing recordkeeping and safety reporting requirements applicable to all approved drugs. See id.

92 See id. § 314.500. The accelerated approval of new drugs for serious or life-threatening illnesses applies to certain new drugs that have been studied for initial safety and efficacy and provide therapeutic benefits over existing treatments. See id. The FDA’s regulations specifically address the issue of safety by including provisions for approval with restrictions, continuing clinical studies, and withdrawal of accelerated approval if the FDA finds it is warranted. See id. §§ 314.510—.530.

93 See id. § 314.530. Accelerated approval for new drugs may be withdrawn, following a hearing, if:

  1. (1)

    (1) A postmarketing clinical study fails to verify clinical benefit;

  2. (2)

    (2) The applicant fails to perform the required postmarketing study with due diligence;

  3. (3)

    (3) Use after marketing demonstrates that postmarketing restrictions are inadequate to assure the safe use of the drug product;

  4. (4)

    (4) The applicant fails to adhere to the postmarketing restrictions agreed upon;

  5. (5)

    (5) The promotional materials are false or misleading; or

  6. (6)

    (6) Other evidence demonstrates that the drug is not shown to be safe and effective under its conditions of use.

Id. § 314.530(a).

94 See Noah, supra note 62, at 888. Lars Noah notes that voluntary drug recalls have worked because pharmaceutical companies know that “a failure to cooperate with an agency’s request risks more serious enforcement measures authorized by statute, such as product seizures, injunctions and even criminal penalties.” Id. at 888-89. The FDA believes that these measures are cumbersome and prefers adverse publicity, through the use of warning letters. See id. Pharmaceutical companies also prefer voluntary recalls because recalls allow them to control what information is released. See id. Further, the Food and Drug Administration Modernization Act of 1997, Pub. L. No. 105-115, 111 Stat. 2296 (codified as amended in scattered sections of 21 U.S.C.), provided notification procedures for discontinuing of a life-saving product and getting information to physician and patient organizations. See id. sec. 131, § 506c, 111 Stat. at 2332 (codified at 21 U.S.C. § 356c (Supp. Ill 1998)).

95 See 21 C.F.R. § 314.530; see also id. § 314.80 (codifying the FDA’s adverse drug reaction reporting requirements). An adverse drug experience is defined as:

Any adverse event associated with the use of a drug in humans, whether or not considered drug related, including the following: An adverse event occurring in the course of the use of a drug product in professional practice; an adverse event occurring from drug overdose whether accidental or intentional; an adverse event occurring from drug abuse; an adverse event occurring from drug withdrawal; and any failure of expected pharmacological action.

Id. § 314.80(a).

The FDA requires that applicants complete an “Alert report” for any adverse drug experience within fifteen days. See id. § 314.80(c)( 1 )(i). The applicant also has a duty to investigate such event and report any additional information to the FDA within fifteen days. See id. § 314.80(c)(l)(ii). Another provision states that the FDA’s release of any information contained in a Alert report, or statements made in an Alert Report, do not necessarily “reflect a conclusion by the applicant or the FDA that the report or information constitutes an admission that the drug caused or contributed to an adverse event.” Id. § 314.80(k). This disclaimer provides an incentive for pharmaceutical companies to disclose adverse events that occur during clinical trials.

96 See Fried, supra note 3, at W13.

97 See id. at W12; see also Otesa Middleton, Many Firms Pushing Search for AIDS Drugs: Drug, Biotech Companies Working on 113 Products, Trade Group Survey Finds, WALL St. J., Dec. 7, 1998, at B9A. “Innovative medications helped cut the death rate from AIDS nearly in half last year.” Id. The importance of these new drugs stems from the nature of AIDS, which tends to mutate causing current treatments to become ineffective as patients become resistant. See id. Further, accelerated approval has allowed expansion of AIDS treatments to include women, children and minority groups who were in the past unable to receive treatments, but are the fastest growing group with AIDS. See id.

98 For a discussion of privatization proposals for the FDA, see infra Part III.D. 1.

99 See supra Part III.A.2 (discussing the fialuridine tragedy); Lovell supra note 77, at 273-74.

100 See Perrin, supra note 9, at 144.

101 See id. at 151-52; see also The Food and Drug Administration Modernization Act of 1997, Pub. L. No. 105-115, 111 Stat. 2296 (codified as amended in scattered sections of 21 U.S.C.). The Act amended the FDCA, codifying many of the FDA enforcement powers and delegating power to the Secretary of Health and Human Services (HHS) to enforce the provisions of the Act. See id. sec. 406, § 903, 111 Stat. at 2369-70 (codified at 21 U.S.C. § 393(f) (Supp. Ill 1998)). The Secretary’s powers included “implementing inspection and postmarket monitoring provisions.” Id. sec. 406(b), § 903(f)(2)(C), 111 Stat. at 2370 (codified at 21 U.S.C. § 393(f)(2)(c) (Supp. Ill 1998)). The Act specified that the Secretary of HHS would prepare an annual report including any “regulatory policy that has a significant negative impact on compliance with any objective of the plan or any statutory obligation and sets forth any proposed revision to any such regulatory policy.” Id. sec. 406(b), § 903(g)(3), 111 Stat. at 2370 (codified at 21 U.S.C. § 393(g)(3) (Supp. Ill 1998)).

102 See Perrin, supra note 9, at 144-46, 151-52.

103 See infra Part IV.C.

104 See infra Part IV.B. (discussing recommendations for increasing the FDA’s enforcement powers).

105 For a discussion of some recent FDA policy changes, see Elyse Tanouye, American Home Withdraws New Drug to Ease Pain, After Death of 4 Patients, Wall St. J., June 23, 1998, at A3 (discussing the case of the pain reliever, Duract which recently was pulled from the market after several patients died and eight required liver transplants). Some individuals voiced concerns that the current drug safety problems reflected problems with the FDA’s accelerated approval process. See id. However, the FDA quickly acted to send a letter and a black-box warning to physicians, indicating that patients may develop jaundice, hepatitis and/or liver failure. See id. When these efforts did not stop doctors from prescribing the drug for more than ten days, the recommended maximum, the FDA requested that American Home Products pull the drug, and the company rapidly complied. See id. The rash of current drug safety problems may also be the result of the FDA’s attempts to rigidly enforce reporting of adverse reactions and increased surveillance of approved drugs. See id;, see also FDA Faults News Release on Agouron's AIDS Drug, Wall St. J., Apr. 29, 1997, at Bll (discussing the FDA’s use of a “letter” posted on its website as a sanction for Agouron’s news release that implied that its clinical results were “more representative than they really are.” The FDA’s letter, sent to Agouron, was issued within a week of Agouron’s press release. See id.)

106 See supra Part II1.A.2. (discussing concerns about abuse of the accelerated approval process); Perrin, supra note 9, at 145-46.

107 See Shulman & Brown, supra note 77, at 515.

108 The plain language of the FDA’s regulations allows for “Accelerated Approval of New Drugs for Serious or Life-Threatening Illnesses.” 21 C.F.R. § 314.500. Additionally, the FDA discussed concerns that accelerated approval would become the norm. See New Drug, Antibiotic, and Biological Drug Product Regulations; Accelerated Approval, 57 Fed. Reg. 58,942, 58,945 (1992). The FDA denied this charge and clearly stated that accelerated approval would not be expanded to cover nonserious or non-life-threatening disease. See id. The FDA noted that it is impossible to define every illness considered serious and life threatening; however, the FDA did provide some guidance in its final rule. See id. Further, the FDA encourages applicants to consult with the FDA “if they have questions about whether their specific product is within the scope of this rule.” Id.

109 See Perrin, supra note 9, at 146-47.

110 See Fox, supra note 7, § 9, at 55-56.

111 See id. §§ 7-9, at 31-63 (discussing various methods of legislative control of agency actions, including the somewhat controversial legislative veto). For a discussion of how congressional appropriations can be used to indicate approval or disapproval of agency’s actions, see id. See also Ronald a. Cass et al., Administrative Law: Cases and Materials 65-68 (2d ed. 1994).

112 See id. § 8, at 32. Congress may “delegate its powers to an agency only under carefully controlled conditions and those conditions … are to be expressly set out in the agency’s enabling act.” Id. Modem enabling acts can give the agency enforcement powers to assess penalties and issue cease and desist orders. See id. § 19, at 104.

113 See Albee & Kilgallen, supra note 47, at 476 n.6.

114 See id. at 493-94.

115 See Selker, supra note 46, at 204-15.

116 See Restatement (Second) of Torts § 402A cmt. k (1965).

117 See Albee & Kilgallen, supra note 47, at 495.

118 See Selker, supra note 46, at 204-15.

119 See Restatement (Second) of Torts § 402A cmt. k (1965).

120 See id. (stating that drugs must be “properly prepared and marketed, and proper warning given”).

121 See id. Comment k does not provide immunity for information that is in the “present state of human knowledge.” Id.

122 See supra notes 44-51 and accompanying text (discussing comment k immunity and various courts’ interpretations of its scope of application).

123 See Elizabeth M. Rutherford, The FDA and “Privatization”: The Drug Approval Process, FOOD & Drug L.J., Special 50th Anniversary Issue, 1995, at 205-06. A competitive market provides “efficient amounts of goods and services at minimum cost to the consumers who are the most willing (and able) to pay for them.’’ Samuelson & Marks, supra note 61, at 330. Regulation through trade restriction and tariffs, for example, creates market inefficiencies and hurts consumers and/or businesses. See id. at 340-44. However, government regulation often occurs when there is market failure due to: “(1) the presence of monopoly power [in the market], (2) the existence of [negative] externalities, and (3) the absence of perfect information.” Id. at 491. In the case of therapeutic drugs, all three kinds of market failure are present at once. See id. at 529. The existence of positive externalities resulting from new drug development was a factor in the creation of the patent system. See id. at 507-08. The patent system has enabled pharmaceutical companies to hold monopoly power. See id. at 529-30. Pharmaceutical companies may also create serious negative externalities if their pharmaceuticals harm consumers. See id. at 497. Imperfect information is likely in the market for pharmaceuticals, because most consumers do not fully understand the costs and benefits associated with their transactions. See id. at 530. This information problem is amplified with respect to new drugs, about which even prescribing physicians and pharmaceutical companies may lack complete information. See id. Therefore, the FDA approval process requires clinical studies to remedy the information problems. See id. The extent of deregulation and proposals for deregulation of industry, including the pharmaceutical industry, require careful cost-benefit analysis. See id. at 508.

124 See FOX, supra note 7, § 3, at 13-15. In particular, one must look at the enabling act to determine the goals or justifications for regulation of a particular industry, as regulation indicates that the free market fails to deal with the problem effectively. See id.

125 For a detailed description of trends in regulation and deregulation, see Fox, supra note 7, § 3, at 16-18. William Fox notes public opinion that health and safety regulation is needed and is often in tension with the tight and economically inhibiting regulations that are imposed by agencies. See id. at 16. However, Fox states that food and drug products have been continuously federally regulated. See id. at 18.

126 See id. at 204-05.

127 See Marc L. Sherman, Note, We Can Share the Woman, We Can Share the Wine: Regulation of Alcohol Advertising on Television, 58 S. CAL. L. REV. 1107, 1107, 1117 (1985) (discussing how the alcohol industry’s voluntary ban on advertising allowed the industry to maintain its large market share and profits).

128 See id. at 1107—08.

129 See id. at 1108.

130 See id. at 1110; Steven J. Younger, Alcoholic Beverages Advertising on the Airwaves: Alternatives to a Ban or Counteradvertsing, 34 UCLA L. Rev. 1139, 1144-45, 1178-93 (1987) (discussing the alcohol industry’s self-regulation, and suggesting alternatives to proposals that would completely ban alcohol advertisements or would require broadcasters that air alcohol advertisements also to air anti-alcohol advertisements).

131 See Younger, supra note 130, at 1145 (noting that hard liquor manufacturers will probably continue to refrain from radio and television advertising “because of an unwritten understanding that Congress would immediately ban hard alcohol ads from broadcasting if distillers began to advertise on radio and television.”).

132 See Sherman, supra note 127, at 1136-39 (suggesting that the Federal Communications Commission should model regulation of alcohol on the Federal Trade Commission’s model of evaluating television advertisements).

133 See Younger, supra note 130, at 1145.

134 For an interesting discussion of how the fear of negative press, political activism and congressional backlash may affect pharmaceutical companies behaviors, see Ralph T. King Jr., The Pill U.S. Drug Companies Dare Not Market, Wall St. J., June 26, 1998, at Bl. More than a year after the FDA declared the “morning-after pill” safe and effective, only one small start-up company had agreed to manufacture it. See id. The potential market for the morning-after pill could be as large as $300 million. See id. Pharmaceutical companies might have been deterred by concerns about anti-abortion activists and potential political effects. See id. Furthermore, if a drug failed, potential product liability suits for birth defects would pose a significant concern for the industry. See id.

135 See Timothy Stoltzfus Jost, Medicare and The Joint Commission on Accreditation of Health Care Organizations: A Healthy Relationship?, Law & Contemp. Probs., Autumn 1994, at 15, 18.

136 See id.

137 See id. at 18-19. The Joint Commission on Accreditation of Healthcare Organizations (JCAHO) was regulated by the Social Security Amendments of 1972, Pub. L. No. 92-603, 86 Stat. 1329 (codified as amended in scattered sections of 42 U.S.C.), which entrusted the then Health Education and Welfare Department to review records and impose standards stricter than JCAHO’s standards. See Jost, supra note 135, at 18-19. Growing consumer concern about poor quality of care in hospitals prompted Congress to enact this government regulatory oversight provision. See id. at 18. JCAHO’s failure to regulate appropriately quality of care in hospitals supports an argument by analogy that private regulation may not be justified in the FDA’s case.

138 See Jost, supra note 136, at 18-19.

139 See id. at 22-23.

140 See id. at 33-34.

141 For example, Timothy Jost notes that JCAHO planned to perform unannounced inspections on five percent of accredited facilities. See id. at 33. JCAHO also positioned itself as a consumer advisor, enhancing the amount of information disclosed about accredited institutions. See id. JCAHO’s goal is “to pursue a strategy of creating and enforcing standards sufficiently stringent to maintain customer confidence and forestall further regulatory intervention, making a special effort to deal aggressively with hospitals in which conditions are bad enough to give the industry as a whole a bad name.” Id.

142 See id.

143 See David A. Kessler, Remarks by the Commissioner of Food and Drugs, 51 FOOD & DRUG L.J. 207,211 (1996).

144 See Mark Maremont, Interneuron Posts Loss on Withdrawal of Its Diet Drug, Wall St. J., Dec. 24, 1997, at B1 (discussing the devastating effects of market withdrawal of drugs later determined to have adverse side-effects).

145 See Lovell, supra note 77, at 273-74 (discussing the failed Fialuridine case and public reaction, particularly from AIDS activists, who questioned both the FDA’s accelerated approval process and the liability of the pharmaceutical company).

146 See Maremont, supra note 144, at B8. American Home Products has since presented new, independent data that potentially indicates that the diet pill is less dangerous than initially thought, but the company said that it will never bring the drug to the market again because of concerns over liability. See Robert Langreth & Laura Johannes, Pharmaceuticals: Redux Diet Pill Receives a Boost in a New Study, Wall St. J., Apr. 1, 1998, at Bl. In another case exemplifying adverse market effects, the FDA sent a letter to Agouron for failing to submit its Viracept press release to the FDA’s division of drug marketing, advertising and communications for pre-approval, and for “misleading” information in the press release. See FDA Faults News Release on Agouron's AIDS Drug, supra note 105, at Bl 1. The FDA also posted the letter on its website. See id. Although this prompted Agouron’s swift compliance, the negative press caused Agouron to lose $2.25 a share in one day. See id.; see also Stickney & Weil, supra note 64 (defining EPS and discussing various EPS calculation methods).

147 See Maremont, supra note 144, at B8.

148 See id.

149 See id.

150 See Tanouye, supra note 105, at A3.

151 See Maremont, supra note 144, at Bl. Intemeuron derived ninety-eight percent of its income from Redux sales and royalties. See id. Many pharmaceutical companies, especially one-product firms, simply cannot withstand the financial consequences of one drug that must be pulled from the market for adverse side-effects. See id.; see also Noah, supra note 62, at 886-87. Like the medical industry, the federal government is also the largest purchaser of pharmaceuticals. See id. at 886. Therefore pharmaceutical companies must follow FDA regulations and orders, or risk losing government contracts. See id.

152 See Lovell, supra note 77, at 282-85. The FDA was particularly sensitive to concerns after the Fialuridine adverse results occurred. Consequently, the FDA began reevaluating controlled clinical trials used in the accelerated approval process. See id. at 274, 285-90.

153 See id. at 278-81.

154 See Richard B. Schmitt, Feeding Frenzy: Trial Lawyers Rush to Turn Diet-Pills Ills Into Money in the Bank, Wall ST. J., Oct. 24, 1997, at Al. Lawyers may use the press to attract clients, in turn promulgating negative press about recalled drugs. Litigation over the diet pills fenfluramine and phentermine (Fen-Phen) was greatly expanded by lawyers’ use of the press. See id.

155 See The Security Exchange Act of 1934, § 13, 15 U.S.C. § 78m(b)(l) (1994). The Act requires that the corporation must provide shareholders with annual reports that contain audited financial information, including outstanding potential liabilities including in specified instances the risk of lawsuits or pending suits. See id.

156 See Restatement (Second) of Torts § 402A cmt. k (1965).

157 See id.; see also Oarside v. Osco Drug, Inc., 976 F.2d 77, 80 (1st Cir. 1992) (stating that “a product may be unreasonably dangerous if the manufacturer fails to warn of a non-obvious risk associated with the normal use of the product about which the manufacturer knows or has reason to know”); MacDonald v. Ortho Pharmaceutical Corp., 475 N.E.2d 65, 70-71 (Mass. 1985) (establishing an affirmative duty that an oral contraceptive manufacturer provide explicit written warnings of inherent risks in its product).

158 See Garside, 976 F.2d at 80; MacDonald, 475 N.E.2d at 70-71.

159 See Schmitt, supra note 154, at Al.

160 Under comment k, a pharmaceutical company that is negligent in its research or investigation of a new drug will still be held liable. See Restatement (Second) of Torts § 402A cmt. k (1965).

161 See supra Part III.A. 1 (discussing incentives for pharmaceutical companies to use the accelerated approval process).

162 See generally Charles J. Walsh & Alissa Pyrich, Rationalizing the Regulation of Prescription Drugs and Medical Devices: Perspectives on Private Certification and Tort Reform, 48 Rutgers L. Rev. 883 (1996) (discussing proposals for FDA privatization and deregulation through the use of private certification or accreditation bodies). Charles Walsh and Alissa Pyrich provide a comprehensive review of current FDA use of private advisory committees, such as institutional review boards. See id. at 973-87.

163 See id. at 988.

164 id. at 979.

165 See id.

166 See id. at 978.

167 See id. at 980-81.

168 pub. L. No. 105-115, 111 Stat. 2296 (codified as amended in scattered sections of 21 U.S.C.).

169 See id. sec. 120, § 505, 111 Stat. at 2318-20 (codified at 21 U.S.C. § 355 (Supp. Ill 1998)) (establishing “scientific advisory panels”). As part of a major overhaul of the FDCA, the Food and Drug Administration Modernization Act of 1997 codified the FDA’s regulations allowing “individual patient access to investigational products intended for serious diseases,” id. sec. 402, § 561, 111 Stat. at 2365 (codified at 21 U.S.C. § 360bbb (Supp. Ill 1998)), and accelerating review of important new medications. See id. sec. 112, § 506, 111 Stat. at 2309 (codified at 21 U.S.C. § 356 (Supp. Ill 1998)). The Act also provided that “accredited persons” could conduct the initial review of all class I and low-to-intermediate risk class II devices. See id. sec. 210, § 523, 111 Stat. at 2342 (codified at 21 U.S.C. § 360m (Supp. Ill 1998)). Under the Act, accredited persons may not review devices that are permanently implantable, life-supporting, life-sustaining, or for which clinical data are required. Id.

170 See Walsh & Pyrich, supra note 162, at 888-89.

171 See id. at 954.

172 See id. at 954-57.

173 See id.

174 See id. at 957-71.

175 U.S.C. app. §§ 1-15 (1994 & Supp. Ill 1998) (amended 1997).

176 See Walsh & Pyrich, supra note 162, at 965-71.

177 See id. at 988-92. Advisory panels have been an effective means for the FDA to gather and evaluate information concerning what drugs should be approved under accelerated approval. See id. The FDA, however, retains control over the final decision to accept or reject the panel’s decision. See Otesa Middleton, Hoechst TB Drug Is Recommended by FDA Panel, Wall St. J., May 6, 1998, at B7. For example, the FDA recently approved a new tuberculosis treatment after a FDA advisory committee recommended that the FDA approve the drug for initial use. See id. As with all drugs recommended for accelerated approval, the panel required that the company present the FDA with additional information after the drug enters the market. See id.

178 See Walsh & Pyrich, supra note 162, at 988-92 (discussing a 1991 proposed reform by Vice President Quayle’s Council on Competitiveness, suggesting that independent experts be allowed to conduct clinical trials for certain kinds of drugs). Subsequently, both the FDA and Congress rejected the Council on Competitiveness proposal. See id. The Progress and Freedom Foundation (PFF) has also suggested a plan. See id. at 992-96. Under the PFF’s plan, private entities called Drug Certifying Bodies (DCBs) would perform a majority of the regulatory oversight. Id. at 994. The PFF would follow the drug from the IND to the new drug application. See id. If the FDA failed to act after the DCBs submitted their recommendation, the application for new drugs would automatically become effective. See id. at 994-95. This would essentially remove the FDA’s power over approval if it failed to act within 60 days of submission of the DCB report. See id. A final proposal the National Performance Review issued in 1992 set up a pilot study for private review of medical devices. See id. at 996-97. Because the FDA has not yet implemented a final plan, any future impact this may have is unknown. See id. at 998. Further, none of these plans specifically has targeted accelerated approval drugs and privatization. See id. However, private advisory committees have recently conducted their own accelerated approval drug evaluations. See Breast-Cancer Treatment is Approved by the FDA, WALL ST. J., May 1, 1998, at B7 (discussing an FDA advisory committee’s recommendation for accelerated approval of Xeloda, a new cancer treatment by Hoffman-LaRoche that showed positive initial clinical results).

179 See Walsh & Pyrich, supra note 162, at 987-98.

180 See id. at 1007.

181 Courts generally should give substantial weight to agencies’ interpretative guidelines and regulations unless they violate a federal, constitutional or regulatory statute or are unreasonable. See Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 843-44 (1984). A court should consider the weight of an agency’s opinion on the issue and the agency’s expertise in the field in determining how much weight should be given to an agency’s interpretation of a statute or regulation. See General Electric Co. v. Gilbert, 429 U.S. 125, 141-44 (1976).

182 See General Electric, 429 U.S. at 141-42.

183 See Rutherford, supra note 123, at 204 (stating that without a profit motive, “few incentives exist to help the government run more efficiently”).

184 See id.

185 See supra Part III.A.l (discussing incentives for pharmaceutical companies to use the accelerated approval process).

186 See Rutherford, supra note 123, at 225.

187 See Joseph A. Grundfest, Incentive Pay for Politicians, Wall St. J., Jan. 21, 1992, at A20.

188 See id.

189 See id.

190 See id.

191 See id. (discussing the possibility that the government could license independent laboratories to assist the FDA in making determinations, and allow pharmaceutical companies to fund this research).

192 See supra Part III.A.

193 See Kessler, supra note 143, at 214; see also supra Part III.A.3,b (discussing improvements in various drug treatments).

194 See supra Part III.A.3.b (discussing the role of Congress in the FDA approval process); see also Part III.D. 1. (discussing delegation of the accelerated approval process to private approval bodies).

195 See Part III.D. 1 (discussing problems with delegation to private bodies).

196 See Perrin, supra note 9, at 152. The FDA needs to have the power to sanction. See id. The Fialuridine crisis prompted the FDA to tighten regulations for adverse reaction reporting. See id. at 145. The Food and Drug Administration Modernization Act took steps toward improving and codifying the enforcement powers of the Secretary of HHS, providing that:

  1. The Secretary may withdraw approval of a fast track product using expedited procedures (as prescribed by the Secretary in regulations which shall include an opportunity for an informal hearing) if—

  2. (A) the sponsor fails to conduct any required post-approval study of the fast track drug with due diligence;

  3. (B) a post-approval study of the fast track product fails to verify clinical benefit of the product;

  4. (C) other evidence demonstrates that the fast track product is not safe or effective under the conditions of use; or

  5. (D) the sponsor disseminates false or misleading promotional materials with respect to the product.

Pub. L. No. 105-115, sec. 112, § 506(b)(3), 111 Stat. 2296, 2310 (codified at 21 U.S.C. § 356(b)(3) (Supp. Ill 1998)).

197 See supra Part III.C.l (discussing the pharmaceutical industry’s incentives to self-regulate).

198 See supra Part III.A.3.C (discussing the Fialuridine case and other failed drugs, but noting the positive effects on FDA regulation from these experiences).

199 See supra Part III.A.3.d (discussing the role of Congress in FDA regulation policies).

200 See supra Part III.D.

201 See supra Parts III.A.3.b-3.c (discussing drug improvements and failed drugs, respectively).

202 The FDA has been charged with regulating pharmaceuticals since 1938. See Federal Food, Drug, and Cosmetic Act of 1938, 21 U.S.C. §§ 301-95 (1994 & Supp. Ill 1998).

203 See supra Part III.D. 1.

204 See FOX, supra note 7, § 9, at 55-56.

205 See Restatement (Second) of Torts § 402A cmt. k (1965).

206 See supra Part III.B.2.

207 See, e.g., Hill v. Searle Laboratories, 884 F.2d 1064, 1069 (8th Cir. 1989) (holding that comment k immunity should be limited to unavoidably unsafe drugs).

208 See generally supra Part I. (discussing concerns about accelerated approval process).

209 See Kessler, supra note 143, at 208-09. The Commissioner of Food and Drugs noted that saquinavir, a protease inhibitor, was approved in ninety-seven days. See id. at 208. Five AIDS antiviral drugs have also been approved under the accelerated approval process, all in less than eight and one- half months. See id. Drugs other than those used to treat AIDS have been approved under the accelerated approval process. See id. at 209. Taxol, an ovarian cancer treatment, Pulmozyme, a cystic fibrosis treatment, and many more have been approved with apparent success. See id. The Commissioner went on to state that whether or not drugs are approved under the accelerated or standard approval process, safety and efficacy remain the centerpiece of agency actions. See id. at 214-15.

210 See supra Part III.A.2.

211 See supra Part III.C.l.

212 See Selker, supra note 46, at 203.

213 See Albee & Kilgallen, supra note 47, at 475, 494-95.

214 See discussion supra Part II.C.

215 See supra Part III.D.

216 See supra Part III.C.

217 See supra Parts II.C., III.C.2.

218 See notes and discussion supra Part III.C.

219 See discussion supra Part III.A.3.d (discussing the FDA’s regulatory scheme and the role of Congress in FDA oversight).

220 See id.