Peter Thiel Adam Jeffery | CNBC

It’s not the FDA that gets in the way of innovation; it’s the limits of our knowledge

One of the key notions that undergirds the Peter Thiel view of the FDA is that if the agency just got rid of some of the pesky restrictions for drug approval, we'd usher in another golden age in drug development. (Thiel declined our interview request.) To test this idea, I asked a longtime pharmaceutical scientist (and conservative), Derek Lowe, for his views. In his 28 years in the lab, Lowe has seen hundreds of thousands of compounds tested on a huge variety of drug targets, and never, not once, has he brought a drug to market. The reason? "We don't know how to find drugs that work," he said. For every 5,000 compounds discovered at this "preclinical" phase of drug development, only about five are promising enough to be tried in humans. That's a success rate of 0.1 percent. Drug innovation comes from painstaking tinkering and a dash of luck. "It's very tempting for someone who has come out of IT to say, 'DNA is code, and cells are the hardware; go in and debug it'," Lowe said. "But this is wrong." In Silicon Valley, humans have designed the hardware, software, and computer code they're working with. In medical research, scientists do not have that advantage, Lowe said. "We have 3 billion years of spaghetti-tangled gibberish to deal with. And unless you've done [drug development], it's very hard to get across how hard it is. I don't know of anything that's harder." Biochemistry and cell biology are "like alien nanotechnology," he added. So the real hurdle researchers face when it comes to finding new drugs for people isn't overcoming a stringent regulator; it's grappling with that "alien nanotechnology" in the lab.

Cheaper, faster, but ... worse drugs?

Thiel has argued that the clinical trials required to prove a drug is effective slow down the development process. In one talk, he said that if we didn't force drugmakers to prove their products are better than the others already available, we'd have more "slightly worse, but much cheaper" options to pick from. To address this, he and other regulation skeptics typically suggest that the FDA should loosen up, or even get rid of, its efficacy requirement. Let's step back a bit to explain how the FDA approves drugs, and the three phases of clinical testing they have to pass to get the final green light. In phase one trials, researchers test drugs for safety in a small group of healthy people, and tinker with dosing. In phase two, they test the drug in a larger group of people and make sure it delivers on its promise by monitoring how well it works against the best available therapies or a placebo. In phase three, the drug is tested on an even bigger group (up to 3,000 people), and again, researchers compare how the drug works against other treatments on the market and carefully analyze safety data. If the drug makes it through phase three, the data is submitted to the FDA for approval.



It’s not like when you pick up a car and drive it and decide whether you like it or not. Knowing whether drugs are safe and work is something far beyond the common knowledge of patients, and is frankly far beyond the knowledge of most physicians. Hank Greely Director of Stanford's Center for Law and the Biosciences

Consider this. It wasn't until 1962 that the Food and Drug Administration starting asking drug companies to prove their products were both safe and effective before they hit the market. Until that time, there were some standards related to adulteration and labeling, but otherwise it was mostly a free-for-all. It took the infamous scandal around thalidomide, a morning-sickness medication that caused severe birth defects, to strengthen the FDA ... and incidentally, the FDA's efficacy standard coincided with the golden age of drug innovation in the 1970s and '80s. The failure rate for drugs in clinical trials is about 90 percent. That means the vast majority of drugs aren't safe or effective enough to be used — they don't do what they were supposed to do. As Yale FDA researcher Joe Ross noted to me, "If there is no demonstration of a benefit, does it matter if we have more options?" And here's Lowe: "The clinical failure rate is not 90 percent because the FDA are such bastards. The clinical failure rate is that high because most drugs don't do what we thought they were going to do." It's precisely the clinical trial process, with scientists closely measuring efficacy, that helps weed out drugs that don't work. Unlike hotels or taxi services, which can easily be evaluated by consumers, consumers often can't judge whether their drugs are helping or hurting them: The effects may not be obvious or appear for a very long time. "It's not like when you pick up a car and drive it and decide whether you like it or not," said Hank Greely, director of the Center for Law and the Biosciences at Stanford. "Knowing whether drugs are safe and work is something far beyond the common knowledge of patients, and is frankly far beyond the knowledge of most physicians." Greely pointed out that we already have an example of what a much less regulated drug world would look like: "It's called the nutritional supplement industry. And it's a travesty." Supplement makers don't need to demonstrate that their products are effective or even safe before putting them on store shelves — so most supplements are unproven, and problems with quality and adulteration appear to be distressingly common.



The FDA has become the fastest medical regulatory agency in the world

In the 1980s and '90s, Congress and the FDA created several programs to speed up the development and approval process for new pharmaceuticals: the orphan drug designation, priority review, fast track, and accelerated approval. These programs were intended to push the most clinically important, innovative drugs — medicines to treat rare, serious, or life-threatening diseases — out to patients more quickly, often on the basis of more limited and less rigorous clinical trial data. "These pathways along with increased funding for FDA drug reviews from user fees enacted first in 1992 were successful," said Aaron Kesselheim, an associate professor of medicine at Brigham and Women's Hospital, in an email. "The average total review time, for example, has fallen from 30 months in the 1980s to currently around 8.5 months." (See chart of drug approvals here.) But the more important question is whether expedited FDA pathways increased the number of innovative new therapeutic options for patients — and here the data is far less clear. "Some transformative drugs, like imatinib (Gleevec) for chronic myeloid leukemia, have definitely benefited from speedier FDA pathways," Kesselheim said. But research continues to show that the majority of drugs that have come onto the market offer little or no improvement over the status quo. For example, several studies have found that since the mid-1990s, about 85 to 90 percentof new drugs that have come onto the market don't offer any clinical advantages for patients compared with existing therapies. More worryingly, the special expedited development and approval pathways have become the rule, rather than the exception. Newer research, led by Kesselheim in the BMJ, looked at a database of all new medicines approved by the FDA between 1987 and 2013 and found that over the past two decades, the proportion of new drugs qualifying for at least one of the FDA's expedited programs has increased by 2.4 percent per year. Kesselheim and his colleagues also concluded that "this trend is being driven by drugs that are not first in class and thus potentially less innovative." So there's little evidence that speeding up approval times has helped spur innovation.



The big opportunity for time savings is not in FDA review time. 's in the entire development process that leads up to the review — how to design clinical trials, how to enroll patients in them. Mark McClellan FDA commissioner under George W. Bush

Some even argue that if you want to bolster medical innovation, you need to look well beyond the FDA. Yale's Ross says some of the biggest barriers occur in the world of insurance payers. "Medicare essentially pays for almost everything [the] FDA approves. If payers were making more coverage decisions — including reimbursing more effective, safer medications — based on value, that would be a huge incentive to innovate better products," he says. Before descending on the agency, Silicon Valley types will also need a firmer grasp of the history of medical regulation and why it's there in the first place. Peter Thiel has said, "You would not be able to invent the polio vaccine today," echoing similar statements from some of the potential FDA picks. Yale medical historian Jason Schwartz disagreed: "This assertion is at best ahistorical, if not altogether meaningless." The famous Salk polio vaccine trial in 1954 involved more than half a million children, "a number that would be unacceptable today," Schwartz explained. And shortly after the vaccine's introduction, problems with its production resulted in the Cutter Incident: Vaccines with live polio virus (instead of killed virus) were administered to thousands of American children, sickening 40,000, leaving 200 paralyzed, and killing 10. Over the past half-century, we've seen a number of new vaccines come onto the market, including shots to prevent hepatitis B and meningococcal, which were developed without harming children. "It's exactly the production safeguards and ongoing oversight of vaccines and other products by the FDA today — both before and after approval — that keep these kinds of preventable tragedies from happening again," Schwartz said.

There are some places where Silicon Valley can help with drug innovation