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CHAPTER I GENERAL PROBLEM In 1992, with the passage of the Prescription Drug User Fee Act (PDUFA), Congress allowed the U.S. Food and Drug Administration (FDA) to collect substantial budgetary funds from the pharmaceutical industry. PDUFA created a fiduciary alliance between big business, public administrators, and civil servants. This legislation created an opening for a new type of partnership to develop between a regulatory agency and the very industry it regulates. Prior to user fees, taxpayers completely funded the FDA. Since PDUFA (i.e., user fee legislation), the FDA now receives its budgetary funds from two major competing groups. First, U.S. taxpayers continue to pay the majority of the FDA's total budget. The second major source of FDA funding, representing more than 50% of the FDA's new drug approval division budget, comes from the brand-name pharmaceutical manufacturers. It is rare for a public regulatory agency to receive significant funding from the organizations it oversees. PDUFA legislation requires the FDA not only to work closely with pharmaceutical companies on getting their drugs approved, but also to get their drugs approved in a significantly shorter time period. Within the FDA, the blurring of the distinction between protecting citizens and doing what is in the best interest of big business continued with the 2002 passage of the Medical Device User Fee and Modernization Act. This act authorized the collection of user fees for the FDA's evaluation of new medical devices. On October 1, 2003, the House passed H.R. 126, the Animal Drug User Fee Act (ADUFA). With the addition of the new user fees, it is clear that the practice of a regulatory agency receiving part of its funding from the industry it is charged with monitoring is expanding. Given these developments, and with the basic erosion of the separation between regulator and those regulated, the question becomes whether the bureaucracy can and will continue to protect the public interest, or if their actions and decisions will be influenced by the industry providing an increasing percentage of their funding.
Background of the Problem
The FDA is a large, scientific, regulatory and public health agency. The FDA is a consumer protection agency that is responsible for overseeing and safeguarding 25% of all products and services consumed in the United States. The agency grew from a single chemist in the U.S. Department of Agriculture in 1862 to a staff of approximately 9,100 employees and a budget of $1,294 billion in 2001 (Hickman, 2003). In the early 20th century, food was often contaminated, adulterated, or simply rotting but cleverly doctored, and much of the medicine sold at that time was worthless: the few vital ingredients that could be effective were often diluted with other substances, faked or mixed with dangerous ingredients (Hilts, 2003). At that time there were no national rules, laws, or regulations setting standards of hygiene, purity, or honesty in the labeling of foods and drugs. People were getting sick and many were dying from contaminated, worthless, and often poisonous medicines. In fact, Harvey Washington Wiley, probably the most generally knowledgeable physician at that time and the founder of the FDA, suggested that tens of thousands of people died each year from patent medicines and adulterated food. He said that the habit of giving infant patent medicines containing opium could have been the worst of all, and that alone may have cost tens of thousands of children their lives over the last two decades of the 19th century (Hilts, 2003). The result of the blatant deception in both food and medicines led to widespread public outrage. As a result of the growing nationwide protest, a petition was sent to Congress demanding action. In 1906, the Food and Drug Act was signed into law. This act created the nation's first regulatory agency: the Food and Drug Administration (FDA). The change in public policy that came with this law was a fundamental one. It was an assertion that it was the job of government to protect citizens from some kinds of commerce rather than just to protect commerce. It was recognition that business more often than not had the means to take care of itself regarding government policy, but the average citizen did not. It acknowledged that there are circumstances, such as ensuring safe and wholesome food and medicine, where government must protect citizens against business. The formation of the FDA was the very beginning of the U.S. federal bureaucracy and the start of modern-day public administration. In 1927, anyone could create medicine in their kitchen and sell it, with no testing required as long as it didn't contain narcotics or one of a few listed poisons. If the new kitchen concoction turned out to be harmful or fatal, the maker was not required to pull it off the market unless the number of dead and ill became obvious to society at large. If the FDA contested the mixture, the maker could simply change the name and start all over again (Hilts, 2003). This idealized state of capitalism ended with the beginning of the depression. In 1933, Rexford G. Tugwell, a professor of economics at Columbia University and an advisor to Franklin D. Roosevelt, said that a "pure" market in the area of food and drugs would permit the killing of citizens first, with investigations to follow, and action last, and under this system, people were simply not protected (Hilts, 2003). On June 15, 1938, Roosevelt signed the Food, Drug and Cosmetics Act with a provision requiring safety tests before marketing new products. The 1938 act has provided the framework for drug creation, research, development, and approval in the United States since that time (Hickman, 2003). The 1938 law was a landmark in civil governance. It was the first law to require the checking of drugs before they went on the market, and it codified the notion that the objective scientific approach would be the standard for which drugs were researched, developed, and approved in the modern society. This law meant additional work for companies trying to create and sell drugs, as they would now be required to prove their safety and efficacy. The law finally offered some protection to citizens in a field prone to predatory and abusive business practices (Kurian, 1998). After World War II, the drug companies started to recognize the commercial value of research and scientific standards and, thus, started recruiting the best scientists. Congressional hearings in the 1950s and 1960s focused public attention on excessive drug costs, inadequate competition, price controls, and patent protection. In this period of tremendous industry growth and the rapid introduction of many important drugs (such as penicillin, the sulfonamide antibiotics, and tetracycline, the first antihistamines, cortisone, and major tranquilizers), the FDA and many of its clinical investigators were publicly criticized for ineptitude and dishonesty (Hilts, 2003). In 1962, in an effort to better protect Americans, Congress unanimously passed the Kefauver-Harris amendments to the nation's food and drug laws. The amendments authorized the FDA to require drug companies to conduct and submit tests determining safety and efficacy. In addition, the FDA now had to preclear all human trials, drug advertising, and labeling (Hickman, 2003). The amendments established public policy, which states that a safe and just society is mandatory to sustain a free and democratic nation. Unfortunately, when
Congress took the important step of mandating the scientific approach to the
development and testing of drugs to protect the public, it did what it had often
done before: it voted to give the agency new duties and responsibilities while
failing to provide the money to allow the agency to carry them out (Strand,
2003). This funding shortfall caused years of dissension and trouble, and would
not be resolved until PDUFA was enacted in 1992 allowing additional budgetary
monies to be garnered directly from the pharmaceutical manufacturers in the form
of user fees. For nearly 30 years, the FDA was given new regulatory duties and increased responsibilities brought about by the 1962 Kefauver-Harris Amendments, but received no additional funding. The result was that medications were taking longer and longer to get through the FDA review and approval process. The average FDA review time was approximately 30.3 months in 1991 (Greider, 2003). Due to the increased time lag to get FDA approval, pharmaceutical manufacturers were losing valuable patent time and, as a consequence, big money. The AIDS epidemic made manifest the problems and concerns relative to these time delays. In the 1980s and 1990s, people were just beginning to learn about the consequences of AIDS. Without any treatment, patients had a life expectancy of only 18 to 30 months after becoming symptomatic from the HIV infection. Prior to 1992, on average, a new drug would take about 12 years from the development stage through the approval process (Strand, 2003). Thus, people were dying because possible medications were slow to be approved by the FDA. Congress responded favorably to the pressure to do something about this time delay. In answer to the impassioned pleas of the American people, lobbying efforts by the AIDS coalitions, the drug industry, and the FDA's strong urging, Congress passed the Prescription Drug User Fee Act (PDUFA) in 1992. This act allowed the FDA to collect a "user fee" from pharmaceutical companies to help cover the expense of getting new drugs approved. In 1992, Congress shifted the shortfall and financial burden to the drug companies by passing the PDUFA. According to many sources, this shift created a win-win situation. The FDA would be more efficient, allowing needed medications to get to the market faster, the drug companies would make more money, and the taxpayers would not have to pay for the added budgetary allowance to achieve this new efficiency. Since 1992, the FDA has received hundreds of millions of dollars from the drug manufacturers. Today, after two additional extensions, user fees are a critical component of the FDA's annual budget. According to a 2002 article, the PDUFA has enabled the FDA to hire 1,004 additional drug reviewers and reduce the average time for review from 30 months to about 15 months. According to Pharmaceutical Research and Manufacturers of America (PhRMA) spokesman, Jeff Trewitt, the proposal recommended to Congress for 2002 will increase user fees by $500 million over the next 5 years, to a total of about $1.2 billion. The FDA will hire hundreds more drug reviewers and commit itself to cut the final average review time for standard drugs from 12 months to 10 months (Hollon, 2002) Sidney Wolfe, M.D., director of Public Citizens' Health Research Group in Washington, DC, said, "It is a terrible system. The review of new drugs is too important to leave to user fees." In Wolfe's opinion, the drug industry's financial support for FDA's review system was like charging criminals user fees to pay for the police department (as cited in Strand, 2003, p. 37). By shifting its focus and resources to fast-tracking new drug approvals, the FDA may have short-changed other vital functions that protected the public, and the fiduciary contract established by user fees may have changed the dynamics of the principal-agent relationship away from protecting the public and towards protecting the drug industry. In 1992, the PDUFA was enacted and created a new and potentially harmful alliance between the FDA, American's "great protector" and the very industry it is charged with regulating, the pharmaceutical industry. Under this legislation, pharmaceutical companies, through fees and other financial sources, would underwrite a portion of the FDA's budget allocation. The rationale behind this shift in policy was to provide the FDA with the resources needed to meet the other imperative included within the legislation—the need to shorten the review for the approval of lifesaving medicines. The potential unintended consequence allowed an alliance to form and thrive between the regulators and the regulated. This study was designed to analyze and quantify the unintended consequences. With the FDA/pharmaceutical industry partnership created by the PDUFA, there have been a number of undeniable shifts within the FDA. These shifts are evidenced in changes to longstanding policies and procedures that appear to directly benefit the pharmaceutical manufacturers. In fact, the PDUFA legislation allowed the FDA performance goals to be set by the manufacturers rather than by the citizens the FDA is charged with protecting (Lurie & Wolfe, 1998). Few leaders had foreseen that the new legislation would distort the distribution of labor at the FDA. By shifting its focus and resources to fast-tracking new drug approvals, the FDA shortchanged other vital functions that protected the public. Because the FDA was now required to meet performance goals set by the pharmaceutical companies, the number of new drugs approved jumped to 80%, as compared to the pre-PDUFA period when 60% of new drugs were approved (Greider, 2003). Los Angeles Times reporter, David Willman, won a Pulitzer Prize in 2001 for his investigative reporting on the societal and health status costs of FDA speedups. Placed under unremitting time pressure, he found that regulators frequently approve drugs without thoroughly determining their potential side effects and health dangers (Willman, 2000). The PDUFA has blurred the lines defining conflict of interest, and has provided a wedge for the industry, and other regulated industries, to periodically renegotiate the whole scheme of consumer protection. This shift has put the FDA at risk of losing the confidence of Americans, and thus, its legitimacy. One of the benefits of a quicker review and sanction process by the FDA is that the pharmaceutical manufacturer can get its drugs to market in a shorter time. Cutting 2 or 3 years off the FDA review process translates into millions of dollars in additional profits for the pharmaceutical company (Hunt, 2000). The process of speedier reviews uses a greater percentage of the financial, personnel, and other resources within the FDA. Because of the shifting priorities, less and less funding, staffing, and other resources are available for other areas and departments (Sasich & Wolfe, 2002). As the user fees increased, the FDA changed other policies that directly benefited the manufacturer. Prior to 1998, pharmaceutical reps (e.g., drug sales personnel who visit doctors and hospitals), were not allowed to promote a drug for a treatment other than its FDA approved and prescribed use. The Food and Drug Administration Modernization Act of 1997 (FDAMA), the replacement and extension law for the PDUFA, eliminated the long-standing prohibition of manufacturers giving out information on unapproved uses of their drugs. Drug companies now had permission to circulate information on the use of their drug for diseases or clinical situations that the FDA had never approved. Drug reps could now suggest the sale of new drugs for uses with no proof of safety or effectiveness (Greider, 2003). In yet another policy shift favoring the drug manufacturers and their profitability, the FDA has reversed a 60-year-old policy to overlook medicines brought in for personal use from outside the U.S. with specific emphasis on Canadian imports. The FDA has started an aggressive campaign to stop the flow of imported lower cost medications from outside the U.S., and has gone so far as to file a lawsuit against a U.S. company that has been helping consumers order their medications from licensed Canadian pharmacies. In an October 6, 2003 USA Today article, Congressman Dan Burton from California accused the FDA of acting "in lockstep with the pharmaceutical industry" to protect prices and profits (Welch, 2003, p. 1). Purpose of the Study The purpose of this study was to determine if the FDA's shifting of its focus and resources to fast-tracking new drug approvals has shortchanged other vital functions that protected the public. Further, this study attempted to determine if the fiduciary contract established by user fees changed the dynamics of the principal-agent relationship away from protecting the public and toward protecting the drug industry. In 1992, Congress allowed the FDA to accept substantial fees from the pharmaceutical manufacturers: an industry that the FDA oversees. Despite what many proponents of user fees are touting publicly, the fact remains that user fees create an inherent conflict of interest between the FDA and the drug manufacturers. The FDA is now receiving a significant portion (17.1%) of its budget from the drug manufacturers, and more than 1,500 FDA employees are paid by user fees (Food and Drug Administration [FDA], 2003b). The purpose of this study was to determine if user fees created a significant shift in the FDA's policies and procedures that benefit the drug industry. User fees represent a departure from the basic tenets of public administration, and represent a shift in the principal-agent relationship. From a theoretical base, this study discusses "user fees" to determine their positive and/or negative relationship and future impact on the study of public administration. It is the thesis of this study that the passage in 1992 of the PDUFA and the FDAMA, the replacement and extension law for the PDUFA, have had an adverse impact on the FDA's stated primary *mission (see mission below) of protecting the public health and safety of the U.S. population. *FDA's Mission Statement—2004 The FDA is responsible for protecting the public health by assuring the safety, efficacy, and security of human and veterinary drugs, biological products, medical devices, our nation's food supply, cosmetics, and products that emit radiation. The FDA is also responsible for advancing the public health by helping to speed innovations that make medicines and foods more effective, safer, and more affordable; and helping the public get the accurate, science-based information they need to use medicines and foods to improve their health. (FDA 2004, p. 1) Research Questions This study includes 11 research questions covering five major areas of inquiry. The first research question was used to determine if user fees have become statistically significant to the FDA human drug review process. User fees were initiated and approved by Congress specifically to increase the FDA's efficiency in new drug approvals (NDAs). Thus, research questions 2, 3, and 4 evaluated whether there has been an improvement in NDA efficiency. Research question 5 compared the cost of medications with other major healthcare services. Research questions 6, 7, 8, and 9 looked at changes within the FDA since user fees were initiated, and finally, questions 10 and 11 looked at safety-related issues. Research Question 1—User Fees' Significance to FDA's Drug Approval Process Are the funds (i.e., user fees) provided by the pharmaceutical manufacturers significant to the continuing operation of the FDA's new drug approval process? Research Question 2—NDA Review Times (Efficiency) How did the FDA drug review and approval time for new drug approvals (NDAs) change after user fees were initiated? Research Question 3—NDA Approvals (Efficiency) How did the percentage of approved NDAs change after user fees were initiated? Research Question 4—NDA Released in U.S. First (Efficiency) Was there a significant increase in the percentage of new drugs introduced in the U.S. first after user fees were initiated? Research Question 5—RX Consumer Prices (Cost Shifting) Since user fees were initiated in 1992, how has the cost of
medications changed in comparison to the costs for hospital and physician
services? After user fees were introduced in 1992, was there a significant change in FDA functions and priorities as evidenced by budget and employee (FTE) allocations? Research Question 7—Total Agency Budgeting (FDA Changes) How did the addition of user fees affect the budget allocations of other FDA departments as evidenced by PDUFA minimum spending requirements? Research Question 8—Priority vs. Standard Review (FDA Changes) What major shifts in FDA scientific review and approval policies related to priority and standard reviews occurred after the introduction of user fees? Research Question 9—NDA Division Workload (FDA Changes) How did the FDA's division of new drug approvals workload change after the new mandatory work requirements were included in PDUFA II? Research Question 10—Adverse Drug Reactions (Safety-Effectiveness) Since the introduction of user fees, has there been an increase in the number of reported adverse drug reactions? Research Question 11—NME Safety Withdrawals (Safety-Effectiveness) Since the introduction of user fees, has there been an increase in the number and percentage of medication safety related withdraws? List of Acronyms
ADUFA. Animal Drug User Fee Act of 2003. ADR. Adverse Drug Reaction. An ADR is an injury resulting from medical intervention related to a drug. This not only includes injuries from properly prescribed medications but also those injuries to patients resulting from errors in the way their physicians prescribed or administered medications. Such errors include prescribing the wrong drug or wrong dosage, and giving a medication by mistake to the wrong person. ADRs also include injuries caused when patients take their medications improperly. ANDA. Abbreviated New Drug Application. The ANDA was established by the Waxman-Hatch Act. Under an ANDA, proof of bioequivalence is enough to satisfy FDA safety and efficacy requirements for a generic drug. In addition, the manufacturer of the generic must certify that the original drug is either (a) not patented, (b) has an expired patent, (c) has a patent expiry date before which the generic will not be sold, or (d) has an invalid patent or a patent that the generic does not infringe. If the manufacturer claims the original patent is invalid or not infringed, there is a 30-month litigation period during which the FDA cannot approve the generic. AWP. Average wholesale price. The drug AWPs are not set forth in any statute. Rather, the drug manufacturers report the AWPs for their drugs to various price reporting services such as First Data Bank and Medispan. BLA. Biologics license application. An application to FDA for a license to market a new biological product in the United States CBER. FDA's Center for Biologics Evaluation and Research. CDER. FDA's Center for Drug Evaluation and Research. EMEA. European Agency for the Evaluation of Medicinal Products. Similar to the FDA, the EMEA is responsible for protecting public health by mobilizing the best scientific resources within the European Union, promoting healthcare through the effective regulation of new pharmaceuticals, and supporting the pharmaceutical research and development industry by developing efficient, effective, and responsive operating procedures. FDAMA. FDA Modernization Act of 1997. The FDAMA reauthorized the collection of user fees by the FDA and amended the Federal Food, Drug, and Cosmetic Act and the Public Health Service Act to facilitate the development and evaluation of new drugs and biologics. Specifically, the Modernization Act reauthorized user fees for another 5 years, codified rules for fast-track approval, codified the rule that only one adequate and well-controlled clinical study and confirmatory evidence could be the basis of approval, and codified restrictive FDA policies on dissemination of information regarding off-label uses of drugs. Finally, in a variety of clauses, the FDA was required to provide manufacturers with better information concerning its procedures. FTC. Federal Trade Commission. Set up in 1915 to restrain monopoly, the FTC monitored drug advertising from its inception until 1962, when the regulation of advertising of prescription drugs matter was transferred to the FDA. The FTC still regulates the advertising of OTC drugs, with a few exceptions, notably aspirin. On food products, the FDA and the FTC have split responsibilities, with the FDA regulating food labeling and the FTC regulating food advertising. FDA. Food and Drug Administration. The U.S. federal agency charged with promoting and protecting the public health by helping safe and effective products reach the market in a timely way and monitoring products for continued safety after they are in use. HCFA. The Health Care Financing Administration is a very powerful government agency that oversees all aspects of health financing for Medicare. IMD. Incrementally modified drug. Medicine that (a) relies on an active ingredient present in a drug already approved for the U.S. market, or a closely related chemical derivative of such an ingredient, and (b) has been modified by the manufacturer. IND. Investigational new drug application. Notification by a drug sponsor to the FDA of its intention to conduct clinical studies on human subjects. IPP. Intellectual property protection. IPP aims to provide incentives for innovation. Patents and other forms of protection eliminate direct competition to a product for a fixed period of time. During this period, the inventor can often charge premium prices, which ensure an attractive return on what might have been a considerable investment in research and development. IRB. Institutional Review Board. IRBs review, approve, and monitor research involving human subjects in order to evaluate the ethical acceptability and the scientific validity of any such studies. An IRB is formally designated by an institution in which research takes place, such as a hospital or university. FDA regulations on IRB membership are quite strict. The IRB must be composed of at least five members including at least one scientific member, one nonscientific member, at least one person not affiliated with the research institution, no members with conflicts of interests, both genders if at all possible, and so forth. Research cannot begin until the IRB approves. NCE. New chemical entities. In the early stages of research, a new substance is called a new chemical entity. An NCE is a chemical entity that has never been used by humans and has been tested only on animals. NDA. New drug application or approval. The NDA review is handled by the FDA's Center for Drug Evaluation and Research (CDER). Once the CDER deems the NDA appropriate, the medical, biopharmaceutical, pharmacology, statistical, chemistry, and microbiology departments of the CDER review it. The length of an NDA can reach 100,000 pages of material. If the departments pass the NDA, an advisory committee meets. If the advisory committee is satisfied with all of the findings, a labeling review takes place. Once the labeling review is complete, the NDA is approved, and the drug is approved for marketing. NME. New molecular entity. NME is a drug whose active ingredient has never before been approved by the FDA for the U.S. market. It can be submitted as either a standard NDA or a priority NDA. PDUFA. Prescription Drug User Fee Act of 1992. PDUFA is legislation passed by Congress authorizing the FDA to collect "user fees" for regulatory review of human drug applications. The FDA agreed to use the income from the fees to hire more reviewers to speed up drug review. PBM. Pharmacy benefit manager. Pharmacy benefit manager is an entity that processes pharmacy claims, manages drug formularies, and negotiates manufacturer rebates and pharmacy discounts on behalf of its clients. SNDA. Supplemental New Drug Application (SNDA). The off-label uses of a drug may become additional on-label uses if the company submits a Supplemental New Drug Application and the FDA approves the application.
Limitations of the Study Although there are many potential independent variables which may help to explain the FDA's changes over the last 12 years, for the purpose of this study only the one independent variable, "user fees," is used. One independent variable will help researchers draw preliminary conclusions, but the results are, most likely, only one piece of a much larger and more complex issue. To more fully and more accurately assess the changes within the FDA, further research, studies, and cross-comparisons are recommended. Among different available original data sources, there may be inconsistencies with data collection and reporting that could skew the results. There may have been major organizational shifts within the FDA over the period studied that will make it impossible to compare and contrast pre- and post-PDUFA variables. In the last 12 years, there have been too many changes and variations within the FDA to study. Thus, this study represents a snapshot in time with only a finite number of variables included. Significance of the Study In this new age of entrepreneurial public administration management theory, whole new avenues of inquiry may be suggested where external bureaucratic funding sources will increase public agency efficiency and lessen the burden on taxpayers. This study provides a qualitative and quantitative analysis of what happens to a public agency that shifts its principal-agent relationship from the citizens to a combination of the citizens and the organizations they are mandated to oversee. Public Administration Problem Increasing efficiency and effectiveness is important for public agencies. However, within the public sector, there is a constant challenge to secure adequate funding. Thus, public administrators are forced to balance agency output by the limited funds that are available. New entrepreneurial public administration management advocates generating new sources of revenue to fill the revenue gap without increasing the burden to taxpayers. The public administration dilemma is determining what is in the best interest of the citizens. From a public administration standpoint, there is a need to determine if the formation of the perceived partnership between the bureaucracy and the entities it oversees creates doubt and distrust among the citizens, resulting in a loss of agency legitimacy and accountability. Six Ways to View the Public Administration ProblemTo better analyze the public administration dilemma, the remainder of this chapter breaks down the issue using the following six theoretical public administration tenets: efficiency vs. effectiveness; responsibility; legitimacy; accountability; representation; and public/administrative dichotomy. Efficiency vs. EffectivenessThroughout public administration literature, theorists continue to debate the following question: Should public agencies be more efficient or more effective? Efficiency is the highest output using the least public resources in the least amount of time. Effectiveness is goal oriented (i.e., meeting desired outcomes) with more emphasis on quality. With enough money, public agencies could, of course, have it both ways. However, it is rare for a public agency to say that it is overfunded or even adequately funded. Within the public administration field, there is always competition for limited public funds. Thus, with a continuous scarcity of funding in the public sector, why should there be a debate? To an outside observer it seems clear that public agencies, similar to private entities, should be focused on becoming more efficient. In 1990, the efficiency vs. effectiveness debate became a real-world issue for the FDA. Due to a FDA backlog in the late 1980s, most drugs had been sanctioned for use in other countries long before, often years before, they were considered for release in the United States. The rest of the world had access to the new drugs first, and people in the U.S. watched from afar to see if any adverse drug reactions resulted. However, many people were not satisfied with the lengthy FDA drug approval process. The most vocal critics came from U.S. citizens who were suffering from serious and fatal illnesses. Drugs that could potentially help America's sick and dying were only available in other parts of the world. The U.S. was in the midst of the AIDS epidemic, and tens of thousands of people suffering from AIDS literally did not have the time to wait for an inefficient FDA and its 2-3 years of trials before a new drug was released. With dying patients, media pressure, and millions of dollars in drug industry lobbying at stake, Congress responded. For the first time in nearly 30 years, a debate regarding the FDA approval process began, looking for ways in which the process could be accelerated. The FDA, as all government agencies, found itself with the need to become more efficient, but it lacked the funds to do the job. So, Congress passed the PDUFA in 1992 allowing the FDA to collect a "user fee" from the pharmaceutical companies to help with the expense of getting new drugs approved. The PDUFA of 1992 was originally designed as a 5-year experiment that Congress passed to help the FDA increase its efficiency. With sufficient funds, the FDA could immediately hire more reviewers and support staff. The pharmaceutical companies directly paid up to $250,000 with each NDA. With the new user fees, the FDA's drug approval process became more efficient, but other parts of the agency suffered. Since the PDUFA in 1992, the FDA reduced its funds for postmarketing surveillance of adverse drug reactions, increased its labeling options to allow for quicker and easier approvals, and the agency has become slower to recognize any serious side effects after a new drug is approved (Strand, 2003). So, not only are Americans testing the new drugs first, a new product will most likely remain on the market much longer, regardless of its ill effects. Dwight Waldo in 1948, John J. Kirlin in 1996, and Vincent Ostrom in 1997, among others, have argued that democratic organizational principles need preference and that focusing predominantly on improving efficiency of public administrative processes can in fact harm the very organizational principles that such improvements are supposed to help (as cited in Kelly, 1998). Procedural due process, substantive rights, equity, and protection of minority rights as well as equal opportunity and equality among citizens are values that have precedence over efficiency. Responsibility
Public administrators have a basic responsibility to meet the needs of the citizens. When this theoretical pillar was first introduced, it was tested and modified in many ways to find the perfect way to "administrate." This philosophical testing lasted through the middle of the 20th century. In 1940, Herbert Simon argued that public administration is an art and as an art, there is no "one best way" to practice the profession. Unlike classical theorist, Frederick Taylor, who believed in a "one-best way" philosophy, Simon concluded that there are no specific directions to follow to succeed in this field. However, a universal axiom crossing most of the public administration theorists is the absolute necessity to earn and maintain the trust of the citizens (as cited in Kettl, 2000). Every public organization is monitored closely by individuals outside the agency. Because taxes are the primary source of funding for most public agencies, the general public is interested in seeing beneficial results. Public managers have the pressure and responsibility of trying to please their internal employees along with citizens outside the organization. Significant publics and organizations outside the public organization include legislators, politicians, the media, the courts, community groups, federal and local officials, other public agencies, unions and, of course, the general citizenry. All external players have their own agendas and opinions on how an agency should be administered. It is very difficult for a public administrator to please all constituencies. The responsible public administrator cuts through the inherent chaos by focusing on what is important; the responsible public administrator works diligently to do what is in the best interest of the community and the citizens. To gain and keep the trust of the citizens, responsible public administrators must define the purpose of the agency in relation to the needs of the community and act accordingly. Since 1992, the FDA has been getting an increasing percentage of its budget from the pharmaceutical industry. With the latest extension of user fees (i.e., 2002), the FDA is expected to get more than a billion dollars in revenue from the pharmaceutical manufacturers in the next 5 years. Substantial amounts of money paid directly to an overseeing regulatory agency from the organizations it oversees are rare within the field of public administration (Geri, 1996). The practice of a public agency accepting funds in return for special considerations can be considered a conflict of interest. Receiving funds from the pharmaceutical manufacturers creates the appearance of impropriety. This practice calls into question the FDA's motives and allegiance. Under these circumstances, how can the public continue to trust the FDA? User fees blur the lines of organizational, departmental, and individual loyalty. User fees create a situation where the FDA is forced to choose between two masters. The money garnered from the pharmaceutical manufacturers represents the FDA's self-interests and self-preservation. With the addition of user fees will the FDA continue to work to protect the citizenry or is the FDA now working to protect its own budgetary interests? Legitimacy The field of public administration has a relatively long history. In fact, the FDA was one of the nation's first bureaucracies. The field of public administration has continued to develop and improve through the years. Despite the fact that public administrators are not elected, they continually deal with the issue of legitimacy because they work with and represent the public. What happens in public administration reflects on the government and on elected officials. Throughout the course of public administration theory and practice, the issue of legitimacy continues to surface. Max Weber (1864-1920), a German sociologist, believed that for a government agency to be legitimate, it must have one or more of three characteristics: law (rational), tradition, and/or charisma (Fry, 1989). If the FDA possesses the trait of law, it means that its actions are defined and circumscribed under the strict guidelines of the law. The founding document, the U.S. Constitution, did not include public administration. However, the Federalist Papers, the papers leading up to the founding document, did cite the need for public administration. Thus, the Federalist Papers give some initial rational legitimacy to the existence of the FDA (Mace, 1979). The characteristic of tradition states that if public administration exists, has a defined specific purpose, continues to exist, and is expected to exist into the future, then public administration must be legitimate. The FDA exists and performs an important function in society. Based on this rationale, the FDA must be legitimate from a traditional perspective. Historically, public administration is thought of as the accomplishing side of government. The field includes agencies and activities involved in carrying out the policies of elected officials and some activities associated with the development of those policies. Public administration legitimacy cannot be achieved without people working together to achieve the goals of the policies that have been legislated. In 1992, the additional fees provided to the FDA helped dying U.S. residents get access to lifesaving medications more quickly. However, U.S. citizens must ask, Why did Congress renew user fees twice since then, and is this new partnership between the overseen and its protective overseeing agency jeopardizing the legitimacy and future of the FDA as a credible trustworthy public agency? The United States is a society in which the people share, as Alexis de Tocqueville, Vincent Ostrom, and Harold Lasswell have suggested, a body of common knowledge grounded in a shared community of understanding with a degree of trust in each other and in the political system (as cited in Ostrom, 1989). There are modern day public administration theorists who perceive a crisis in the United States sufficiently severe as to require refounding public administration. Theorists have expressed caution, fearing that the public administration professionals' self-serving and self-promotional interests may conflict with public goals, and they have suggested that public administration must be constitutionally grounded yet remain an active agent of the public interest. How are user fees paid by the drug companies to ensure favored status and special considerations different from a contractor illegally paying off a public official to get a government contract or any other large corporation that bribes government employees to get something of value? In the final analysis, the difference is that the FDA taking large sums of money in return for special favors has been sanctioned and approved by Congress, but was Congress acting legally when the user fees were enacted? Accountability
The buck stops here! Accountability in public administration is determined by the person who is ultimately responsible for an organization and/or program(s) within an organization. In the U.S., the ultimate accountability is the President. The citizens will and do hold the President accountable for the state of the nation. Government spans many levels, multiple organizations, and unlimited numbers of networks both formal and informal. There are judicial entities; departments; federal, state, and local agencies and more. Within the context of their mission, someone on some level is accountable. As you move up the chain of command, others are held accountable (Weber, 1930, as cited in Fry, 1989). On the lower levels, being accountable is a choice. For instance, individual firefighters and police personnel feel a sense of responsibility to protect citizens and property. Taking responsibility and feeling accountable for appropriate outcomes is a moral value. Regardless, it is the station management and chiefs who are ultimately held accountable for the combined results of the work performed. The FDA and its personnel on every level have accepted accountability to protect and safeguard U.S. citizens. When one follows the money, he or she will see that an individual taxpaying consumer contributes only a few dollars per year to cover the FDA's budget needs. The pharmaceutical industry, on the other hand, contributes hundreds of millions of dollars. Without user fees, the FDA would literally lose more than 1,500 of its total 9,000 employees. Seventeen percent of the FDA staff on every level knows that their jobs are due to money from the pharmaceutical manufacturers not from the taxpayers. With the FDA getting a significant portion of its budget from the pharmaceutical industry and with 17% of its employees depending on drug industry money, the question is the following: To whom is the FDA and its employees accountable? Representation Accountability and representation are closely related. Accountability seeks to find out who is in charge: who is held accountable if something goes right or goes wrong. Representation seeks to learn who the constituents are that the agency is supposed to be representing. Mark McClellan, MD, the FDA Director and all employees within the FDA have agreed to represent U.S. citizens in pursuit of the FDA's mission (FDA, 2004). According to the FDA Mission Statement (FDA, 2004), the FDA solely represents the public. Nowhere in the mission statement does the FDA state a desire to represent the pharmaceutical manufacturers. On January 12, 2004, Carl Feldbaum, head of the pharmaceutical industry's lobbying arm, said the following at a Biotechnology Industry Conference in San Francisco: Since the last conference, a record number of biotechnology drugs have been approved, stock prices surged and the initial public offering window appears to be opening wider than it has in the last five years. The Amex Biotechnology Index and the Nasdaq Biotechnology Index each gained 45% in 2003, as the FDA approved 17 new biotech drugs. The upswing in approvals in part reflects new energy at the FDA under Commissioner Mark McClellan. (Elias, 2004, p. 1) The FDA mission specifically states "make medicines more affordable." After 50 years of looking the other way and having no safety or quality issues, the Food and Drug Administration, under FDA Director, Dr. Mark McClellan, has recently taken heroic efforts to stop the flood of lower cost medications coming from Canada. In protection of the drug industry, high prices and profits, and citing unsubstantiated safety concerns, in 2003 the FDA successfully closed RX Depot, a national chain of walk-in centers that assists consumers in getting lower cost Canadian medications (AP, 2003b). Despite warnings from the FDA, Springfield, Massachusetts, has defied the FDA and put a full program in place. Springfield Mayor Michael Albano said the city has saved more than $1 million in drug costs. Albano said, "We haven't had one safety concern and we're getting over 2,200 people enrolled. People are signing up virtually every day" (AP 2003b, p. 1). Albano (2003) said, "If someone proved to me these drugs are unsafe, I would stop" (p. 1). Illinois Governor Blagojevich said, "If the Canadian drugs are so unsafe, why does the FDA let it happen? The FDA is protecting the pharmaceutical industry. The pharmaceutical industry is powerful and has friends in high places" (Agovino, 2003, p. 1). Minnesota Attorney General, Mike Hatch, said, "My trust in the federal government on the drug issue is zero. No one has complained to my office about the quality of the drugs purchased in Canada. This is just a case of political influence" (Agovino, 2003, p. 1). Politics/Administration Dichotomy
Starting with Wilson and Weber, a number of public administration theorists believed that for public administration to maintain the "greater good," there should be a separation between politics and administration. The early theorists believed in an absolute separation. As public administration theory has developed, there is an increasing recognition and belief that there is little or no separation between politics and public administration. Both entities depend on one another for their legitimacy, accountability, credibility, continuation, and survival. Policy and influence networks include politicians and top-level public administrators (Riper, 1997). Theoretically, the distinction between politicians and public administrators on the highest levels has all but been eliminated. Since the end of the spoils system, civil servants and employees working below the top public administrative levels have become more and more protected from outside influences. Civil servants are given the job security needed to perform their jobs related strictly to the mission of the organization. Civil servants often care little about the fleeting demands of an appointed public administrator and/or politician. Civil servants understand that they were there before their new boss, and they will be there long after their new boss is gone. Entirely too much time and energy are currently spent on a dichotomy concept that has never been of much importance in the real world of public administration. The critical issue is not dichotomy—certainly not today—but the pervasive impact of our separation of powers on the practice of public administration at all levels of U.S. government (Riper, 1997). Chapter I Summary A public agency obtaining additional non-taxpayer funds and funding sources is a great opportunity for the public agency to increase its efficiency without creating an additional taxpayer burden. Although entrepreneurs are highly respected in private industry, from a public administrative viewpoint a public agency may be walking a fine line between "right" and "wrong" when it starts obtaining nontraditional funding sources. Thus, this research study was designed to help determine if the FDA crossed over the line when the agency started collecting additional funds from the pharmaceutical manufacturers. Are the new user fees an asset or detriment to pursuing the agency's primary mission of protecting and safeguarding U.S. citizens?
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