Assessing the Safety and Efficacy of the FDA: The Case of the Prescription Drug User Fee Acts / Tomas J. Philipson, Ernst R. Berndt, Adrian H. B. Gottschalk, Matthew W. Strobeck.

Format:

Book

Author/Creator:

Philipson, Tomas J.

Contributor:

National Bureau of Economic Research.

Berndt, Ernst R.

Gottschalk, Adrian H. B.

Strobeck, Matthew W.

Series:

Working Paper Series (National Bureau of Economic Research) no. w11724.

NBER working paper series no. w11724

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Assessing the Safety and Efficacy of the FDA

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2005.

Summary:

The US Food and drug Administration (FDA) is estimated to regulate markets accounting for about 20% of consumer spending in the US. This paper proposes a general methodology to evaluate FDA policies, in general, and the central speed-safety tradeoff it faces, in particular. We apply this methodology to estimate the welfare effects of a major piece of legislation affecting this tradeoff, the Prescription Drug User Fee Acts (PDUFA). We find that PDUFA raised the private surplus of producers, and thus innovative returns, by about $11 to $13 billion. Dependent on the market power assumed of producers while having patent protection, we find that PDUFA raised consumer welfare between $5 to$19 billion; thus the combined social surplus was raised between $18 to $31 billions. Converting these economic gains into equivalent health benefits, we find that the more rapid access of drugs on the market enabled by PDUFA saved the equivalent of 180 to 310 thousand life-years. Additionally, we estimate an upper bound on the adverse effects of PDUFA based on drugs submitted during PDUFA I/II and subsequently withdrawn for safety reasons, and find that an extreme upper bound of about 56 thousand life-years were lost. We discuss how our general methodology could be used to perform a quantitative and evidence-based evaluation of the desirability of other FDA policies in the future, particularly those affecting the speed-safety tradeoff.

Notes:

Print version record

October 2005.