In a December 60 Minutes interview, House Speaker Paul Ryan spoke of the need for regulatory reform.
“There are a lot of regulations that are really just crushing jobs. Look at the coal miners in the Rust Belt that are getting out of work…the loggers and the timber workers and the paper mills on the West Coast…the ranchers or farmers in the Midwest…We’re talking about smarter regulations that actually help us grow jobs in this country.”
Leaving no doubt about the centrality of regulatory reform on the congressional to-do list, Speaker Ryan also said, “So we think regulatory relief is very, very important. And that’s something we’re going to work on on day one.”
He wasn’t kidding.
Within the first week of the new session of Congress, two important pieces of legislation that could be major steps forward on regulatory reform had been approved by the House of Representatives.
The first is the aptly-named Regulations from the Executive in Need of Scrutiny (REINS) Act, which would require affirmative congressional approval of any “significant” rule — one that imposes compliance costs of more than $100 million a year.
If Congress failed to approve a rule within 70 days after its promulgation, it would not become law. The “opt-in” nature of this legislation instead of the “opt-out” character of the Congressional Review Act would make it far more effective.
Greater politicization of regulation is a risk itself, of course, but it’s a reasonable price to pay for curbing rogue regulators.
The second is the resurrection of the “Holman Rule,” which empowers any member of Congress to propose an amendment to appropriations bills that would single out a government employee for salary reduction or cut a specific program.
A majority of the House and the Senate would have to approve any such amendment. That could be an important factor in redressing the excessive risk-aversion of many of our “gatekeeper” regulatory agencies.
If they become law, FDA would be a good place to start applying these new measures.
The nation’s most ubiquitous regulator, it regulates products accounting for more than a trillion dollars annually— 25 cents of every consumer dollar — encompassing food, drugs, vaccines, medical devices and your dog’s flea medicine.
In recent years, the FDA has made egregious errors that have had important consequences, in both the formulation of policy and in the evaluation of individual products.
Most of these missteps have been in the direction of excessive risk-aversion or heavy-handed regulation, although a few, such as oversight of herbal dietary supplements and compounding pharmacies, have been marked by laxity, timidity or outright incompetence.
President-elect Trump seems to agree.
“Reforms will also include cutting the red tape at the FDA: There are over 4,000 drugs awaiting approval, and we especially want to speed the approval of life-saving medications,” Trump told a rally in Gettysburg, Pa., promising to address the issue in his first 100 days.
There are several areas in the pharmaceutical arena where we expect to see specific regulatory changes. One that should come quickly from Congress is the permanent repeal of the disastrous medical device excise tax.
This monstrosity, a provision of the Affordable Care Act, was a dark cloud over medical technology innovation during the years it was in place and led to drastic cuts in research and development, as well as job losses and lost opportunities to improve patient care.
Congress recognized just how detrimental this policy was to innovation and suspended the tax for two years, but it will resume in 2018 if nothing is done.
Fully repealing the medical device tax, once and for all, would remove a massive roadblock to improving patient outcomes and creating high-tech manufacturing jobs.
Another needed innovation would be “reciprocity” of approvals with certain foreign “A-list” governments, so that an approval in one country would be reciprocated automatically by the others.
That would make more drugs available sooner in all of the participating countries, increasing competition and putting downward pressure on prices.
It would also help to alleviate another critical problem— Shortages of certain critical pharmaceuticals, many of which have been essential in medical practice for decades.
The majority of the pharmaceuticals are generic injectable medications commonly used in hospitals, including analgesics, cancer drugs, anesthetics, antipsychotics and electrolytes needed for patients on IV supplementation. In short, reciprocity would be a win-win-win.
Bringing a new drug to market now requires 10-15 years and costs have skyrocketed to an average of more than $2.5 billion largely because FDA requirements have increased the length and number of clinical trials per marketing application.
The detrimental effects of FDA delays in approving certain new drugs that are already available in other industrialized countries are well-documented and deserve as much attention as drugs’ high costs.
At times, FDA officials seem to have forgotten that their decisions are literally a matter of life or death.
An example is the sorry saga of a drug called pirfenidone, used to treat a pulmonary disorder called idiopathic pulmonary fibrosis (IPF), which killed tens of thousands of Americans annually.
The cause of the disease is unknown and there were no drug treatments approved for it in the United States until October 2014, although pirfenidone had already been marketed in Europe (since 2011), Japan (2008), Canada (2012) and China.
Pirfenidone was approved in the EU on the basis of three randomized, double-blind, placebo-controlled studies, one conducted in Japan and the other two in Europe and the United States.
In spite of a recommendation for approval by an FDA advisory committee (comprised of outside experts) in 2010, agency officials opted not to approve the drug and demanded another major clinical study.
The results, published in May 2014, were impressive and the FDA finally approved the drug without fanfare in October 2014.
But, between 2010 and the approval, more than 150,000 patients died of IPF in the United States.
The pirfenidone example illustrates an endemic problem at “gatekeeper” regulatory agencies — those such that must grant an affirmative approval before a product can be legally marketed.
Their timidity, incompetence and lack of accountability can have calamitous impacts.
The current state of affairs, not only at the FDA, but at many federal regulatory agencies, is bad for the public interest.
We need a new ethic, one that better considers the heretofore under-appreciated dangers of excessive risk-aversion.
With an eye toward more evidence-based decision-making, we need to find ways to introduce accountability for bureaucrats’ misdeeds and missteps.
The Wall Street Journal’s Dan Henninger offered this wise observation: “Once past the voting, politics is about public policies, whose real-world effects either sustain or diminish hope.”
We’re hoping for marked improvements in the regulatory climate during the next four years.
[Originally Published at Pundicity]
Jeff Stier is a Senior Fellow at the Consumer Choice Center. He is also a policy advisor to The Heartland Institute.
