Didn't Big Pharma or the FDA learn anything from the Gulf oil spill or the Wall Street meltdown?

Making government work better.
July 14 2010 2:01 PM

Regulators and Risk-Takers

Didn't Big Pharma or the FDA learn anything from the Gulf oil spill or the Wall Street meltdown?

Avandia, a diabetes medication by GlaxoSmithKline. Click image to expand.
Avandia, a diabetes medication by GlaxoSmithKline

It's a depressingly familiar story: A company hides enormous risk in its effort to get outsize returns, hoping that if and when the risk metastasizes, somebody else will have to pick up the tab. The name of the company may change, the sector of the economy may differ, but the basic narrative is as predictable as a Hollywood sequel.

Our two recent cataclysms—the financial meltdown of the past several years, and the more recent eco-disaster in the Gulf of Mexico—follow this pattern. The latest version of this story involves Big Pharma. Add GlaxoSmithKline and the Food and Drug Administration to the roster of actors, joining Goldman Sachs, AIG, BP, the Securities and Exchange Commission, the Federal Reserve, and the Minerals Management Service. In all these cases, the regulatory entity responsible for oversight failed to do even a minimally acceptable job of identifying and requiring protection against the risk at hand.

According to the New York Times, it appears that GSK hid test results relating to Avandia, a diabetes drug, which showed that the drug creates a risk to the heart. Rather than publicize these results, or make them part of the file to be analyzed in determinations about the efficacy of the drug, GSK buried the results, doing all it could to suppress the data and keep it from anybody outside the company. Internal documents show that GSK calculated the potential lost sales if the risk were exposed: hundreds of millions of dollars annually. Records also suggest that the then-FDA leadership (not those currently running the agency) appeared all too comfortable accommodating GSK.

As I said, this type of story is not new. But neither is this particular story. When I was attorney general of New York, we got wind of the fact that GSK had suppressed test results relating to Paxil, an antidepressant. The tests showed that use of Paxil was positively correlated with suicidal tendencies among teenagers. GSK, of course, did not want these data out, and so both suppressed the actual data and mischaracterized the results of the tests they had done. In 2004 we sued GSK and, in a groundbreaking settlement, got it to agree to post the results of its clinical tests online so that their self-serving interpretation of the data would not mislead doctors and patients. In 2007, Congress followed with a mandate that these data be made publicly available.

When it comes to Avandia, we once again have outrageous behavior on the part of the corporation—GSK—but also the failure of the regulator. The FDA can and should require that all testing data be made available for FDA examination as well as publicly available for all approved drugs. Full stop. No exceptions.

American law gives drug companies a lengthy monopoly on the sale of new products in order to justify the cost of research and development. This protection of intellectual property is a wise inducement to create and explore, and our "innovation economy" depends upon sufficient protection of intellectual capital. What America should demand in return for this protection is that the FDA be able to make an honest evaluation of the efficacy of drugs. When drug companies make this impossible by suppressing test results, not only do they violate their fundamental obligation of honesty with the public, their customers, and their regulator, but they also break the bargain they have struck in return for the protection of their intellectual capital.

In addition to the egregious behavior by the respective corporate actors, we have now seen the same pattern at the FDA, SEC, the Fed, and the MMS: Enormous risk is hidden from view by a company and not explored by a regulatory agency, whether through its own negligence or deception on the part of those it regulates. Then that enormous risk spreads, endangering the economy, the environment, or the public health. This story is getting old. We don't need another sequel to what is already a Hollywood remake.

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