Claim: Half of FDA funding comes from pharma companies. Conflict of interest?

[Kalil]

I saw a post that half of FDA funding comes from pharma companies.

The Food and Drug Administration has moved from an entirely taxpayer-funded entity to one increasingly funded by user fees paid by manufacturers that are being regulated. Today, close to 45% of its budget comes from these user fees that companies pay when they apply for approval of a medical device or drug.

Source




FDA mission from their webpage:

FDA Mission

The Food and Drug Administration is responsible for protecting the public health by ensuring the safety, efficacy, and security of human and veterinary drugs, biological products, and medical devices; and by ensuring the safety of our nation's food supply, cosmetics, and products that emit radiation.

FDA also has responsibility for regulating the manufacturing, marketing, and distribution of tobacco products to protect the public health and to reduce tobacco use by minors.

FDA is responsible for advancing the public health by helping to speed innovations that make medical products more effective, safer, and more affordable and by helping the public get the accurate, science-based information they need to use medical products and foods to maintain and improve their health.

FDA also plays a significant role in the Nation's counterterrorism capability. FDA fulfills this responsibility by ensuring the security of the food supply and by fostering development of medical products to respond to deliberate and naturally emerging public health threats.

https://www.fda.gov/about-fda/what-we-do

How can FDA be funded even with a 1 dollar from the parties they should regulate? Isn't that text book conflict of interest?



FDA mission from their webpage:

FDA Mission

The Food and Drug Administration is responsible for protecting the public health by ensuring the safety, efficacy, and security of human and veterinary drugs, biological products, and medical devices; and by ensuring the safety of our nation's food supply, cosmetics, and products that emit radiation.

FDA also has responsibility for regulating the manufacturing, marketing, and distribution of tobacco products to protect the public health and to reduce tobacco use by minors.

FDA is responsible for advancing the public health by helping to speed innovations that make medical products more effective, safer, and more affordable and by helping the public get the accurate, science-based information they need to use medical products and foods to maintain and improve their health.

FDA also plays a significant role in the Nation's counterterrorism capability. FDA fulfills this responsibility by ensuring the security of the food supply and by fostering development of medical products to respond to deliberate and naturally emerging public health threats.

https://www.fda.gov/about-fda/what-we-do

How FDA can be funded even with a 1 dollar from the parties they should regulate. Isn't that text book conflict of interest?

 

[Landru]

I saw a post that half of FDA funding comes from pharma companies.

The Food and Drug Administration has moved from an entirely taxpayer-funded entity to one increasingly funded by user fees paid by manufacturers that are being regulated. Today, close to 45% of its budget comes from these user fees that companies pay when they apply for approval of a medical device or drug.

Source




FDA mission from their webpage:

FDA Mission

The Food and Drug Administration is responsible for protecting the public health by ensuring the safety, efficacy, and security of human and veterinary drugs, biological products, and medical devices; and by ensuring the safety of our nation's food supply, cosmetics, and products that emit radiation.

FDA also has responsibility for regulating the manufacturing, marketing, and distribution of tobacco products to protect the public health and to reduce tobacco use by minors.

FDA is responsible for advancing the public health by helping to speed innovations that make medical products more effective, safer, and more affordable and by helping the public get the accurate, science-based information they need to use medical products and foods to maintain and improve their health.

FDA also plays a significant role in the Nation's counterterrorism capability. FDA fulfills this responsibility by ensuring the security of the food supply and by fostering development of medical products to respond to deliberate and naturally emerging public health threats.

https://www.fda.gov/about-fda/what-we-do

How can FDA be funded even with a 1 dollar from the parties they should regulate? Isn't that text book conflict of interest?



FDA mission from their webpage:

FDA Mission

The Food and Drug Administration is responsible for protecting the public health by ensuring the safety, efficacy, and security of human and veterinary drugs, biological products, and medical devices; and by ensuring the safety of our nation's food supply, cosmetics, and products that emit radiation.

FDA also has responsibility for regulating the manufacturing, marketing, and distribution of tobacco products to protect the public health and to reduce tobacco use by minors.

FDA is responsible for advancing the public health by helping to speed innovations that make medical products more effective, safer, and more affordable and by helping the public get the accurate, science-based information they need to use medical products and foods to maintain and improve their health.

FDA also plays a significant role in the Nation's counterterrorism capability. FDA fulfills this responsibility by ensuring the security of the food supply and by fostering development of medical products to respond to deliberate and naturally emerging public health threats.

https://www.fda.gov/about-fda/what-we-do

How FDA can be funded even with a 1 dollar from the parties they should regulate. Isn't that text book conflict of interest?

How is it a conflict of interest? The funding is through mandatory fees from the drug companies plus general revenue funds. The drug companies cannot say, "do this or we will stop paying."

 

[econ41]

"User pays"??

 

[Mendel]

"User pays"??

compare: the California DMV (first example I found) is 95% funded by the drivers it is supposed to regulate:

Article:

Source: https://lao.ca.gov/handouts/transportation/2021/The-2021-22-Budget-Department-of-Motor-020821.pdf

Financial contributions tend to generate a conflict of interest when they're voluntary or negotiable, like campaign donations, bribes, or side job earnings; fees don't.

That's not to say agencies are always free of conflicts of interest: e.g. regulatory capture can happen when the industry that an agency is meant to regulate achieves control of the entity overseeing the agency.

Example:

Article:

Regulatory capture is defined as when a supposedly objective regulatory agency ends up promoting the ends of the industries they are regulating. The FDA has been captured for quite a while. In a 2016 study published in the British Medical Journal, the majority of the FDA's hematology-oncology reviewers who left the agency ended up working or consulting for the biopharmaceutical industry. In another investigation by Science magazine, 11 of 16 FDA reviewers who worked on 28 drug approvals and subsequently left the agency are working or consulting for the companies they recently regulated.

Source: https://www.theamericanconservative.com/the-regulatory-capture-of-the-fda/

Going at this via the funding doesn't really reflect what's going on. If anything, the FDA being underfunded exacerbates the danger of it getting "captured", and cutting the mandatory pharma fees because of alleged "conflicts of interest" would make the FDA more underfunded—things would get worse!

 

[econ41]

Financial contributions tend to generate a conflict of interest when they're voluntary or negotiable, like campaign donations, bribes, or side job earnings; fees don't.

Hence my terse comment: "user pays!" And an even more generic observation. "If some sectoral industry needs regulating they should meet the cost of regulation. Not impose it on the rest of the community." << Now stating it that loosely could attract some disagreement.

 

[Mendel]

Hence my terse comment: "user pays!" And an even more generic observation. "If some sectoral industry needs regulating they should meet the cost of regulation. Not impose it on the rest of the community." << Now stating it that loosely could attract some disagreement.

yes, it's a political issue

say, you want a diverse market, or maybe just cheap pharmaceuticals, as your political goal, then having large fees create a barrier to entry that discourage smaller competitors or cheaper products, and you're going to want smaller fees. But if you still want these pharmaceuticals to be safe, somebody else has to pay for ensuring that safety. And that means a political process to balance those various opposite goals plays out and arrives at some compromise.

 

[aperson]

How is it a conflict of interest? The funding is through mandatory fees from the drug companies plus general revenue funds. The drug companies cannot say, "do this or we will stop paying."

They can say that. What's to stop them? It's not like the U.S. is going to stop using their pharmaceuticals if these companies decide to say "we will stop paying." The reality might be that not only do the pharmaceutical companies have the government over a barrel but may just be another piece of it. "Mandatory fees" could be just window-dressing for the public to give the impression that the FDA and Moderna, Johnson and Johnson, etc. aren't in bed with each other and avoid a headache of public outcry.

Furthermore, the FDA is an arm of and overseen by the government(Department of Human Services). The same government who gets money from drug lobbyists. Definitely a conflict of interest. Dr. Robert M. Califf is the head of The Department of Health and Human Services who oversees the FDA. Dr. Califf has a history with many drug companies from consultant fees to being a director of Portola Pharmaceuticals.

 

[Landru]

They can say that. What's to stop them? It's not like the U.S. is going to stop using their pharmaceuticals if these companies decide to say "we will stop paying." The reality might be that not only do the pharmaceutical companies have the government over a barrel but may just be another piece of it. "Mandatory fees" could be just window-dressing for the public to give the impression that the FDA and Moderna, Johnson and Johnson, etc. aren't in bed with each other and avoid a headache of public outcry.

Furthermore, the FDA is an arm of and overseen by the government(Department of Human Services). The same government who gets money from drug lobbyists. Definitely a conflict of interest. Dr. Robert M. Califf is the head of The Department of Health and Human Services who oversees the FDA. Dr. Califf has a history with many drug companies from consultant fees to being a director of Portola Pharmaceuticals.

The fees are mandatory. Which means the companies have to pay or face legal consequences. Also, there is no conflict of interest on mandatory fees.

 

[Mendel]

It's not like the U.S. is going to stop using their pharmaceuticals if these companies decide to say "we will stop paying."

It's more like, "you cannot bring this new drug to market in the US".
The FDA can't go broke, the companies can. That's why the FDA has more leverage.

Definitely a conflict of interest. Dr. Robert M. Califf is the head of The Department of Health and Human Services who oversees the FDA. Dr. Califf has a history with many drug companies from consultant fees to being a director of Portola Pharmaceuticals.

Even if true, that's another issue—not the topic of this thread.

 

[aperson]

It's more like, "you cannot bring this new drug to market in the US".
The FDA can't go broke, the companies can. That's why the FDA has more leverage.

Assuming the FDA and drug companies aren't in bed with each other, the U.S. isn't the only country that they sell drugs to. There are other places Moderna, Johnson and Johnson, etc. can rely on to ride out a boycott.

Even if true, that's another issue—not the topic of this thread.

It's a fact and it is evidence that these payments given to the fda may not be what they seem, but fine.

 

[aperson]

The fees are mandatory. Which means the companies have to pay or face legal consequences. Also, there is no conflict of interest on mandatory fees.

Assuming this concept is true, the drug companies have more power especially together.

Drug company tells government that it is not paying the fees, government says it will face legal consequences, drug company says "try it and will pull from the u.s. market." Seeing the kind of backlash that would come from people on insulin, chemotherapy, hypertension meds, and on and on the government would quickly back down. Like I said, I think the mandatory fees are all just b.s. for show but using this concept the drug companies definitely have the fda by the balls.

 

[beakflip]

Drug company tells government that it is not paying the fees, government says it will face legal consequences, drug company says "try it and will pull from the u.s. market." Seeing the kind of backlash that would come from people on insulin, chemotherapy, hypertension meds, and on and on the government would quickly back down

This may work in a smaller country, like Romania, where I am from. The resources and markets that "big pharma" has outside the country are probably enough to match the GDP (still, a small market so no real incentive to cause public backlash over). That's not true for the US though. Losing that market would mean losing a huge chunk of their revenue, along with all of their invested resources there. Like Mendel said, it's a balancing act.

 

[Landru]

Assuming this concept is true, the drug companies have more power especially together.

Drug company tells government that it is not paying the fees, government says it will face legal consequences, drug company says "try it and will pull from the u.s. market." Seeing the kind of backlash that would come from people on insulin, chemotherapy, hypertension meds, and on and on the government would quickly back down. Like I said, I think the mandatory fees are all just b.s. for show but using this concept the drug companies definitely have the fda by the balls.

Well, the facts and history do not support your claim.

American pharmaceutical giant Pfizer Inc. and its subsidiary Pharmacia & Upjohn Company Inc. (hereinafter together "Pfizer") have agreed to pay $2.3 billion, the largest health care fraud settlement in the history of the Department of Justice, to resolve criminal and civil liability arising from the illegal promotion of certain pharmaceutical products, the Justice Department announced today.

https://www.justice.gov/opa/pr/just...izer"),the Justice Department announced today.

 

[aperson]

This may work in a smaller country, like Romania, where I am from. The resources and markets that "big pharma" has outside the country are probably enough to match the GDP (still, a small market so no real incentive to cause public backlash over). That's not true for the US though. Losing that market would mean losing a huge chunk of their revenue, along with all of their invested resources there. Like Mendel said, it's a balancing act.

They know that the loss would be temporary especially if they moved in unison. On top of that you can bet their lobby groups would keep things moving in the right direction.

 

[Landru]

They know that the loss would be temporary especially if they moved in unison. On top of that you can bet their lobby groups would keep things moving in the right direction.

Support your claims please. I provided evidence that Pfizer and other drug companies were fined $2.3 billion and they didn't attempt to blackmail the US government.

 

[aperson]

Well, the facts and history do not support your claim.


https://www.justice.gov/opa/pr/justice-department-announces-largest-health-care-fraud-settlement-its-history#:~:text=(hereinafter together "Pfizer"),the Justice Department announced today.

Um, you are aware that last year alone, Pfizer netted almost 93 billion dollars, right? One year, alone. That "judgement" had no teeth. A slap on the wrist that was once again maybe just for show, given the backgounds of the people running the fda. Pfizer has buckets more money. Buckets more.

 

[aperson]

Support your claims please. I provided evidence that Pfizer and other drug companies were fined $2.3 billion and they didn't attempt to blackmail the US government.

Support my claim that the government would give in a boycott of pharmaceuticals to treat its citizens with illness? That should be pretty obvious what would happen. Reason should tell you that. You don't need a peer reviewed paper or a court document. I'm also basing that off of your belief that the FDA and drug companies are not in league with each other. To me this is like Sam's Club fighting with Wal Mart. It's all really the same people at the end of the day.

 

[Landru]

Um, you are aware that last year alone, Pfizer netted almost 93 billion dollars, right? One year, alone. That "judgement" had no teeth. A slap on the wrist that was once again maybe just for show, given the backgounds of the people running the fda. Pfizer has buckets more money. Buckets more.

No, Pfizer netted a little over $29 billion. The $93 billion number is gross revenue.

https://www.macrotrends.net/stocks/... ending March 31,a 139.97% increase from 2020.

The rules here require you to back up your claims with evidence.

 

[Landru]

Support my claim that the government would give in a boycott of pharmaceuticals to treat its citizens with illness? That should be pretty obvious what would happen. Reason should tell you that. You don't need a peer reviewed paper or a court document. I'm also basing that off of your belief that the FDA and drug companies are not in league with each other. To me this is like Sam's Club fighting with Wal Mart. It's all really the same people at the end of the day.

Pretty obvious but it has never happened.

 

[aperson]

No, Pfizer netted a little over $29 billion. The $93 billion number is gross revenue.

https://www.macrotrends.net/stocks/charts/PFE/pfizer/net-income#:~:text=Pfizer net income for the twelve months ending March 31,a 139.97% increase from 2020.

The rules here require you to back up your claims with evidence.

I didn't say $93 billion was in profit.

$29 billion in one year is way more that the $2 billion in a rare judgement. Pfizer loss next to nothing. The company is worth $200 billion. https://www.macrotrends.net/stocks/charts/PFE/pfizer/net-worth

so that $2 billion lawsuit is only one hundredth of what the company is worth. Laughable.

 

[aperson]

Pretty obvious but it has never happened.

I know it has never happened. Where we differ is why it has never happened.

 

[Landru]

I didn't say $93 billion was in profit.

$29 billion in one year is way more that the $2 billion in a rare judgement. Pfizer loss next to nothing. The company is worth $200 billion. https://www.macrotrends.net/stocks/charts/PFE/pfizer/net-worth

so that $2 billion lawsuit is only one hundredth of what the company is worth. Laughable.

You said,

Um, you are aware that last year alone, Pfizer netted almost 93 billion dollars, right?

 

[Mendel]

Drug company tells government that it is not paying the fees, government says it will face legal consequences, drug company says "try it and will pull from the u.s. market." Seeing the kind of backlash that would come from people on insulin, chemotherapy, hypertension meds, and on and on the government would quickly back down.

In my mind it plays out that the US declares a medical emergency and allows 3rd party suppliers (China!) to manufacture patent protected medications. And the DOJ antitrust division could do serious damage to the companies as well if they concerted a boycott.

It's just not plausible that the pharma companies can out-leverage the US government.

And, like I said above, the fees provide market protection for them.

 

[Landru]

I know it has never happened. Where we differ is why it has never happened.

No, you have no evidence to support your assertion.

 

[beakflip]

@Mendel That is right. Big pharma doesn't have exclusive knowledge of the products they are selling. They have exclusive rights to make and sell it in the countries that recognize the patents. Even the production of various medicine itself is not this simple matter of just making it. There's a whole web of licensing going on, from selling it to employing specific techniques and apparatus to make it in the first place. And all the nodes of that web have their own needs and wants.

 

[deirdre]

especially if they moved in unison

why would they move in unison? so Pfizer refuses to pay the fee... Moderna throws a celebration, pays the fee and increases its revenue client list by 120% because Pfizer is out.
Capitalism in the U.S does not work the way you are imagining.

 

[aperson]

why would they move in unison? so Pfizer refuses to pay the fee... Moderna throws a celebration, pays the fee and increases its revenue client list by 120% because Pfizer is out.
Capitalism in the U.S does not work the way you are imagining.

Because it would be in the best interest of all drug companies for all companies to unite and fight these fees. "The enemy of my enemy is my friend."

 

[Landru]

Because it would be in the best interest of all drug companies for all companies to unite and fight these fees. "The enemy of my enemy is my friend."

Do you have any evidence to back up your speculation?

 

[aperson]

You said,

So are you saying that that lawsuit you mentioned earlier made a noticable dent in Pfizer's bank account? Okay will go with profit. They made $29 billion in one year alone. So what did that judgement do? Nothing for company that is loaded with money. Net or gross they felt hardly anything.

 

[Mendel]

Because it would be in the best interest of all drug companies for all companies to unite and fight these fees. "The enemy of my enemy is my friend."

I already explained twice that if the taxpayer fielded these costs, any med student with a clever idea could start up their own pharma company instead of selling it to one of the big players. That's a huge drawback.
And you just explained that the fees are small compared to the revenue of the pharma giants.

 

[aperson]

No, you have no evidence to support your assertion.

So are you saying it has happened?

 

[Landru]

So are you saying it has happened?

No, I am saying you are speculating excessively.

 

[Mendel]

So are you saying it has happened?

No, he is saying that it's your claim, so it's your responsibility to back it up with evidence.
Backing it up with sophistry won't be successful.

 

[Landru]

So are you saying that that lawsuit you mentioned earlier made a noticable dent in Pfizer's bank account? Okay will go with profit. They made $29 billion in one year alone. So what did that judgement do? Nothing for company that is loaded with money. Net or gross they felt hardly anything.

You have stated the drug companies will refuse to pay fines levied by the US government with no supporting evidence. Please provide evidence to support your claims.

 

[aperson]

In my mind it plays out that the US declares a medical emergency and allows 3rd party suppliers (China!) to manufacture patent protected medications. And the DOJ antitrust division could do serious damage to the companies as well if they concerted a boycott.

It's just not plausible that the pharma companies can out-leverage the US government.

And, like I said above, the fees provide market protection for them.

Those things would take time and given the relationship between China and the U.S. how well do you think that would turn out?
Can you explain how the fees provide protection for them?

 

[aperson]

You have stated the drug companies will refuse to pay fines levied by the US government with no supporting evidence. Please provide evidence to support your claims.

Okay. You remain silent yet again on my question of the impact of a 14 year old 2 billion dollar lawsuit on a very rich company. You will not admit that it is a drop in the bucket. You presented it as evidence that the government is impartial when in fact it is not evidence because it makes no real impact on their bank accounts.

 

[Mendel]

given the relationship between China and the U.S. how well do you think that would turn out?

Article:

Chinese firms have become major suppliers of US pharmaceuticals. Since 2020, US imports of Chinese pharmaceuticals (defined by the US tariff code to include packaged medicaments, vaccines, blood, organic cultures, bandages, and organs) has grown by 485 percent, going from $2.1B in 2020 to $10.3B in 2022.

Source: https://www.atlanticcouncil.org/blogs/econographics/the-us-is-relying-more-on-china-for-pharmaceuticals-and-vice-versa/

You really ought to start doing a minimum amount of fact checking on your claims.

 

[aperson]

You have stated the drug companies will refuse to pay fines levied by the US government with no supporting evidence. Please provide evidence to support your claims.

Lets backtrack. You said something along the lines of "it's not like the drug companies will refuse to pay" All I did was say that there is nothing stopping them from doing that. They could indeed refuse to pay. If these two entities weren't so closely tied together(I gave evidence but you denied it and sai

Article:

Chinese firms have become major suppliers of US pharmaceuticals. Since 2020, US imports of Chinese pharmaceuticals (defined by the US tariff code to include packaged medicaments, vaccines, blood, organic cultures, bandages, and organs) has grown by 485 percent, going from $2.1B in 2020 to $10.3B in 2022.

Source: https://www.atlanticcouncil.org/blogs/econographics/the-us-is-relying-more-on-china-for-pharmaceuticals-and-vice-versa/

You really ought to start doing a minimum amount of fact checking on your claims.

That same article states: "China still only makes up around 6% of overall US pharmaceutical imports and 17% of API imports." Doesn't sound like we're ready for 100%. Of course, I'm just going off of the narrative of the way most people believe the way things are from the news. Basically, China=Enemy.

 

[Mendel]

Okay. You remain silent yet again on my question of the impact of a 14 year old 2 billion dollar lawsuit on a very rich company. You will not admit that it is a drop in the bucket. You presented it as evidence that the government is impartial when in fact it is not evidence because it makes no real impact on their bank accounts.

No. @Landru presented it as evidence that the government enforces the law with respect to the pharma companies, and that the companies comply.

 

[Mendel]

Doesn't sound like we're ready for 100%

Yet another unsourced claim that is also a straw man.