Thursday, February 4, 2010

Given the amount of fiscal tap-dancing by the president and his advisers these days, instead of bringing back former campaign manager David Plouffe, maybe they should have chosen someone like Fred Astaire or Bill “Bojangles” Robinson.

The Democrats’ political vacillation is laughable - but the joke is on us taxpayers. In December, the Senate passed a spending bill that on average increased spending for a wide spectrum of federal departments and agencies by 10 percent to 12 percent. Suddenly, chastened by the “Massachusetts Miracle,” the president announced a freeze on virtually all government spending across the board - but beginning only in 2011. Then he submitted a $3.8 trillion budget for the fiscal year that will begin in October that, in spite of massive tax increases, would create the largest deficits in the history of the planet. Heel click, toe punch, shuffle. …

Completely forgotten is the president’s commitment shortly after his election that budget officials would “go through our federal budget - page by page, line by line - eliminating those programs we don’t need, and insisting that those we do operate in a sensible cost-effective way.”

Nowhere will the effects of the out-of-control spending be greater than at federal regulatory agencies that act as a gatekeeper, or brake, on innovative products and technologies because they must grant pre-marketing approvals - agencies such as the Environmental Protection Agency (EPA) and the Food and Drug Administration (FDA). The reality is that budget increases cause bureaucrats to search for more things to do and to exert their power more aggressively. That makes regulation more stultifying, which in turn further stifles innovation.

Consider, for example, the ubiquitous FDA, which regulates products that account for more than 25 cents of every consumer dollar. Trimming, revising or eliminating programs that are ill-conceived and counterproductive would free up resources for essential functions, improve the efficiency and effectiveness of FDA regulation, reduce the costs of research and development performed by the private sector and stimulate innovation - but that’s not on the president’s agenda. Quite the opposite. As my late colleague economist Milton Friedman used to say, only in government do we see a program or project fail miserably and conclude that it needs to be expanded: At the dysfunctional and demoralized FDA, the 2010 budget rose to $3.2 billion, a 19 percent increase over the previous year, the largest boost in FDA history. For the next fiscal year, it would soar to $4 billion.

Had Mr. Obama kept his post-election promise, his Office of Management and Budget officials could have found flawed, anti-innovative FDA policies, programs and practices that are amenable to cost-cutting. Here are a few specific suggestions, a microcosm of what might be achieved throughout the government:

c Many FDA evaluations take far longer than they should. These include approvals of new drugs, vaccines, medical devices (such as artificial joints and pacemakers) and food additives. Not only is there minimal accountability for dilatory performance, but the agency’s pervasive risk aversion actually rewards anti-drug bias. Greater accountability, more expeditious decision-making and improved risk-benefit balancing would expend existing and additional resources more efficiently.

c In 2007, the FDA announced a plan to perform a comprehensive assessment of the safety of some new drugs within 18 months after their introduction and to issue a report card on their performance. Although this may sound plausible, it is inconsistent with data showing that, in fact, newer drugs confer an advantage over older ones in reducing mortality. This plan is another candidate for elimination or could be limited to encompass only very widely prescribed drugs for which clinical trials raised a safety signal.

c Most day-to-day evaluations and approvals of drugs, medical devices and food products are performed autonomously within the FDA’s various decentralized units, and yet there are massive, largely superfluous bureaucracies that serve the commissioner and a horde of deputy commissioners, associate commissioners and assistant commissioners. These should be trimmed drastically, freeing resources for the agency’s essential programs.

c The current FDA leadership has permitted self-styled whistleblowers to flout the FDA’s ethics rules by publicly contradicting agency policy and disparaging drugs and drug companies they dislike. More disciplined management would boost morale and increase productivity.

c A memorandum of agreement between two groups within the FDA entity that regulates medicines slows drug development and increases its costs. Under the accord, the drug review and drug safety offices have equal responsibility for “significant safety issues” pertaining to medicines that are under review or already have been approved for marketing. However, officials in the latter group are focused so narrowly on “safety” that they ignore the fact that because all drugs have side effects, safety cannot be evaluated in a vacuum. Instead, safety must be part of a risk-benefit judgment. Their motto might be: “If you don’t approve new drugs, you avoid safety problems with them.” These drug-safety zealots should be returned to a purely advisory role.

c The FDA is becoming increasingly risk-averse toward products other than drugs. A perfect example is its attitude toward bisphenol A (BPA), a chemical that, as FDA notes, “has been present in many hard plastic bottles and metal-based food and beverage cans since the 1960s.” In spite of the agency’s own admission that “studies employing standardized toxicity tests have thus far supported the safety of current low levels of human exposure to BPA,” FDA recently announced that it will expend significant effort to re-examine the issue, crank up regulation and try to reduce exposures - largely in response to the baseless demands of activists.

“This isn’t about big government or small government,” the president said. “It’s about building a smarter government that focuses on what works.” Heel click, toe punch, shuffle, spin, spin, spin. …

Dr. Henry I. Miller is a physician and fellow at Stanford University’s Hoover Institution. An official at the FDA from 1979 to 1994, he is the author of “To America’s Health: A Proposal to Reform the FDA” (Hoover Institution Press, 2000).

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