The Power of the FDA


What exactly happens when the Food and Drug Administration (FDA) issues one of those ominous Public Health Advisories (PHAs) about a pharmaceutical product?  A new paper by Rena M. Conti, Haiden A. Huskamp and Ernst R. Berndt investigates.


From the abstract:

We find firms targeted by an advisory have average stock price declines of 3% in three days and 11% in five days following the advisory release, and in turn appear to decrease total physician-directed promotion spending, journals ads and detailing visits significantly six months following the advisory release; the provision of free samples is unaffected. We find no changes among therapeutic substitutes unaffected by the advisory.

The authors suggest that the FDA “could include the impact of the PHA on firm valuation as part of its risk-based approach. Additionally, our findings imply the FDA should generally anticipate declines in branded promotion when a PHA is released on a patent-protected drug.”

Here’s our question for you, dear readers: is this a good or bad outcome?  Do you think people who might benefit from a drug are missing out because of PHAs?

Mike B

Anything that decreases pharmaceutical marketing is a good thing. If people need to be told that they have a problem and should "ask" their doctor about some particular drug well they probably don’t have a problem to begin with. If my arm gets cut off I don’t need some television advert to tell me I had best apply a bandage. An argument can be made that if people are gullible enough to fall for these ads then there is nothing wrong with the legitimate placebo effects that the drugs will provide, however the problem is that they aren’t the ones who end up paying the cost of these drugs. The cost is passed on to insurance companies and/or the government that we all end up paying for this overuse of prescription drugs. The worst thing is that many of the most heavily marketed drugs have cheaper, time tested, generic alternatives. So all the new drugs have to offer, aside from a higher price, are unforeseen side effects like dry mouth or death.



There's nothing like the relief of finding what you're lokoing for.

[WORDPRESS HASHCASH] The poster sent us '0 which is not a hashcash value.

Joey T

The FDA doesn't just release PHA's willy-nilly. They're released because of a likely serious negative effect that a drug will have on public health. Let's be honest, public health is far more important that the devaluation of a company's stock.

Enter your name...

The study doesn't say anything about a decline in direct-to-consumer advertising. It only documents a decline in advertising targeting professionals: "physician-directed promotion spending, journals ads and detailing visits".

The effect on consumers probably depends on the condition: There are so many drugs for high cholesterol and high blood pressure that probably has no negative effect. For some rare disease, though, lower physician awareness of the options might mean worse care for some patients. On the other hand, the publicity surrounding the PHA might itself overcompensate: the physician doesn't need the manufacturer to remind him or her that Dubious X is an option for Extremelyrareitis, because the news media is doing that task for them.


Several years ago FDA added Black Box warnings to antidepressants regarding reports of young people REPORTING more suicidal thoughts when treated with antidepressants. Antidepressants prescribed to this group went down and suicide rates went up. FDA's failure to distinguish between rates of reporting suicidal thoughts versus suicide attempts/completions cost many lives.