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No perfect world

11 Apr 2008 11:07 am

Pharmaceuticals really are marvelous things. They're responsible for most of the increases in life expectancy that took place in the 20th century, and believe it or not, even with rising drug costs they save us money by replacing more expensive treatments like surgery. Saving money is nice, of course, and so is the extra economic growth we have from keeping more productive people around. But the really great thing is the number of active life years it adds to the world--active life expectancy is actually increasing faster than ordinary life expectancy in the US.

Unfortunately, no cloud is without its silver lining. In the case of pharmaceuticals, it's the fact that some small number of the people who take them will thereby be made worse off. The regulatory and liability systems try to control that, but as Derek Lowe points out, they can't fix everything:

This illustrates why either extreme of that argument is untenable. On the make-‘em-pay side, you have trial lawyers arguing that if companies just wouldn’t put defective products on the market, well, they wouldn’t have anything to worry about, would they? Test your drugs correctly and things will be fine! But Exubera’s pre-approval life was as long and detailed as could be. The testing went on and on – and after all, insulin itself has been on the market for more than half a century. What more would a company need to say something is safe?

Then there’s the other side – total pre-emption, which says that the FDA is there to regulate and sign off on safety and efficacy, and by gosh we should have them do it. Once this mighty agency gives its stamp of approval, that settles it. But again, the FDA put Exubera through all kinds of paces. If every drug took that long and cost that much to develop, we’d be in even worse shape than we are now, believe me. So what’s the agency to do?

The truth, as far as I can see, is that no one can guarantee the safety of a new drug. If you want to take that further, guaranteeing the safety of an existing drug isn’t possible, either. Every known drug is capable of causing trouble at some dose, and every known drug is capable of causing trouble at its normal dose in some people. Every new drug has the possibility of doing things no one ever anticipated, once it gets into enough patients for enough time. Every single one.

Complete safety doesn’t exist, and never has. You can have more safety, if you’re willing to take enough time and spend enough money. But you can take all the time we have on earth, and spend all the money available, and you still won’t be able to promise that nothing bad will ever happen. Pretending that either the drug companies or the regulatory agencies can make that fact go away is a position for fools and demagogues.

Libertarians tend to chafe at the notion that companies should be liable for something they couldn't predict. On the other hand, neither could the person who took the drug--why should they bear all the costs? Liability, in theory, pretty effectively socializes the risk of something that has great public benefits.

The problem, of course, is that juries aren't particularly well equipped to handle scientific arguments. Liability as a solution for medical disasters errs both ways--it often fails to punish the guilty, and does snare the innocent (see Breast Implants, class actions against). The liability system evolved during an era in which most problems were basically comprehensible to the average juror. Now with things like environmental pollutants, construction safety standards, medical malpractice, pharmaceutical liability, and securities law, jurors are dealing with things that take advanced degrees (or the work experience equivalent) to understand.

I don't know what the solution is; perhaps we should push the VICAP model more widely for pharma risk in cases where the side effects were simply unpredictable. But that has its own problems.

Comments (26)

Another acronym I had to look up. According to Wikipedia, VICAP stands for the following:

"Vi-CAP (Violent Criminal Apprehension Program) is a nationwide computerized system implemented in 1985 by the FBI out of Quantico, Virginia."

Thank you, Emily Litella.

"You can have more safety, if you’re willing to take enough time and spend enough money."

Excellent post. But the quoted passage may not be true. Taking too much time and increasing the costs of drug approval delays and, in the end, reduces the number of life-saving and life-enhancing drugs on the market. If penicillin and aspirin--both of which have saved countless lives--had just been invented, the manufacturers probably wouldn't even try to get them approved, as both have very serious side-effects in some cases.

There's a sort of Laffer curve for safety, and unlike the tax one, we may be on the wrong side of this one. Insist on too much safety in one area, and you can easily make the world more dangerous. Shut down American Airlines, for instance, because their planes carry some risk, and the people who would have flown drive, sometimes a long way, and driving is about 100 times more dangerous than flying.

The problem, of course, is that juries aren't particularly well equipped to handle scientific arguments.

A larger question is whether juries are particularly well equipped to handle other kind of arguments, either. One of the assumptions that is required to make democracy work is that juries more often than not produce verdicts which are compatible with basic notions of justice and truth. But if you actually look at the numbers when it comes to overturned decisions, wrongful imprisonment and after-death exoneration; if you assume that these numbers represent only a fraction of the actual cases where someone was erroneously convicted of crime; and if you assume that there are a not-insignificant number of people who are acquitted or otherwise released when they are in fact guilty-- well, it can be a bit staggering.

Look I don't have any better alternatives and I'll defend trial by jury with all I have. But our faith in it seems to be just that, faith, rather than confidence borne of evidence.

The increasing back door trend by Justice Scalia and other activist judges to deprive judicial review of medical safety and putting it all into the hands of a truncated, deeply conflicted FDA is the worst possible solution and the one we now have.

Believe me, trial lawyers and real experts dedicated to getting at the truth in an adversarial system is far preferable to having a compliant, overworked bunch of government hacks who will soon be employed by those they regulate do the important business of determining whether medicines and medical devices perform effectively and as intended.

"Pharmaceuticals really are marvelous things. They're responsible for most of the increases in life expectancy that took place in the 20th century"

I believe the beginning of your post either needs to be corrected or have its wording changed. If you are talking about the total number of times life expectancy has risen (i.e. life expetancy rises from 50, to 52, to 54, to 55, therefore, the total number of times it has risen is 4), then it is certainly true that new drugs can be found to be responsible for many of the increases. However, if you are speaking of the reasons for the increase in life expectancy in totality, then drugs play a much more minor role. While I acknowledge this is not my area of expertise, I would argue that modern plumbing is probably the single biggest innovation in life expectancy. Sanitized disposal of waste and clean drinking water are a primary reason that modern cities (at least western ones) are considered livable. You can add; modern refrigeration, improvements in transport infrastructure, rising middle class wages and other innovations besides drugs.

And I know you may not like to hear this, but social security almost certainly helped life expectancy by giving those 65 years and older a source of income. Again, I'm not here to belittle the idea that drugs are important to our longevity and health. But your post as written may greatly overstate the impact.

"On the other hand, neither could the person who took the drug--why should they bear all the costs?"

My feeling is that drug manufacturers should take responsibility for the medical damages caused by their drugs. However, there should be a cap on punitive damages unless outright fraud or negligence is proven. The FDA is then there to make sure a clinical trial was performed properly and that the drug is effective. It adds transparency by revealing the known side-effects of a drug and how well it works. I have a feeling that most people couldn't wade through clinical trial data to figure this out themselves.

The bigger problem is the runaway amounts problem.

I'm not sure I really mind some liability for Merck in the Vioxx case, but in the very first case to go to verdict they placed compensatory damages at $24 million, for a 59-year-old Walmart produce manager who left behind a widow from a one-year marriage. Then they assigned ninefold punitive damages.

Compensatory damages are supposed to be rationally related to lost lifetime earnings. Lefties are fond of telling us how lousy Walmart jobs are, but I guess they're really very remunerative.

Does anyone believe that if Mr. Ernst had been killed in an ordinary traffic accident with, say, a UPS truck there would have been a $24 million judgement? It's fairly clear to me that the jury really wanted to issue $1 million for the wrongful death and $1/4 billion in punitive damages, but they knew about the O'conner standard [which limits punitive damages to single digit multiples], so they worked back from the desired verdict size and they knew they had to inflate the compensatory damages.

Anyway, when there are, say, 100 plaintiffs, and the defendant's behavior is basically innocent, it wouldn't really do much damage if 1% of the juries get it wrong, provided that the damages amount is reasonable. However, if that one jury can inflate the the damages to 100 times what would be reasonable if the defendant were in fact culpable, the good work of the other 99 juries in finding them not culpable is erased.

-dk

DK,

Don't you know that life is priceless? The judgement against WalMart should have been infinity dollars. We should liquidate all of our societal assets and give them to the next person killed by a corporation.

". . . trial lawyers and real experts dedicated to getting at the truth . . ."

I wouldn't ordinarily say this sort of thing here, but ROTFLMAO.

I like to frame the issue of the FDA's effectiveness with the question: does the FDA save more people than it kills? The FDA, of course, saves people by releasing life saving drugs and kill people by (unintentionally) releasing drugs with fatal side effects for some people. But the FDA kills more people than that.

First, the FDA kills when anyone dies while a life saving drug is under FDA revue and thus not available. Then there's the people that die because it was too expensive to jump through all of the hoops of the approval process so the drug was never (or later) put up for approval. In general, there are the broader inefficiencies that come about due to the FDA's policies that cause drugs to be delayed or dropped.

In my opinion, the FDA's stated goal should be to balance the number of people that it saves with the number that it kills. Though counting the number killed is not praticle, I think that framing the issue in this way is helpful.

Of course, the bureaucrats at the FDA are strongly incented to delay the release of new drugs, so I contend that they kill more than they save.

I have to wonder if the opening of this post isn't a bit misguided.

Nothing in the entire American Health care system is designed to "save us money" and any argument that starts with that contention had better be able to explain why the US spends vastly more of its GDP than any other nation on health care but nonetheless posts health outcomes that are mediocre at best.

Indeed, despite much greater market-orientation, health care in the US is demonstrably less efficient (on an outcome per dollar spent basis) than in any other industrialized country on Earth.

More to the point, unnecessary and ineffective treatment are now estimated to constitute fully 30% of American health spending. This includes pharmaceutical sales driven by marketing campaigns that replace off-patent treatments that are very often just as effective in clinical trials. The "solution" of reduced regulation would likely make this dismal figure worse.

The bottom line: most of the drug development being touted here as part of a "solution" contributes little to the nation's overall health while nonetheless greatly adding to record care costs.

I have to wonder if the opening of this post isn't a bit misguided.

Nothing in the entire American Health care system is designed to "save us money" and any argument that starts with that contention had better be able to explain why the US spends vastly more of its GDP than any other nation on health care but nonetheless posts health outcomes that are mediocre at best.

Indeed, despite much greater market-orientation, health care in the US is demonstrably less efficient (on an outcome per dollar spent basis) than in any other industrialized country on Earth.

More to the point, unnecessary and ineffective treatment are now estimated to constitute fully 30% of American health spending. This includes pharmaceutical sales driven by marketing campaigns that replace off-patent treatments that are very often just as effective in clinical trials. The "solution" of reduced regulation would likely make this dismal figure worse.

The bottom line: most of the drug development being touted here as part of a "solution" contributes little to the nation's overall health while nonetheless greatly adding to record care costs.

Sorry for the double-post

Um, I think you meant that no silver lining is without its cloud. The cliche in its original form - as you have it - doesn't really make sense there.

A larger question is whether juries are particularly well equipped to handle other kind of arguments, either.

Go to WalMart. Imagine the 1st 12 adults you see deciding whether you go to jail or not. That's our system. Absolutely terrifying.

Due diligence is the answer. If a company has done due diligence, it should be held blameless.

But as part of this, the final stages of product testing need to be done by an outside authority. And the results need to be made public.

The producer needs to hand over the money to the FDA or similar, then the FDA farms out the study and disburses the money to firms or universities who have submitted their bids/proposals.

You've got good conclusion (we can't have complete safety assurance), but the intro to this post belies a woeful ignorance of public health. As Colin stated - sanitation/potable water probably increased life expectancy more than any other public health measure in the 20th century. And then you go down the list and see - vaccinations (government reasearch), food safety, and so forth. And looking ahead to developed country health outcomes in the 21st century, smoking cessation and obesity control will probably save more lives than any medicine.

You could pick up JAMA or the New England Journal of Medicine each week and probably find a research article validating such findings (I'll email them if you want).

Oh and another thing on the market forces of profitability of medicines: pravastatin and lipitor are both good 'statins' (cholesterol meds). Pravastatin costs $4/month at walmart/target. Lipitor, costs $120/month for an equivalent dose. (Generic Zocor costs about $30.) Given that there's no study showing a difference between these three drugs (go ahead, search the NIH library at pubmed.com), why aren't prices equlibrated at the lowest one?

If we have specialized courts for tax issues because they are so complicated why dont we have the same for ones involving scientific issues?

Steve

Liability for drug manufacturers gives them an incentive to pull drugs which are marginal (in terms of profit vs. risk of lawsuit) off the market. I guess that's a good tradeoff if profit and liability both track with good/evil done by the drug, and that the main argument for limiting or eliminating liability for FDA approved drugs is that liability is likely to overestimate the evil done by the drug. I wonder how you'd measure that, if you wanted to get a sense of it. It's not obvious whether liability over- or undershoots total harm done.

Is there a good reference for the life expectancy improvement causes? My understanding is that the big improvements in life expectancy involve preventing or treating stuff that kills you as a child--sanitation, vaccines, antibiotics, better safety in cars and fires and with poisons, etc. But it would be interesting to see numbers from someone who's really done the analysis. I'm pretty sure most new drugs now are not able to add much to total life expectancy, because they mostly treat either rare diseases or diseases that stike mostly older people. Preventing a fatal heart attack at 60 can only benefit you so much in terms of life expectancy, because *something* will probably get you in the next 20 years.

To agree with the previous comments, prior to the 1930s or so most deaths were due to infectious diseases. If you count antibiotics as pharmaceuticals, you may have a bit of a case. But sanitation, nutrition and vaccination have been predominant in importance.

Also, I'd put air conditioning on the list for life saving innovations. People spending most of their time inside during the hot winter months was crucial to eliminating malaria in America. This is one more reason why further use of DDT in Africa and Asia, despite its benefits in increased life expectancy, would not have eliminated the scourge there.

I assume by "liability" you mean tort.

Under the common law, tort is designed to right a wrong committed -- that is, the wrongdoer is supposed to make the victim of his wrong whole again.

So the elements are:
-a wrongful action (negligence or intentional act)
-an injury
-causation

Note that this is purely private ordering, like contract. In fact, one way of looking at tort is as a involutary contract.

Liability isn't about socializing costs or punishment. Those are public ordering functions--the role of criminal law and other law(e.g., regulatory/admin/tax/etc.).

Yes, under relatively recent "advances" we have twisted tort law out of its previous shape and we wonder why it no longer works. We've taken a screwdriver and used it as a hammer for a few decades -- now the damaged tool is not very useful for any purpose.

If a drug company was not negligent, why should they pay anything to someone injured by their product? The legal answer is "because product liability law is strict liability." What that means is that if anything goes wrong, the product mfr. pays.

The philosophical and economic answer is "they shouldn't." But that doesn't matter.

When you are held strictly liable for any bad result--incentive = spend too much on safety. Add in punitive damages and runaway jury verdicts...the drug company incentive is to spend way too much on safety.

Who pays for that? Not the corporations, they don't really exist except as a scrap of paper. The people using the drugs pay (higher prices, fewer drugs), the drug company employees pay (lower wages or jobs that would've been there aren't), and the stockholders (e.g., anyone with a mutual fund in their 401k) pay (lower returns, delayed retirement).

...and I don't think you should blame the juries. They don't decide the law, the state legislatures and the state judges do (for tort in most cases).

What that means is that if anything goes wrong, the product mfr. pays.

No, it means that if a product is "unreasonably dangerous for its intended purposes" then somebody pays. Which moves you out of the realm of neglignce, but doens't take you all the way to injury = liability.

Taking any prescription drug is potentially bad for your health - that's why you need a doctor's prescription to get them.

The whole reason that a drug isn't available over-the-counter is that it is not safe for everyone.

Safe pharmaceuticals, like vitamin pills or saline solution, can be used safely without the supervision of a licensed professional. Potentially unsafe drugs, like insulin or Prozac, need to be taken while being monitored by a physician because they are bad for some people.

Expecting 100% safety from something that by definition Is Not Safe is a false hope. Drugs aren't candy; using them entails risk. Find out the facts and decide for yourself. If a drug company is negligent about testing, they are culpable for any damage done due to their negligence. If your physician gives you bad information, then he's culpable.

Perhaps drug manufacturers should copy the cigarette warning label, like so: Caution: Using This Product May Kill You.

Why not a workers' comp analog? Have the manufacturers pay into a fund that will compensate the people who have those 1-in-ten-million side effects. No courtroom roulette is involved, but you still get adequate compensation for victims.

If the manufacturer isn't actually negligent, this approach makes sense to me. There's nothing to deter in such a case.

"The problem, of course, is that juries aren't particularly well equipped to handle scientific arguments."

Yet, conservatives have no problem with juries delivering death sentences based on scientific evidence.

"Go to WalMart. Imagine the 1st 12 adults you see deciding whether you go to jail or not. That's our system. Absolutely terrifying."

Having tried over a hundred jury trials, I can tell you that while individual jurors may not be very smart, juries are very smart. Often a jury will spot something that none of the lawyers, who worked on the case for years, ever saw.

Oh, and Dick King, punitive damages in Texas are limited to $200,000 or two times special damages(lost earnings and medical expenses), whichever is greater. Since this has been the law for more than ten years, I am sure some of the members of the jury were aware of it. They were trying to send Merck a message, in my judgment.

Why not a workers' comp analog?

This is a good idea, but the problem remains one of causation. Unless we're going to compensate anyone who has anything at all happen to them while taking a drug or for some prescribed period afterward, then there will still be a fight about causation.

Worker's comp protects you while at work, period, regardless of how you get hurt (subject to variations in state laws...), but the equivalent for drugs is tough to work out.