Currently the FDA requires that drug companies conduct 3 phases in order to secure the approval of a pharmaceutical. These are:
- Phase I. These are smaller (20-80 participants), clinical trials which determine a drug’s safety and pharmacologic properties among healthy volunteers.
- Phase II. This phase tests a drug’s efficacy and optimal dosage. Typically 100-300 individuals are enrolled and these volunteers have the disease which the drug is supposed to treat.
- Phase III. The third phase is very similar to phase 2, except that the study is much larger. Often there are over 1000 participants in these trials. A drug can receive approval from the FDA if Phase III proves successful.
Is this the best way to insure a safe drug supply? Charles Manski argues no. Instead, Dr. Manski argues that pharmaceutical companies should received approval to sell limited quantities of a drug after Phase II approval. This would help reduce the amount of Type II error (not approving a drug that is beneficial). Quantity limits would increase if the drug was shown to be effective over time. Drug companies would submit annual reports to the FDA regarding the drug efficacy.
Further, Manski argues that Type III trials should be of much longer length and should focus more on outcomes than on surrogates. “For example, treatments for heart disease may be evaluated using data on patient cholesterol levels and blood pressure rather than data on heart attacks and life span.”
The Healthcare Economists Take
While I agree with much of what Manski proposes in theory, putting his proposals into practice will be exceedingly difficult. The first matter is how much should the drug company be allowed to sell during the partial approval stage. Manski claims that this decision should be made by a panel of experts, but it is possible that the experts in the field may have strong relationships with pharmaceutical companies. Further, even an expert will not know if releasing 1000 or 1200 doses of a medicine is optimal.
From a political standpoint, a limited release is a difficult sell. If the drug is beneficial, it will be hard to justify limiting its sale when it could help other people afflicted with the disease. If it is potentially harmful, why sell it at all. Further, one wonders when would insurance companies decide to cover the drug? This would likely only happen after the full approval many years down the line.
I agree with Manski that surrogates are a poor measure of health outcomes. Nevertheless, mandating phase 3 trials of “considerably longer” duration will make the drug development process even more expensive. Finding the optimal tradeoff between additional information and increased cost is an exceedingly difficult one.
- Manski, Charles F. (2009) “Adaptive Partial Drug Approval: A Health Policy Proposal,” The Economists’ Voice: Vol. 6 : Iss. 4, Article 9.