The Multi-Trillion Dollar Opportunity in Reforming the FDA

UNLEASH PROSPERITY NOW

Before a new medical product can be marketed in the United States, Congress has ruled that the Food and Drug Administration (FDA) must ensure that it is both safe and effective.  This administration has successfully addressed permitting delays in many industries, such as infrastructure and real estate development, but such delays are even more damaging for drug development.

This paper reports on the economic value of faster medical innovation by FDA shortening delays due to effectiveness approvals and provides a set of recommendations to unleash that value.  We report that reducing development times for FDA-approved medical products (small molecule drugs, biologics, and medical devices) has been found to generate $4 to $61 trillion in combined value to consumers and producers of drugs for shortening of FDA effectiveness determination by 1 to 6 years.  The undiscounted foregone value of a one-year delay in market access due to FDA is the benefit to producers and consumers measuring consumers and producer surplus in a conventional way capturing the value in health beyond the price paid for and the earnings obtained by innovators. It is calculated through multiplying sales, about $676 billion in aggregate in the US in 2024, by what the existing evidence base suggests is the multiple of sales that make up benefits to consumers in terms of consumer surplus  (a multiple of about 15) and producers in terms of earnings (a multiple of about 0.8) affecting innovation incentives.

Read the full study here.