Gatekeeping Drugs

David A. Simon (Northeastern University), Gatekeeping Drugs (Northeastern U. Sch. of L. Rsch. Paper) (forthcoming):

How much evidence should pharmaceutical manufacturers be required to provide before they can market new drugs? With drug costs ballooning to over $500 million and marketing approval decisions increasingly contested, scholars have reached two conflicting views. Public-health scholars tend to think high evidentiary standards overseen by a strong governmental gatekeeper are important to medical progress and protecting consumers while pro-market scholars view them as impediments to innovation and a threat to public health. This Article shows these seemingly diametrically opposed views can be married using an existing system that reimburses certain unapproved uses of approved drugs-so-called off-label uses-based on evidence that they work. In these cases, reimbursement acts like an initial gatekeeper with respect to certain unapproved uses by "approving" them through payment. This system of off-label approval, therefore, resembles one that pro-market scholars desire: drug approval regulates drug entry to the market and reimbursement regulates (unapproved) drug use once on the market. Extending this system across all drug regulation reveals that changing drug approval standards has benefits and costs that both pro-market and public-health scholars have not fully considered. It demonstrates that the potential benefits of changing drug approval are difficult to predict given the costs imposed by significantly disrupting the existing drug ecosystem. This suggests reform to drug approval should be methodical, carefully controlled, and measured.