Does the pharmaceutical industry bribe the FDA?

It’s not the type of question we’re asked every day, so it sparked our interest, particularly the assumption that something like this is possible. Opinion on the subject is divided. They range from ideas that anything related to the pharmaceutical industry is tainted, in this case the FDA, to opinions from scientists and policy experts at the FDA that bribes are impossible given all the checks and balances at the Agency. Whether the industry bribes the FDA has implications for pharmaceutical markets in the US, market access around the world, and institutions associated with the pharmaceutical industry. Below we present our approach to this question.

Does the pharmaceutical industry bribe the FDA? It depends on how you define “bribe.” Let’s consider the definition provided by dictionary.com:

“Bride (when used as a noun) is money or any other valuable consideration given or promised with a view to corrupting the behavior of a person, especially in that person's performance as an athlete, public official, etc.”

To answer the main question, we need to answer the following related questions: Does the FDA receive “money or any other valuable consideration” from the pharmaceutical industry? If so, do these payments “corrupt the behavior of …” the FDA?

Question 1 Answer
The FDA collects fees from the pharmaceutical industry to supplement non-user fees used by the Agency for the drug review process. The FDA uses the fees for hiring, supporting, and maintaining personnel and to ensure that safe, effective, and high-quality prescription drugs are available to the American public (1)

In 2016, the FDA collected USD857 million from the pharmaceutical industry, see table below. User fees are collected for prescription drug applications and annual fees are collected for establishments and products. (Reference 1, page 4)

FDA Fees Collected and Received

Question 2 Answer
Before we answer this question, consider the definition of “corrupt”, again based on dictionary.com

“Corrupt (when used as a verb) is to destroy the integrity of; cause to be dishonest, disloyal, etc., especially by bribery.”

Do the payments received by the FDA from the pharmaceutical industry destroy the integrity of the Agency? Does it cause the Agency to be dishonest? It’s a lot tougher to answer this question. Imagine if you would, two FDAs - one FDA that receives payments from the pharmaceutical industry to subsidize operations, and another FDA that does NOT receive such payments. The two FDAs are identical in all respects. Will the decisions of the first FDA be any different compared to the second FDA? Will the first FDA approve prescription drugs that are less safe, effective, or of poorer quality compared to the second FDA? To answer these questions, we’d need a social experiment to compare the effects of payments by the pharmaceutical industry on the work outcomes of the FDA - clearly an impractical proposition.

Observations
A significant portion of the FDA’s operating budget is derived from fees collected from the pharmaceutical industry, but we don’t know if these payments cause the Agency to be dishonest. Is the Agency corruptible? Do these payments alter the behavior of the 4,125 FTEs at the Agency in 2016 (see Table below), among them hundreds of scientists and policy experts (Reference 1, page 14)? We doubt this group of independent and critical thinkers would allow the level of corruption/bribery suggested by the main question.

FDA FTEs

However, scientists and policy experts at the FDA depend on budgets derived from payments by the pharmaceutical industry. Their research is most probably incorruptible in the sense that the outcomes of their work are modified, but we think it’s fair to suggest that their activities depend on funding from the pharmaceutical industry. It’s as simple as “no fees no FDA” - in the absence of such funding the FDA as we know it would look very different. On the other hand, the pharmaceutical industry depends on the market-shaping activities enabled by the FDA. The FDA develops policies to ensure that safe, effective, and high-quality prescription drugs are available to the American public. The FDA also establishes the minimum threshold for market participants entering the market, and they determine the market structure, the number of market participants, and ultimately the profitability of market segments.

The FDA depends on the pharmaceutical industry, and the pharmaceutical industry depends on the FDA. This mutual dependence is akin to the “Theory of Regulatory Capture” elaborated by public choice theorists and economists. Briefly, it states that “regulatory capture is a form of government failure that occurs when a regulatory agency, created to act in the public interest, instead advances the commercial or political concerns of special interest groups that dominate the industry or sector it is charged with regulating” (2). To our knowledge, there’s no empirical evidence to suggest that the FDA is a victim of regulatory capture or that it has deviated from its public mandate.

In summary, does the pharmaceutical industry bribe the FDA? We know that a significant portion of the FDA’s operating budget depends on payments from the pharmaceutical industry, but we don’t know if these payments cause the Agency to be dishonest. The Theory of Regulatory Capture may help future research in this area, for now, we don’t know if removing the financial dependence of the Agency on industry fees will alter their work outcomes.

References

  1. FDA Financial Report 2016. www.fda.gov/downloads/AboutFDA/ReportsManualsForms/Reports/UserFeeReports/FinancialReports/PDUFA/UCM550408.pdf
  2. Wikipedia: Regulatory Capture. en.wikipedia.org/wiki/Regulatory_capture

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