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Point 1 effectively happens today, with larger and successful pharma firms basically waiting on startups to do the heavy lifting/absorb risk of product development, then swooping in at a late phase to acquire the startup.

Point 2 is outside the FDA's mandate. Other HHS agencies like the CDC and BARDA are a better fit and more or less already do this.

Point 3: again, outside the FDA mandate, and the FDA doesn't 'choose' anything in this sense. It evaluates safety and efficacy. Public health benefit is a secondary factor, and one that doesn't necessarily get heavy weight (e.g. Achaogen getting plazomicin 'Fast Tracked' by the FDA didn't seem to do much in Achaogen's favor in the end, with the drug only getting approved for a less-profitable indication).

Point 4: Again, agencies other than the FDA already do this and are a better fit.

Point 5: This is practically already how the industry works, though the FDA isn't the one calling shots.

If it wasn't obvious, I'm talking about changing the FDA's mandate to nationalize drug R&D, while contracting the work out to private entites. I would actually require those entities to operate as non-profits too, in order to receive FDA contracts.

If other agencies are a better fit for various parts of this plan, I'd do some reorganizing to bring them into a single organization. Maybe that's called FDA, maybe not. It would definitely be doing the FDA's current role in drug approval.

Putting the same agency in charge development and regulatory QA is a horrible idea. Way too many perverse incentives there.

Such as?

Corrupt behavior of government employees is already illegal, so if your concern is that they'd approve R&D funding for a drug and development company they have a financial stake in, that wouldn't be allowed and would be dealt with, unless they can prove that the drug really should be developed and the company getting the contract and funding really is the best choice.

Same goes for the manufacturing side, once the drug is approved.

And for the approval process, what perverse incentives would be created that don't already exist, and are already being dealt with? Today, anyone at the FDA who approves a drug that they've got some way to benefit from is already breaking the law.

>what perverse incentives would be created that don't already exist

If the FDA is both in the business of facilitating R&D, and regulatory QA for the products resulting from said R&D, you're creating an internal feedback loop that results in a couple predictable courses of action for the organization to appear successful:

1. The R&D program 'picks winners' and puts low-hanging fruit in the product pipeline that's highly certain to pass QA. FDA looks good due to high % of approvals for products it pushes to develop, but doesn't really reward innovation or high-risk + high-payoff projects. While this yields benefits, it doesn't address the issue of trying to get 'moonshot' type projects that result in significant leaps ahead funded.

2.) The R&D program (predictably) suffers from the same sort of high failure rate and safety issues that plague pharma in general; it's not a fault of the FDA per se, but because our collective knowledge regarding mechanisms of action is still rather basic. FDA proceeds to be attacked by Congress, the public, the media, etc. for 'wasting taxpayer dollars' on a low-yield program. FDA officials are thus incentivized to let their standards of quality and efficacy slide in order to protect the agency's image on the R&D side of the house.

The organization will "appear successful" if it brings useful drugs to market at a reasonable cost to patients. There would obviously need to be unbiased criteria for deciding what's useful and what isn't, and the decisions around both selecting criteria and applying them should be made by medical professionals, not bureaucrats or MBAs.

Your second argument could be applied to every government program, which are attacked all the time, with the intent to get rid of them and eventually have no government programs at all. That's a separate problem that needs to be solved.

> R&D companies submit proposals to the FDA for new drugs they want to develop. The FDA can also send out RFPs for drugs they'd like to prioritize.

So I'm Pfizer, and I think I've identified a compound to treat hypertension. I get all the way to phase 1 (which isn't cheap), only to find out that it doesn't actually work better than alternatives. What I do find out is that it's great at stimulating erections. A la peanut butter sandwiches, now we have Viagra.

> The math for insurance costs and premiums would change because retails prices for most drugs would drop. That would make insurance cheaper, and some of those savings would probably need to go towards a tax for the FDA's R&D funding.

Total US spend for pharmaceuticals is on the order of 10% of all spending. Since you can't actually zero that out, you're probably not looking at as much money as you think.

For the viagra example, what's your point? R&D has research right in the name, and research can turn up unanticipated results. If the FDA is funding research into a compound that might be good for hypertension, and it turns out to be good at stimulating erections instead, that's fine. There's a valid medical need for that sort of drug, and there would be no problem finding manufacturers who want to pay for a license to produce it.

The total US spend for pharmaceuticals include tens, hundreds, or thousands of dollar-per-dose retail cost that patients are paying either out-of-pocket or through their insurance. Those high prices are justified by two things: the cost of R&D (both for the specific drug and to cover losses from drugs that don't make it to market) and advertising/marketing. My proposal nationalizes the R&D cost so it's spread out over both the full spectrum of drugs being developed instead of just one company's drugs, and over the full taxpaying population of the US rather than just over the patients purchasing the drug.

As for the advertising and marketing cost, there'd be much less incentive to push drugs as hard as they're pushed today, because there'd be no need for the manufacturing company to try to recoup the R&D cost. So long as their earnings are greater than the actual manufacturing cost and the FDA licensing fee, they're making a profit. And they'd have the whole FDA catalog to choose from when they're deciding which drugs they can manufacture and sell at a profit. I also think it would be reasonable for the FDA licensing terms to include a reasonable limit on margins and profits, so that costs for the patients are reasonable.

So, nothing has to be zeroed out. So long as this setup reduces the retail cost, it'll reduce costs for the insurance companies, and so premiums can drop. That puts more money into everyone's pockets, which will make any additional taxes needed for this scheme less painful (so long as the tax is less than the premium reduction.)

Some minor/major issues with your line of thought: The US isn’t the world. Having the FDA essentially own and also pick winners and losers on the R&D market enormously misses their role, and messes up incentives, your essentially asking for all the money in The pharma industry to be funneled through the gatekeeper who’s traditional role has been to say “no way in hell we’ll let you put this hugely profitable drug on the market because it’s highly addictive, causes liver failure and you haven’t evne finished clinical trials on it...” imagine if the public will trust the guys who’s not only saying “yes this drug is definitely safe” but in the same breath is also ensuring 3 new lambos for his personal fleet.

As for the idea of splitting research and productions, that is an absolutely incredible idea, so great in fact that it’s already standard practice to see biotechs spin up only doing R&D with a plan to get bought up once they go to production.

But honestly, it feels like a scary totalitarian government like reality if we move to a state where the FDA starts getting heavily involved in the financials and starts picking winners and losers. Next thing you know Trump will be declaring through executive orders that hydrochloroquine is safe and effective and that production must go ahead With a company he happens to be invested in, but unlike current reality there won’t be any actual scientific checks of those bogus claims.

The FDA wouldn't be picking winners and losers. It would be picking scientifically valid lines of research, based on proposals from private companies. These are government employees; they're not buying lambos. Do you see CDC scientists getting rich?

Today's drug startup company, which thinks it has a product that could be successfully developed, would write up a proposal to apply for FDA funding. If the FDA scientists decide the proposal has merit, they get funding. If the FDA thinks the company is nuts, the company can still self-fund and do the R&D on their own. Either way the normal testing phases are needed for final approval.

After that, if the FDA funded the R&D, it gets ownership and licenses out the manufacturing. The startup company can move on to work on something else, or having already been paid by the FDA to do the R&D, they can close up shop. If they self-funded the R&D, then they keep ownership and get to license the manufacturing, just like they do today. (Getting bought-out is just a transfer of manufacturing rights from the startup to the pharma, so that can still happen if the startup retains the rights.)

I'm imagining lots of startup companies developing nutritional-based vitamins and herbal products, getting paid to take them through the testing process, and then after approval the startup just moves on to another compound and/or disease. They could run as profitable little businesses for a long time doing this, and we'll get lots of non-patentable but fully tested products on the market that are cheap as dirt for the consumers. We can't get these products today because no one will pay for the testing process, so instead we have unregulated snake-oil products with little to no quality control and vague unverifiable claims about what they're good for.