Regulatory Discretion and Corruption in the FDA

In the United States, the regulatory agency responsible for ensuring safe food and medicine, the Food and Drug Administration (FDA), has been marred by numerous scandals – from a 2016 insider trading prosecution to a 2009 politicized medical device approval to a 2013 ProPublica investigation that found the FDA overlooked fraudulent research and let potentially unsafe drugs stay on the market. These scandals have, understandably, undermined public confidence in the FDA. What’s the explanation for these problems? Why is there such a large public perception of corruption, and so many questionable incidents, at the FDA?

Much of the explanation has to do with institutional design: Corruption blooms where transparency and accountability are lacking, yet the FDA has vast discretion over the regulations it sets, incredibly loose restrictions on the money it can receive from industry, and little public accountability. The following steps can be taken to reform the FDA, in the interest of rooting out corruption and restoring public confidence in the agency:

  1. End the Influence of Corporate Money in FDA Regulation—The FDA is responsible for the approval of pharmaceuticals, which are incredibly expensive to develop, in the hundreds of millions of dollars per drug. Drug companies therefore spend heavily on lobbyists to influence FDA approval policy. As in other contexts where well-resourced interest groups spend heavily to influence government policy, this conduct, even if lawful, raises at the reasonable suspicion of impropriety and undermines public confidence in the agency. Furthermore, the FDA suffers from a pervasive “revolving door” problem: many FDA administrators, either before or after their time at the agency, receive payments from (and sit on the boards of) large pharmaceutical companies. For example, President Trump’s nominee for FDA Commissioner, Scott Gottlieb, received $200,000 in 2015 from drug companies. But this is not a new or partisan issue: President Obama’s FDA Commissioner, Robert M. Califf, received $30,000 from drug companies in the year preceding his nomination, and President George W. Bush’s former FDA Chair continues to receive $50K-$70K from drug companies, mostly for “consulting.” When FDA administrators stand to make hundreds of thousands of dollars in the years following their service from the very companies they are charged with regulating, they face strong incentives to behave in ways favorable to those companies. The ability to pay a drug administrator for approval is antithetical to the need for safe and fair drug trials; that the payments come a few years before and after their service does not change this fact. The federal government could take steps to limit the revolving door with a mandatory deferral time of at least a few years between employment at the FDA and participation in FDA-related lobbying activities.
  2. Improve Transparency of the FDA’s Regulatory Processes—While the FDA makes claims about the safety of certain food and drugs, there is little transparency into what goes into the decision-making process behind those claims. The agency’s secretive behavior contributes to the public perception of wrongdoing and the lack of trust in the agency’s conclusions. The Regulatory Affairs Professionals Society has an excellent post describing some basic reforms that would improve transparency and generally improve the way in which the agency conducts business. The recommendations are astoundingly simple, including “Making public FDA’s clinical and statistical reviews of products not approved or for which the marketing applications are abandoned or withdrawn.” Current FDA regulations that limit public information are self-imposed, rather than statutory, and therefore could be changed if the agency faced pressure to do so.
  3. Provide Oversight of the Agency—The FDA falls under the purview of Department of Health and Human Services (HHS), an agency also charged with administering Medicare and Medicaid. The FDA is a very small part of HHS, receiving about $2.7 billion of HHS’s $1 trillion This organizational structure means that the main oversight agency for the FDA is the Office of the Inspector General for HHS, an office also tasked with overseeing the massive federal insurance programs. This lack of effective oversight, when coupled with FDA’s vast regulatory discretion, substantially increases the risks of improper behavior. Decisions by the agency are mostly final and lack an effective appeals process, and failure to act by the agency requires litigation by activists to correct. If so much discretion and secrecy are truly necessary to the FDA’s regulatory process, there must be a third-party oversight body whose main focus is the integrity of this agency.

8 thoughts on “Regulatory Discretion and Corruption in the FDA

  1. Thanks for identifying the revolving door problem at the FDA with some pretty shocking examples. It seems that this issue is pervasive in the government (perhaps even inherent to government service): private companies want to hire people who understand the regulators. How would you suggest remedying it? I’m surprised that the FDA doesn’t already have a mandatory deferral period, but I know that other agencies do, and I’m not convinced that it has much of an effect on behavior.

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  3. You write that:
    “Current FDA regulations that limit public information are self-imposed, rather than statutory, and therefore could be changed if the agency faced pressure to do so.”

    I think senior FDA staff have repeatedly shown a strong personal commitment to transparency. The regulations are not self-imposed in practice.
    The problem is that any pressure for the FDA to become transparent must be incredibly strong ***and*** sustained because of the countervailing pressure from the pharma industry, which drags the FDA to court and publicly rakes it over the coals every time it tries to release more information.
    The most blatant example is non-enforcement of the FDAAA section 801:
    I don’t think it’s fair to blame the FDA for not enforcing transparency laws and adopting transparency provisions as long as politicians fail to give it the resources and political backing it requires to do its job, and do the right thing.

  4. Jetson, thanks for your comments and you make some interesting points. To your comment suggesting oversight of the FDA, what do you make of duplicative agency coverage over food safety and regulations? For example, both the FDA and the USDA regulate eggs. Does this create some kind of check/balance or is this insufficient in your opinion for the type of oversight we need? Also, are you focused more on the pharmaceutical side (for which I agree that there is not an effective oversight body)?

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