Eroom's Law, Updated: The Crash Continues

 

As noted in this space last year, the decline of pharmaceutical innovation over the last seven decades has been strangely unnoticed, even as the numbers are staggering.   This is a loss to patients, most obviously, and yet it's also a loss to investors.  

The chart above shows real GDP growth from 1949 to 2024, as measured by the St. Louis Federal Reserve, as the blue line, going up.   Meanwhile, new drug approvals--NDAs approved, as tallied by the U.S. Food and Drug Administration--are the tan line, going down.  Way down, from 360 in 1949 to just 50 in 2024.  Indeed, 2024 saw a decline just from 2023.

That's an 86 percent drop over the last 75 years, even as the real GDP of the U.S. rose more than nine-fold.   To put the matter another way, if pharma innovation these past eight decades had kept pace with economic growth, we'd be looking at 3000 new drugs a year, instead of last year's 50. 

So what's happening?  Back in 2012, Nature took note of the stagnation of pharmaceutical innovation: "The number of new drugs approved per billion US dollars spent on R&D has halved roughly every 9 years since 1950, falling around 80-fold in inflation-adjusted terms.  The authors called this phenomenon "Eroom's Law," as an ironic gallows humor tribute to Moore's Law that applies to rapid, logarythmic tech evolution. 

The Nature authors rightly put much of the onus on the Kefauver Amendment of 1962, which mandated that the Food and Drug Administration study "efficacy," as well as "safety" in its examination of new drugs. Safety is easy enough to test for, efficacy is not. Efficacy is an endless swamp of unknown unknowns.  If personalized medicine means anything, it means that a drug that might work for Smith might not work for Jones, and vice versa.  And yet these questions are beyond the ken of the FDA. As the above chart shows, there's been no improvement since 2012.  

Reversing the FDA's dead hand through legislation is a supremely worthy goal.  The FDA has proven itself to be remarkably resilient, impervious, even, to reform, although there's new hope in the form of comments from new FDA Commissioner Marty Makary about a new pathway for at least some drugs.  That's hopeful, for sure, but if the action is done administratively by the FDA commissioner, it can be undone, just as easily, by the next FDA commissioner, or the next presidential administration. 

So the challenge is to make the changes more permanent.  Perhaps the best path is to take the matter to the states, as far aways as physically and legally possible from FDA HQ.  To seek a Brandeisian answer, the states as "laboratories of democracy," as I have argued here.  

And we can add: Indian reservations have their own legal authority.  The success of Indian gaming these past four decades is a reminder that those laboratories of democracy can be extended to the 574 federally recognized tribes, as well as, perhaps, other tribes, too.