How Republicans Want to Regulate Pharma: Not At All


The Republicans' approach to government as a handmaiden to industry and a fixer for the rapaciously rich was on display last week in Washington at the House Energy and Commerce Committee. This time their lunatic approach focused on the FDA, where they hope to loosen standards for drug approvals and permit researchers in the pockets of the drug companies to serve on advisory panels.

Their rationale rests on the claim that conflict-of-interest provisions have delayed drug approvals. Republicans also want to rescind legislation passed at Congress's previous reauthorization of the FDA that gave the agency added authority to regulate drugs after approval. That regulatory authority permits the agency to require safety studies from drug makers and to make appropriate label changes.

Committee Republicans claim that FDA "overregulation is stifling innovation and preventing drug and device companies from creating new jobs." The Representatives for the wealthy and powerful repeat here at least two of their recurrent myths.

The first is that strict FDA regulation is responsible for the productivity decline of pharma's new drug development efforts. The fact is that the FDA is not denying approval to a high volume of new drug submissions. Rather the pharma companies are submitting fewer candidates for approval. For at least ten years now, observers have known that the industry's research efforts are in decline because much of the “low hanging fruit has already been identified and picked", thereby making the well established approaches less fruitful.

Secondly, the enormous layoffs that pharma created during the past two years didn't result from FDA disapprovals. Changes in the reimbursement approaches of private insurers meant that even if many of those failed products had won approvals, the prospects for their commercial success were unlikely. Because the per unit costs paid by insurers for each drug decline as it gains sales and/or market share, the HMOs find it advantageous to drive as much usage as possible to the category leaders. This thwarted the me-too phenomenon that had been a major source of pharma's profitability for decades. Faced with a shrinking pool of new products that its customers would feel compelled to buy, the industry's leaders decided to preserve their own earnings-based compensations by lowering expenses through cutting R&D and firing people.

By claiming that FDA regulation causes unemployment, the Republicans are repeating their entirely deceptive commitment to creating jobs. In 2010, people began recognizing the timidity and the conservative nature of President Obama as it became apparent that his economic stimulus package from the previous year was entirely inadequate. The Republicans won large gains in Congress last year by claiming they would create jobs. Once they entered office this year, however, they failed to submit so much as a single jobs creation bill to either the House or the Senate. Instead their pandering to a base of scrofulous bigots caused a flurry of activities related to gay marriage, English as a national language, funding to Planned Parenthood and denying US citizenship to the American born children of illegal immigrants.

It's no surprise that Republicans claim allowing blatant conflict-of-interest and fostering toothless regulation will create more and better medications. After all, this is a party whose principal chant for two-and-a-half years has been the absurdly counter-factual claim that government spending during a recession stifles the economy.

The Republicans relied here on the deceptive sophistry of their marketing researchers who told them that economically illiterate "moderates" and Fox News watchers could not grasp the Keynesian principle of countercyclical spending. Instead, they concluded that people in the "unwashed middle" were more comfortable comparing the federal government to a family that continues to borrow while household income declines. Republican focus groups and interviews uncovered for them only a sparse understanding that the federal government in a recession remains the only sector of the economy with sufficient liquidity to stimulate demand. This provided the basis for the Republican narrative in which casual voters were easy marks for a demagogic line such as, "Washington has a spending problem."

So once again Republicans appear as if they are in thrall to the liars and crackpots that refer to themselves either as tea partiers, Christian conservatives or free marketers. In fact any such genuflection is merely a mask to cover their true intention of redistributing wealth and income upward, from the middle class to the corporate oligarchs. That they also seek to jeopardize the middle class's health and safety in the process should come as no surprise. After all, if they explicitly intend to undue the reforms of mid-twentieth century progressives such as Lyndon Johnson (Medicare) and Franklin Roosevelt (Social Security), why shouldn't they also reverse an earlier progressive, Theodore Roosevelt, who originally signed the FDA into law in 1906?

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