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[3:27] RUWART: The FDA, who really controls what you can say about your product, has said that if you make a health claim for a food or a nutrient, it then becomes a drug. And then it has to go through 12 to 14 years of regulatory hoop-jumping.
Ruwart.com where you can sign up for her newsletter and free library.
Her Facebook page.
Her Instagram page.
And her YouTube channel.
[3:27] RUWART: The FDA, who really controls what you can say about your product, has said that if you make a health claim for a food or a nutrient, it then becomes a drug. And then it has to go through 12 to 14 years of regulatory hoop-jumping.
REGULATORY CAPTURE
[3:55] RUWART: Especially, in a highly regulated industry, the industry's survival depends on capturing the goodwill or the funding of the regulatory agency itself. And that's happened by the Prescription Drug User Fee Act that was passed in 1992. It started out as a user fee that the drug companies could pay, about $100,000, to speed up the approval process, the FDA's review of 12 to 14 years of data. And the FDA generally takes a year or two to do that; it was about 2 years in 1992. But it's morphed into funding most of the FDA's section that approves new drugs. The numbers that I've seen, say as much as 70% of the salaries of the people who approve drugs now, come from these user fees, which at the last time I saw them were $2 million, which is huge. So they've captured the . . . getting back to your definition, they've captured the regulators to such an extent that when Vioxx was being debated at the FDA whether they should approve it or not, one of the persons, David Graham, who objected to its approval, was told that the FDA's client was the Pharmaceutical Industry, not the American people, not Congress, but the Pharmaceutical Industry. So that's a great example of regulatory capture. [An entire industry!!!]
[5:35] DEIST: Most people tend to think that the FDA keeps us safe from dangerous drugs . . .
RUWART: . . . laughter . . .
DEIST: Continues . . . It's not just a safety issue when the FDA tests and bans a certain drug because it causes heart seizures or something like that. People can see that. That seems tangible . . . and they can say, well, thank goodness for the FDA for protecting me. It calls to mind Bastiat's the seen and unseen, what we can't see are all the things that might have been, all the innovative treatments and procedures that might have been had the FDA not been in the way.
[6:10] RUWART: Yes, but with the Pharmaceutical industry we have studies that actually show that impact to a large degree. In 1962, the Kefauver-Harris Amendments to the Food and Drug Act were passed. And this really gave the FDA almost unlimited power over the pharmaceutical industry. And the time it took to get a drug from the lab bench to the marketplace went from 4 years to 14 years by the 1980s because the FDA didn't want Congress to come down on them if there was a side effect for a drug, and all drugs have side-effects, so they would keep asking for more and more studies. And because we know roughly how many lives each drug that's on the market today saves, you can actually calculate the number of people who have died waiting for new drugs because of these amendments. It's about 15 million people through 2009. And then we also have studies that show loss of innovation and late-stage development. So for example, after the companies spent maybe 10 years working on a drug about 50% of them are dropped, not because they don't work, not because they aren't safe, but for economic reasons that the manufacturer realizes that they won't recover its costs or make enough profit to make it worthwhile to continue. If we're only losing only 1/2 of our innovations, and we estimate that maybe 25% are as effective as the drugs we have on the market today, that's another 26.7 million people who've lost their lives to loss of innovation. And lots of innovation actually gets lost before development even begins. I had the FDA actually call me up one day and say, "Dr. Ruwart, we understand you have this patent now that you've applied for the treatment of liver disease with prostaglandins, which by the way are a natural substance and every cell in your body makes. And I said, "Yes, that's true." And the examiner said "Well, we're very excited at the FDA about this. A hundred thousand people die every year from liver disease and we can only recommend bed rest. So we want to let you know that we're here to help you get this drug to market." But the problem is that when you have a truly new drug, you don't know how many times a day you have to give, you don't know what dose you need to give, and for a long-term disease like liver disease you don't know how long you need to treat. So you don't know how many people you need in your study, and if you guess wrong on any of this, and you do an effectiveness study, which takes years, and you don't get the statistical significance that the FDA wants, you have to start over. And Upjohn Management figured out that if we did start out, our patent would be gone and we would never be able to recover costs. And I'm not a big believer in patents, but when you have this much regulation, there's no hope of recovering your costs unless of course, you have some type of monopoly protection, in this case, bans. So I suspect that many, many drugs drop out in late-stage are never developed because the company can estimate it's just not going to make them any money. So there's a lot of innovation that is lost, so my numbers are conservative and if you crank through these numbers probably every one of us has lost 5 years of our lives to these regulations that were passed in 1962. The good news is that the regulators are losing 5 years, too. And so is Congress, so maybe we get this changed.
[9:50] DEIST: But when you talk about a drug taking 15 years to get to market, what you're essentially saying is that small or start-up pharmaceutical companies almost can't exist . . . you have to be big and rich.
[10:00] RUWART: Well, that's right. What happens is today a lot of small companies start up and they do just the initial studies, of what we call Phase 1 Safety Testing in people, to get to that stage and then hand off their product to one of the big pharma companies that have enough money to take a big hit because it takes about $2 billion to bring a drug to market. So if at the last moment, you pull the drug or the FDA won't approve it, obviously you lose a lot of money and small companies can't take that hit, but if you hand it off to a big pharmaceutical firm, a big firm who can take a hit, they lose a lot of potential profit.
Get Dr. Ruwart's book, Death by Regulation: How We Were Robbed of a Golden Age of Health and How We Can Reclaim It, Dr. Mary J. Ruwart, 2018.
[5:35] DEIST: Most people tend to think that the FDA keeps us safe from dangerous drugs . . .
RUWART: . . . laughter . . .
DEIST: Continues . . . It's not just a safety issue when the FDA tests and bans a certain drug because it causes heart seizures or something like that. People can see that. That seems tangible . . . and they can say, well, thank goodness for the FDA for protecting me. It calls to mind Bastiat's the seen and unseen, what we can't see are all the things that might have been, all the innovative treatments and procedures that might have been had the FDA not been in the way.
[6:10] RUWART: Yes, but with the Pharmaceutical industry we have studies that actually show that impact to a large degree. In 1962, the Kefauver-Harris Amendments to the Food and Drug Act were passed. And this really gave the FDA almost unlimited power over the pharmaceutical industry. And the time it took to get a drug from the lab bench to the marketplace went from 4 years to 14 years by the 1980s because the FDA didn't want Congress to come down on them if there was a side effect for a drug, and all drugs have side-effects, so they would keep asking for more and more studies. And because we know roughly how many lives each drug that's on the market today saves, you can actually calculate the number of people who have died waiting for new drugs because of these amendments. It's about 15 million people through 2009. And then we also have studies that show loss of innovation and late-stage development. So for example, after the companies spent maybe 10 years working on a drug about 50% of them are dropped, not because they don't work, not because they aren't safe, but for economic reasons that the manufacturer realizes that they won't recover its costs or make enough profit to make it worthwhile to continue. If we're only losing only 1/2 of our innovations, and we estimate that maybe 25% are as effective as the drugs we have on the market today, that's another 26.7 million people who've lost their lives to loss of innovation. And lots of innovation actually gets lost before development even begins. I had the FDA actually call me up one day and say, "Dr. Ruwart, we understand you have this patent now that you've applied for the treatment of liver disease with prostaglandins, which by the way are a natural substance and every cell in your body makes. And I said, "Yes, that's true." And the examiner said "Well, we're very excited at the FDA about this. A hundred thousand people die every year from liver disease and we can only recommend bed rest. So we want to let you know that we're here to help you get this drug to market." But the problem is that when you have a truly new drug, you don't know how many times a day you have to give, you don't know what dose you need to give, and for a long-term disease like liver disease you don't know how long you need to treat. So you don't know how many people you need in your study, and if you guess wrong on any of this, and you do an effectiveness study, which takes years, and you don't get the statistical significance that the FDA wants, you have to start over. And Upjohn Management figured out that if we did start out, our patent would be gone and we would never be able to recover costs. And I'm not a big believer in patents, but when you have this much regulation, there's no hope of recovering your costs unless of course, you have some type of monopoly protection, in this case, bans. So I suspect that many, many drugs drop out in late-stage are never developed because the company can estimate it's just not going to make them any money. So there's a lot of innovation that is lost, so my numbers are conservative and if you crank through these numbers probably every one of us has lost 5 years of our lives to these regulations that were passed in 1962. The good news is that the regulators are losing 5 years, too. And so is Congress, so maybe we get this changed.
[9:50] DEIST: But when you talk about a drug taking 15 years to get to market, what you're essentially saying is that small or start-up pharmaceutical companies almost can't exist . . . you have to be big and rich.
[10:00] RUWART: Well, that's right. What happens is today a lot of small companies start up and they do just the initial studies, of what we call Phase 1 Safety Testing in people, to get to that stage and then hand off their product to one of the big pharma companies that have enough money to take a big hit because it takes about $2 billion to bring a drug to market. So if at the last moment, you pull the drug or the FDA won't approve it, obviously you lose a lot of money and small companies can't take that hit, but if you hand it off to a big pharmaceutical firm, a big firm who can take a hit, they lose a lot of potential profit.
Get Dr. Ruwart's book, Death by Regulation: How We Were Robbed of a Golden Age of Health and How We Can Reclaim It, Dr. Mary J. Ruwart, 2018.
