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How Smart Regulation Supports Public Health and Private Enterprise

Remarks as Delivered by Margaret A. Hamburg, M.D.,
Commissioner of Food and Drugs
at the Commonwealth Club of San Francisco
San Francisco, Calif.
February 6, 2012

Thank you Sue for that generous introduction, and thank you all so much for having me back.  Having been raised in Stanford, this is a home coming for me, and it’s an honor to again have the opportunity to address the nation’s oldest and largest public affairs forum.

For over 100 years, the Commonwealth Club has played host to a diverse and distinctive spectrum of speakers, including every sitting President starting with Teddy Roosevelt—who, by the way, championed the founding of the FDA.  In what’s now considered a landmark address, Roosevelt made the case here at the Commonwealth Club for federal involvement in the protection of common lands for the common good.

The question of how to best protect the common good is one that continues to confront us everyday at the FDA. We’re responsible for protecting the public health by assuring the safety and effectiveness of human and veterinary drugs…vaccines, the blood supply and other biological products for human use…and medical devices.   We also are responsible for the safety of our nation’s food supply, cosmetics, dietary supplements, products that emit radiation—and, most recently, regulation of tobacco products.  Overall, we regulate products that represent 20-25 cents of every dollar spent by consumers on products in the U.S. These are products that really matter to people and that they rely on…whether toothpaste, or the food on the table or the drug needed for a chronic or an acute disease.

The challenge of protecting the common good especially resonates at the FDA as we mark fifty years since the infamous Thalidomide tragedy. No doubt, many of you remember, in the early 1960s, devastating reports began coming in from around the world of countless women who were giving birth to children with extremely deformed limbs and other severe birth defects.  The mothers had taken the sedative, Thalidomide.  It was supposed to be a wonder drug for morning sickness.  But medical officer Dr. Frances Kelsey of the FDA discovered that Thalidomide had not even been tested on pregnant animals. Thanks to her vigilance, the drug was never approved in the United States.

Dr. Kelsey’s reaction to Thalidomide best exemplifies FDA’s mission: protecting and promoting the health of the American people, using science for regulatory decision-making. 

But an equally important part of the FDA’s mission is to help speed medical progress to people.  FDA was pivotal in protecting pregnant women from Thalidomide and we are proud to honor Dr. Kelsey for her heroic actions.  But we must also play a critical role in ensuring that safe and effective products quickly reach patients—whether it’s a woman suffering from complications of pregnancy or who has been diagnosed with a metastatic cancer…or a child with poorly controlled type 1 diabetes…or a teenager who is struggling to breathe because of cystic fibrosis. 

But there are sometimes tensions between moving new products swiftly out into the marketplace and making sure that they have been adequately studied.

As FDA commissioner, I have been surprised by how many people ask whether I favor safety or innovation. I favor both. Protecting the public health—while encouraging, not discouraging innovation must be the goal…and it is. But it is also why a robust, well-funded, FDA, with the necessary scientific expertise and capability, is so important.  

And this dual objective leads to a question that I want to address this afternoon.  Given the current state of our economy, and the never ceasing challenges to public health, it’s a question that’s vitally important to all of us, and to our nation.  Specifically:  Can Smart Regulation Support Public Health and Private Enterprise?

I believe the answer is an unqualified yes—because we actually achieve these dual objectives through the same means:   Sound, smart, science-based, regulation. 

Now, I know that in some circles, regulation is viewed as a roadblock to innovation and economic growth.  Some even insist that regulations kill jobs.  More than once I’ve had the pleasure of being called a "job killing regulator."

But, in actuality, regulation—when it’s done right—isn’t a roadblock—it’s the actual pathway to achieve meaningful and lasting innovation.  Smart, science-based regulation instills consumer confidence in products and treatments. It levels the playing field for businesses. It decreases the threat of litigation. It prevents recalls that threaten industry reputation and consumer trust—not to mention levying huge preventable costs on individual companies and entire industries. And it spurs industry to excellence. 

The fact is, when done right, smart regulation allows us to deliver the promise of science in the service of patients, consumers—and yes, even industry.

When quality, cutting edge science, industry leadership, and good regulatory practice combine when they are working well, and working together, the resulting synergy produces tremendously positive outcomes.  But take away any of these necessary factors on the continuum of discovery to delivery, and the engines of innovation can stall.

Today, in this context, I’d like to share with you some of my perspective on the regulatory role of FDA. It requires a little history because it’s a story—a journey—that begins with the establishment of the FDA, and continues today.

When the pro-business Teddy Roosevelt lent his support to the passage of the Pure Food and Drug Act of 1906—the founding document for the FDA—he envisioned the legislation as a helping hand for both consumers—and free enterprise.  He believed that by giving consumers a degree of confidence and security in the safety of the food and drugs they purchased, it would further market growth—especially for the best businesses.

That’s why, as I understand, there was unprecedented—although certainly not wholesale—industry support for the 1906 Act.  Many businesses hoped that the regulation would restore the competitiveness of their products on weak foreign and domestic markets, as it would prevent unscrupulous companies from marketing poor quality and often dangerous products.

Over the years, Congress gave FDA additional powers to protect and promote public health—often in response to a public health crisis.  More often than not, each change was greeted with dire warnings by some voices in industry. 

For example, when 107 people died after a chemist used a poisonous solvent in a new sulfa drug, Congress enacted the Federal Food, Drug and Cosmetic Act in 1938.  The landmark legislation required basic safety testing of drugs.  Naysayers said that the new law would put countless people out of work…close plants…hurt thousands…and to quote one industry proclamation from the time, "help none."  But they were wrong.

But even with this landmark legislation, by the midpoint of the 20th century, there were still few requirements for studies to determine the actual benefits of a drug.  There were no patient protections.   There was little post-market scrutiny.  And there was very little need for manufacturers to adhere to good manufacturing practices that would lead to consistently safe products.

Then came the uproar over Thalidomide.  And exactly fifty years ago—in 1962—it prompted Congress to enact the Kefauver-Harris amendments to the Federal Food, Drug and Cosmetic Act.

Thanks to the new amendments, manufacturers had to prove that a drug was not only safe—but also effective. Approvals had to be based on sound science—typically two well controlled clinical trials. Companies had to monitor safety reports that emerged post-market and adhere to good manufacturing practices.  And there were new, additional protections for patients.

Predictably, opponents said that these new provisions were unnecessary—or worse.  But these voices had been heard before. And the Kefauver-Harris Amendments created the science-based agency that exists today.  Frankly, they allowed the FDA to become the regulatory leader, the gold standard for the world.  And, above all, they ensured that we could continue to fulfill our public health mission—protecting patients from dangers like thalidomide…while enabling safe and effective drug to be made available to those in need.

And while the amendments clearly benefited patients, they also helped industry—and helped serve as a catalyst for innovation. For they not only raised scientific standards, but they also helped establish a framework for a new form of scientific research enterprise. 

In short, you could argue that these amendments helped usher in today’s sophisticated, science-based biotech and pharmaceutical industry. For the very first time, many companies put in place rigorous research and development programs, including the design and implementation of controlled clinical trials.  Major therapeutic breakthroughs resulted, including the use of beta blockers in patients after a heart attack …a variety of well-tolerated anti-hypertensive agents…and the use of angiotensin-converting enzyme inhibiters to improve survival in patients with heart failure. 

All of these were good news for patients and for public health…and for corporate bottom lines, I might add. And by requiring that new drugs and treatments were not just safe—but effective—the best drugs and treatments—rather than simply those most heavily marketed—could rise to the top.

At their core, the Kefauver Amendments—by demanding excellence and creating a culture of quality and innovation—laid the foundation for our current regulatory environment which is emulated around the world.  It’s an environment that has offered enormous progress for patients and consumers—while encouraging, rather than discouraging, private sector innovation and economic growth.   I know there are skeptics, but, we need only look at the evidence.

These are hard times…but even with the current economy, American pharmaceutical, biotech, and medical device companies are maintaining a competitive advantage in the global marketplace.  Indeed, our current regulatory environment has fostered the growth of a domestic pharmaceutical industry that is second to none.  Under FDA oversight, U.S. pharmaceutical sales from New Jersey alone, I’m told, surpass those of Australia and the Middle East combined, and are nearly as large as sales from all of Asia. 

Although they may not always like it, I think that companies also find that adhering to FDA’s quality standards is beneficial to their bottom lines.  After all, major recalls exact financial and reputational costs.  According to McKinsey & Co., quality improvements can boost revenues for medical device companies by three to four percent—while companies hit with a product recall or other major quality event can experience a ten percent drop in their share price.

Moreover, many studies confirm that the FDA’s regulatory framework, and its standards for safety and efficacy, are vital to the trust and confidence of consumers in products and the companies who make them. FDA approval clearly matters to domestic commerce, and it is an important gateway to international markets as well.

In this regard, answering an earlier charge, I think it can be said that appropriate regulation has helped to create—not cost—jobs.  According to a Battelle Memorial institute report, in 2008 the biosciences industry directly employed some 1.4 million people in the United States and ensured about 8 million related jobs. 

I know that the past three years have bought new economic constraints including layoffs in the pharmaceutical sector due to industry consolidation and restructuring, but there are encouraging reports that biomedical product job growth is coming back.

A recent report commissioned by BIOCOM, a trade organization for life science companies in Southern California, and prepared by an independent economic consultant, examined the jobs and overall economic impact of 3,500 life science companies in the region. Commenting on the findings of that report, Joe Panetta, President of BIOCOM stated that, "The data backs up that the life science industry is leading economic growth locally and nationally." The report indicates that this year the industry will employ 95,000 works, not in "dead end" jobs, but high quality, high-value jobs with an average wage of more than $100,000.

But it takes the right regulation to help support job and economic growth, so I fully understand the private sector’s frustration with regulation that isn’t as sound or streamlined as it should be. And we must address a set of very real concerns.

For example, I’ve heard from small medical device companies and biotech startups who complain that dealing with the FDA can be a daunting experience.  Every day that they don’t hear back from us can mean lost dollars and lost opportunity.

That’s why we’re establishing a small business liaison who will work with our product centers to help companies navigate through FDA, and why we are putting in place enhanced systems across all of our programs to ensure both the prompt and responsive engagement that these companies need and deserve and clearer guidance about what we expect from them and why. And while there will never be a guarantee that every product will be approved, we can help make the system more transparent, consistent, and predictable. This is smart, responsive, regulation.  

Smart regulation also necessitates that the way we regulate never becomes stagnant or archaic. That our regulation responds to changing situations, new information and new challenges—and always brings the best possible science to bear.

All of this requires regulatory flexibility in light of continually changing needs or circumstances.  But it also demands that we advance regulatory science:  the knowledge and tools necessary for the meaningful and timely review of products for safety, efficacy, quality and performance.

Unfortunately, this has been an area of our overall scientific enterprise and investments that has been woefully under-addressed, but absolutely vital if we, as a nation, want to leverage the opportunities in science today in the form of new, better and more innovative medical products. And it is some very exciting science in fact.

So advancing regulatory science is a huge priority, not just within the walls of FDA, but as an active, dynamic field of scientific research.  We are continually working to find new and better ways of doing things.  To seize new opportunities that exist in science and technology.  And to work with industry and our scientific partners in academia and government—in a collaborative way—to discover and apply new regulatory tools. 

Such things as: enhancing the use of pharmacogenomics and qualified  biomarkers; developing innovative clinical trial designs which enable clinical studies to be smaller, more efficient, and more adaptive; and developing new strategies using bioinformatics to more effectively mine large data bases to learn more about issues of both safety and efficacy, as well as questions like, can we identify subpopulations of responders to respond based on certain indicators, or learn more about important pathways of disease.
These efforts matter in our ability to swiftly and surely review product applications that come before us…and they are also essential for  reducing the time and cost—and increasing the likelihood of success—for drug development itself.

To see the results, you only have to look at three of our most recent drug approvals. Voraxaze, which removes the unused portion of a toxic chemotherapy agent from the bloodstream, was approved based on a single 22 patient study. 

Kalydeco, first conceived by a San Diego startup, targets a genetic mutation in a subset of patients with cystic fibrosis. It is the very first product that treats the underlying mechanism of the disease rather than the symptoms.  And it offers extraordinary promise.

The third new drug, Erivedge, the first FDA-approved drug for metastatic basal cell carcinoma, addresses a new finding for cancer cell growth—the so-called hedgehog pathway.  This drug was developed by Genentech, based right here in South San Francisco, and I’m proud to say that it was reviewed under the agency’s priority review program, and was approved a month ahead of its goal date based on a single study that used a non-traditional measure for success.

When strong science and quality applications come together, FDA can provide responsible and flexible regulatory oversight…and we have a clear responsibility to make sure this happens.  The successful translation of new discoveries in science, and the realization of new opportunities into real world products that people need and can depend on is our foremost goal. We must be an agency with the strong scientific and regulatory capacity that can provide the kind of clear, timely, consistent and reliable science-based, smart regulation that benefits industry and most importantly, benefits patients.

We can only fulfill this crucial role if we have the resources and support we need. Industry understands this, which is why the prescription drug industry is working with the FDA for the reauthorization of the Prescription Drug User Fee Act this year and why the private sector—and academia—are engaging with us in new scientific partnerships. Let me say a little about each.

The Prescription Drug User Act, or PDUFA, was enacted in 1992 to address a serious problem:  the chronic underfunding of the FDA, despite our critical work.  Its concept was simple.  Since industry benefits from FDA pre-market review—which helps to ensure drug safety and effectiveness, instill consumer confidence, and mitigate litigation—industry should help pay for a portion of the cost. 

When PDUFA was first implemented, the U.S. lagged behind Europe with respect to the introduction of new drugs, we had significant review backlogs, and the drug review program had high rates of staff turnover and inadequate management oversight. Since prescription drug user fees were enacted by Congress, they’ve greatly expedited drug approvals.  They’ve enabled our agency to hire and train additional drug reviewers, to strengthen our review team management, to strengthen our science base, and to provide industry with guidance on getting drugs through the approval process. 

Now, after several cycles of PDUFA, review times have shrunk, there are no backlogs, and we lead the world in approval of new drugs. In fact, we are regarded as the gold standard for drug regulatory review around the world.

Overall, PDUFA has been so successful that it has become the funding model for other medical products. Last week, FDA sent a proposal to Congress for historic new user fees that support the review of generic drugs and biosimilar biologics—two very dynamic and important areas for health and health care.  And just last week FDA reached an agreement in principle with industry to reauthorize user fees for medical devices.

Even in these challenging political and economic times, I am guardedly optimistic that Congress will move forward in a timely and bipartisan manner with the legislation needed to authorize all of these medical product user fees—and the programs and performance goals that we have negotiated with industry with input from patient and consumer groups as part of the user fee packages. At the same time, it is essential that Congress not take actions that will undermine—intentionally or unintentionally—the standards for safety and efficacy that, in fact, undergird the overall success of these efforts…and importantly the benefits for the safety, health and well-being of the American people

And as we strive to strengthen our regulatory programs, and help build the science we need for medical product development and review, we have come to believe strongly in the power of partnership. We need the best and the brightest coming together to help ensure success and progress. That’s why we are establishing a series of Centers for Excellence in Regulatory Science that cut across disciplines and sectors.

This morning I was discussing possible collaborations with Sue Hellman and UCSF.

And just last month we signed a memorandum of understanding with Stanford Biodesign, a fellowship training program under the auspices of Stanford University, just down the road from here. This MOU outlines collaboration on educational outreach…cross-training of scientific personnel…and the development of new biostatistical methods for more accurately evaluating the safety of emerging medical technologies.  Such partnerships help ensure that the work of the FDA reflects the best possible science…and supports the standards of the FDA that are so important for us all.

But while I can’t overestimate their importance, user fees and partnerships don’t provide necessary support for many of our core programs or for many activities that are fundamental for progress.

It’s undignified to whine about money and, frankly, over the past few years, we’ve been fortunate enough to receive budget increases despite the difficult economic times. Nonetheless, I do think it’s startling to realize that if you calculate out what every American pays for FDA services through the federal budget process, it’s about $8.00 per year. Frankly, I suspect that many people use more than $8.00 worth of FDA regulated products before they’ve even finished breakfast.

So I hope you will think it’s fair for me to close with a reminder of why all this matters.

We need resources to ensure that we always have the best regulatory practices and to continue to find new—and better ways—of doing things. We need  the resources to continue to help the private sector boost innovation while protecting and promoting the health of the American people—the common good that Roosevelt spoke of during that first Commonwealth speech. And we need resources to build an even stronger FDA.

Patient groups like the Cystic Fibrosis Foundation—which was pivotal in the development of the drug Kalydeco—recognize the importance of adequate and sustainable FDA funding as they look forward to new products on the horizon. That’s why they, and many other groups, have been publicly supporting strong funding for the agency.

The naysayers of earlier generations thought a stronger FDA would hurt thousands and help “none.”  Without a strong FDA—one endowed with the necessary resources to ensure smart, sound, science-based, cutting edge regulation—the human—as well as the economic costs would be incalculable.

As I’ve discussed this afternoon, such regulation protects the health and welfare of the American people and serves as a pathway to innovation if we do it responsibly and right. It’s the kind of regulation that industry needs.  It’s the kind of regulation that the American people want and expect.  And it’s the kind of regulation that Teddy Roosevelt probably first envisioned when he signed the Pure Food and Drug Act into law—and forever enhanced the common good.

Thank you.