Drug safety information and the “transparency paradox”

The only way to increase the quality and amount of pharmaceutical safety information available to the public is to institute tort reform and market-based economic incentives.  So argues Penn State assistant law professor and patent attorney Daniel Cahoy in a paper soon to be published in the Indiana Law Journal. Attempting to force drug companies to publicize more safety information will only force them to cut down on voluntary clinical trials, which will reduce the amount of safety information available to the public. Below an excerpt from a Penn State news release about the paper: "...Under Cahoy's proposal, a drug company could be protected from the type of litigation facing Merck if it continually tests its products and openly discloses both good and bad results.A "very narrow legal revision must be adopted that specifically links the desired information with a liability limitation," Cahoy writes. "The limitation need not go beyond ensuring that a manufacturer that acts in a manner that benefits society will not face liability as a result." Should a pharmaceutical be found to contribute to heart attack risk, for example, its manufacturer would be protected from liability if it discovered this risk on its own and released the new revelation expeditiously. This protection from liability will encourage a company to take the risk of seeking new information. Cahoy favors such a market-based incentive structure over the FDA's recent attempt to eliminate or "preempt" state product liability litigation if a company merely complies with the relevant regulations. The latter would likely result in less than the desired amount of information because "a firm derives no benefit from acting beyond the regulatory rules because it will face no liability costs," he argues. "Since tort liability is important to induce a company to internalize the costs of future harm by producing information, complete immunity is not a reasonable option." These market-based incentives are also likely to be more desirable than increased federal regulatory powers, given the recent criticisms of the FDA as highlighted in Monday's report from the Government Accountability Office. "The FDA is often accused of acting in an overly industry-friendly manner, and given the powerful incentives of tort immunity for regulatory compliance, the benefits in exerting undue influence on the agency only increase," Cahoy writes. Further, he warns that bureaucratic and political pressures within the FDA may hinder the agency's ability to enforce new regulations and get more prescription drug information to the public. Cahoy concludes that giving the FDA more authority is a second-best option to providing market-based incentives to drug manufacturers. And given the life-and-death nature of this kind of information, second best isn't good enough..." -AMS