1. Should riskier drugs be approved for lethal diseases? Carolyn Johnson September 1, 2015 Washington Post http://www.washingtonpost.com/news/wonkblog/wp/2015/09/01/one-way-the-fda-could-change-the-way-it-thinks-about-drug-risks/

2. Too inflexible? Two economists are asking “Are the criteria we use to choose which drugs are safe and effective too inflexible?” At the core of this question are two kinds of mistakes that federal regulators can make when deciding whether or not to approve a new drug. –1. If they set the evidence bar too low, drugs that don't work and carry dangerous side effects could end up on the market. –2. If they set the bar too high, effective medicines may end up in the dustbin instead of in the hands of patients.

3. New Study The new study suggests that for many devastating diseases, the current standards are too risk-averse, erring on the side of keeping drugs off the market even when patients, facing a dire prognosis, would accept higher risks that the drug doesn't work or comes with toxic side effects.study "For certain kinds of contexts, that doesn't make any sense," said Andrew Lo, a professor of finance at the Sloan School of Management at the Massachusetts Institute of Technology who did the study with his student, Vahid Montazerhodjat. Lo said that pancreatic cancer is the poster-child of the problem that motivated the team to propose an alternative method for calculating the level of acceptable risk.

4. Cure v. Kill For relatively common diseases that do have treatments, such as prostate cancer, the current statistical standard may actually be a little too lenient -- we may be accepting riskier drugs than we should. But for devastating diseases such as pancreatic cancer, the tolerance for risk that a drug doesn't work should, according to their calculations, be about 10 times higher.

5. The Economics Consider 2 Drugs –Drug A Cures 20/100 No impact on 80/100 –Drug B Cures 25/100 No impact on 70/100 Kills 5/100 General Policy –Drug A APPROVE –Drug B DO NOT APPROVE FDA tends to be Risk Averse

6. A VERY simple model Consider 2 Drugs –Drug A Cures 20/100 No impact on 80/100 –Drug B Cures 25/100 No impact on 70/100 Kills 5/100 Consider 2 Drugs V A = 0.2*B cure + 0.8*0 V B = 0.25*B cure + 0.70*0 – 0.05*C kill WHICH … IS PREFERABLE? WHY? WHICH … IS PREFERABLE? WHY?

7. Watchdogs and Economists Watchdogs have been critical of efforts to loosen and ease the regulatory process, but economists say that the effect of the current threshold for drug approval is not just in the number of drugs approved, but in what drugs get developed in the first place. "A conservative FDA reduces the flow of new drugs to be tested. In a sense, failing to approve a good drug has two costs, the opportunity cost of lives that could have been saved and the cost of reducing the incentive to invest in R&D," economist Alex Tabarrok wrote on the blog, Marginal Revolution.Marginal Revolution