Two Thalidomide Disasters – Econlib

Most people have heard of the thalidomide tragedy. Few people have heard that that tragedy led lawmakers to cause an even bigger tragedy. In short, there were two thalidomide tragedies.

In the first one, babies were born with severe deformities after their mothers took the drug. The second tragedy was more serious and damaging. Lawmakers used thalidomide as an excuse to pass legislation that would have done little or nothing to prevent the first tragedy but has led to six decades of lost lives. Those lives were lost because the legislation led to fewer beneficial drugs being developed and sold.

These are the two opening paragraphs of Charles L. Hooper and David R. Henderson, “Two Thalidomide Disasters,” Regulation, Winter 2024-2025. It’s the lead article.

Another excerpt:

The FDA’s rules were altered with the Kefauver–Harris Amendments of 1962. These amendments required drug companies to prove both safety and efficacy before a new drug could be marketed.

Note the irony. What kind of problem did thalidomide have? An efficacy problem? No; it did what it was supposed to do: treat anxiety and morning sickness. A safety problem? Yes. The FDA already had rules in place to prevent unsafe drugs. The FDA could have rejected thalidomide based on rules that had been on the books since 1938.

Anticipating by nearly half a century Rahm Emanuel’s maxim that “You never want a serious crisis to go to waste,” Congress and President Kennedy didn’t waste this one and the Kefauver–Harris Amendments were passed. The opportunist Kefauver got his bill because of the thalidomide tragedy even though his bill had almost nothing to do with the thalidomide tragedy. (italics in original)

And:

Part of the reason for this slowdown is the much higher cost of drug development after Kefauver–Harris. In the subsequent decades, capitalized drug development and approval costs per approved drug have increased at 7.5 percent per year in real terms: $179 million in the 1970s, $413 million in the 1980s, $1.04 billion in the 1990s through early 2000s, and $2.56 billion in the 2000s through early 2010s (all in 2013 dollars).

If this 7.5 percent annual growth rate were to persist, costs would more than double every 10 years. But the cost increase seems to be accelerating: The annual growth rate over the last decade has been 8.5 percent. The cost today is probably already at least $8 billion (in 2024 dollars).

In short, we have fewer drugs and the cost per drug has exploded. Is this attributable only to the bad drugs that were weeded out by the new rules? Multiple researchers have concluded that the answer is no. Peltzman came to this same conclusion, seeing the culling as if “an arbitrary marketing quota … had been placed on new drugs after 1962.” The adjective “arbitrary” isn’t something a supposedly scientific organization strives for.

Read the whole article.

The picture is of Estes Kefauver.