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Shaking Up the FDA

Executive Summary

To improve regulatory predictability, Mark McClellan has plans to reduce multiple-cycle reviews. In addition, he is in the midst of adopting best review practices and developing clearer guidances in therapeutic areas where progress has been slow and in certain emerging areas. While such plans potentially offer good news for the brand-name drug companies--though the benefits will be slow to accrue since the regulatory efficiencies will take years to fully materialize--they won't lower overall system costs since lower development expenses won't necessarily lead to lower average prices. Thus the FDA is focusing on two areas in which it has direct influence on drug costs and reimbursement: speeding the approval of generics and forcing OTC switches. McClellan's desire to impose a cost-benefit mindset on the agency attempts to balance the needs of the drug industry with the needs of reimbursers, particularly the Federal government as it prepares to shoulder the new burden of Medicare outpatient drug costs.
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