The FDA’s Differing Approval Standards For Sleeping Pills and Covid Vaccines

Sam Peltzman, a University of Chicago emeritus professor, could easily win this year’s Nobel Prize in Economics for his pioneering work on the economics of regulations. Peltzman’s odds of winning have probably improved because of his work nearly a half century ago on the impact of the FDA’s efficacy requirement for drug approval, which was imposed in 1962. Before that year, drugs only had to pass the FDA’s safety standards.

Peltzman found that the added approval standard substantially increased drug development costs, which caused a serious drop-off in new drugs developed and multiyear delays in the introduction of approved drugs. Peltzman and other economists following his lead have found that the added development costs caused hundreds of thousands of deaths from drugs never making it to market or being introduced after long delays. A Nobel for Peltzman is long overdue.

Peltzman’s impact can be heard today from a variety of sources, including the Trump Administration, calling for a speed-up in the FDA’s approval of Covid-19 vaccines. Delays in approval can only increase Covid cases and deaths. Peltzman’s findings remain applicable, critics insist.

The rigor of approval standards for sleeping pills (or beta-blockers and many other drugs) need not, and cannot, be the same as those for Covid vaccines, a point Peltzman would likely accept. Sleeping pills are largely for the users’ benefit—more sleep—with the effects on others nil or inconsequential. The death-reduction case for reducing such drugs’ development costs remains as strong as ever.

However, vaccines are different in one critical respect: Vaccines benefits those vaccinated and many others through the development of “herd immunity” (the point at which the spread of a disease is throttled by the prevalence of inoculation).

Herd immunity can reduce cases and deaths of those vaccinated as well as others not vaccinated. However, herd immunity depends on a substantial portion of the population (many epidemiologists say 60 or more percent, while one recent study from two European universities has found 43 percent is adequate) willingly getting vaccinated (with a working rule, the greater the spread in immunity, up to a point, the greater the decline in disease spread). This means that, barring forced vaccinations, herd immunity is not only dependent upon the science of testing, but also on people’s perception of the safety and efficacy of the testing processes.

Cutbacks in testing rigor (or just the amount of time devoted to testing) can have a two-pronged effect: They can reduce earlier than otherwise Covid deaths among early vaccinated people, but the cuts in rigor can also cause many people to resist vaccination (or even join the ranks of “anti-vaxxers”), delaying the development of herd immunity and extending spread of the disease, which, in turn, can cause more Covid deaths in the long run than are saved in the short run.

Ironically, the greater people’s resistance to vaccination, the more rigorous the testing may have to be just to assuage their safety and efficacy fears and induce them to get vaccinated, so that they contribute to the spread of herd immunity and add to derivative economic gains (more jobs and incomes).

By seeking to speed up the FDA approval process, Republican officials could have sewn doubts on the net value of vaccines and slowed the development of herd immunity. Similarly, many Democrats could have compounded the problem by suggesting that Trump has pressed the FDA to compromise its testing rigor for his reelection ends. Media hostility toward Trump, including emphasis on his efforts to press for vaccine development at “warp speed,” has probably compounded political pressures for vaccine resistance.

Peltzman’s line of argument suggests that greater resistance to vaccination can increase the needed payments to spread vaccinations and, again, to achieve herd immunity. The testing rigor for vaccines may also need to be greater than for sleeping pills because the last thing wanted during a pandemic is a vaccine-prescription requirement, which can slow the development of herd immunity by raising the costs of vaccinations.

The politics of vaccines could be having the unintended effect of elevating resistance to Covid vaccinations. In May, the Pew Research Center reported that 72 percent of polled Americans said that they would “definitely” or “probably” be vaccinated for Covid, while 27 percent said they would not. Earlier this month, the percentage of Americans willing to get vaccinated was down by almost a third, to 51 percent. Those unwilling to get vaccinated was up by more than two-thirds, to 49 percent.

These findings portend a new form of the well-known “tragedy of the commons,” a wider and longer spread of Covid and more unintended deaths, given that a check on vaccine politics will unlikely be driven by concern for the common good. Now, as reported by Wall Street Journal editors, officials from the CDC, FDA, NIH, and drug companies are having to work overtime to assure Americans that drug-testing protocols continue to be follow with the upmost rigor.

 

 

 

 

 

Richard McKenzie is an emeritus professor of economics in the Merage Business School at the University of California, Irvine. His latest book under development is The Human Brain on Economics.

 

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Herd immunity is not a number (part 2)

Here’s Yahoo.com:

COVID-19 researchers and modelers have assumed that at least 60 percent of a population, perhaps 70 percent, would need to be infected with the new coronavirus or vaccinated against it before reaching herd immunity, the point at which the virus can no longer spread widely among a community. Some infectious disease experts are now examining the “hopeful possibility” that far fewer people have to get infected or immunized to achieve herd immunity, The New York Times reports, citing interviews with more than a dozen scientists.

If their new, complicated statistical models are correct, and communities can reach herd immunity with 50 percent or less of people gaining immunity to COVID-19, “it may be possible to turn back the coronavirus more quickly than once thought,” the Times reports. A clear minority of researchers predict as few as 10 or 20 percent of a population developing antibodies to the disease would be sufficient for herd immunity; Stockholm University mathematician Tom Britton calculated the threshold at 43 percent.

I continue to see these extremely misleading articles, which suggest that herd immunity is some sort of stable parameter than can be estimated by scientists.  Actually, herd immunity is a function of behavior.

When Covid-19 first appeared it was highly infectious.  That led to estimates of 60% or 70% for herd immunity.  But unlike with the common cold, societies almost everywhere took precautions to reduce the spread of Covid-19.  Even in Sweden there was a great deal of social distancing.  Since April, social distancing in New York State has reduced the fatality rate from Covid-19 from almost 1000/day to near zero.  And that’s with antibody levels far below 60% (probably closer to 20%)

 

But if New Yorkers were suddenly to go back to life as usual, Covid-19 cases would likely rise sharply, as New York’s current situation of near herd immunity is predicated on a high level of social distancing and mask wearing.

This does not mean the initial 60% to 70% estimates are correct, even for a population taking no precautions.  Scientists now have a better understanding of issues such as natural immunity and heterogeneity in behavior (super-spreaders).  So the initial estimates may be incorrect.

Here’s how I look at things.  The US has a fatality rate of 533/million, rising fast.  Sweden’s has leveled off at 584/million.  But New Jersey’s at 1805/million deaths despite lots of social distancing.  Indeed I know people in New Jersey who work at home and are extremely unlikely to contract Covid-19 unless they go back to business as usual.  Thus even New Jersey is far from herd immunity with no precautions.  Therefore it’s unlikely that herd immunity was a sensible solution for the US back in April.  The entire US would have likely been hit even harder than New Jersey was hit.  (And recall that even official death rates probably undercount the true death toll, at least according to “excess deaths” studies.)

On the other hand, the fatality rates I cite for New Jersey reflect the medical care back in April, when most of the deaths occurred.  There is evidence that the death rate for Covid-19 (per actual case) has already fallen sharply in recent months.  With improved treatments, it’s very possible that at some point herd immunity will become the optimal strategy.  I’m agnostic on that question.  But it’s important to think clearly about these issues, and a number of recent news articles have done a disservice to the public by oversimplifying the problem.

PS.  People often focus too much on the public policy aspects of this issue.  When I said, “Therefore it’s unlikely that herd immunity was a sensible solution for the US back in April” I was not referring to public policy.  There’s no way the US government could have adopted herd immunity as a strategy, as the public would have done social distancing on their own, and indeed started doing so even before lockdown were in place.

It’s also worth noting that while Sweden’s economy did better than the Eurozone (so far); its recession was as bad as in Denmark and worse than in Finland. (Norway’s Q2 GDP data is not in yet.)  Sweden shows that substantial social distancing was inevitable.

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Herd Immunity: Saving Lives and Saving the Economy at the Same Time

Absent a highly effective vaccine or some other cure, only two policy questions are relevant: how quickly should we reach herd immunity and whom should we protect during that period? The answers are obvious. We should achieve herd immunity as quickly as is prudent, while protecting the vulnerable, including the elderly, sick, and frail. Let the young and healthy become infected in the natural course of their lives to help create a protective layer around the old and sick. The first step is reopening schools and businesses.

No one wants to become infected with the novel coronavirus. But those who do can know that their private cost confers a public benefit, moving us one step closer to herd immunity. The good news is that we might already be close to herd immunity.

This is from David R. Henderson and Charles L. Hooper, “Herd Immunity: Saving Lives and Saving the Economy at the Same Time,” Brief Analysis No. 138, Goodman Institute for Public Policy Research, July 20.

Read the whole thing: it’s only 2 pages long.

Charley and I finished the piece about 10 days ago. Would I write it somewhat differently today? I would. I found this post by EconLog co-blogger Scott Sumner, published 2 days ago, persuasive.

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Herd immunity is not a number (it’s a function)

There’s a lot of talk about what sort of percentage of the population must be infected before you have “herd immunity”. For instance, Tyler Cowen has a post discussing the fact that new Covid-19 infection rates are down sharply in places that have previously been hit hard, such as Sweden, Lombardy and New York. I do agree with Tyler’s claim that it is plausible that this might reflect, in part, the role of herd immunity.

At the same time, I fear that the implications of this might be misunderstood. Herd immunity is not a specific number, like 20% or 70%; it’s a function of “R0”, the rate at which the virus spreads. And that reflects human behavior. Sweden certainly does not have enough herd immunity to go back to life as normal, but they may have enough for a partial return to life as normal. Thus they don’t want to go back to behavior that would normally lead to a R0 of 3 in an unexposed population, but 1.4 might be good enough, given those precautions.

The US is still a long way from having to avoid taking precautions. In New Jersey, the death rate is 1768 per million. And that rate occurred despite New Jersey residents taking significant precautions. Even worse, lots of people still die each day in New Jersey, so the 1768 figure will likely reach close to 2000.

For the US as a whole, the fatality rate is 424 per million (a tad below Sweden), which is less than 1/4th the New Jersey rate. If the virus is allowed to spread uncontrolled in the US then we can eventually expect to be hit as hard as New Jersey, and probably much harder. The US has already had 140,000 deaths—I don’t think anyone wants 560,000 deaths, or more. We clearly need to avoid ending up like New Jersey, and that means we cannot rely solely on herd immunity.  Almost everyone favors at least some precautions, such as for nursing homes.

Now for the good news. We’ve gotten better at preventing Covid-19, despite all our missteps. So the percentage of the population necessary for herd immunity—when combined with widespread mask wearing and testing—is much lower than when New Jersey was first impacted in March and April. That doesn’t mean we can let down our guard, but it does mean that herd immunity combined with precautions could help the US as a whole to avoid being hit as hard as New Jersey.

There are a lot of moving parts with Covid-19, and it’s important to focus on them all.  Not just one in isolation.

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Herd immunity was never a feasible option

Bryan Caplan has a post on Covid-19 that is full of sensible ideas. But I disagree with one of his claims:

18. Alex Tabarrok is wrong to state, “Social distancing, closing non-essential firms and working from home protect the vulnerable but these same practices protect workers in critical industries. Thus, the debate between protecting the vulnerable and protecting the economy is moot.” Moot?!  True, there is a mild trade-off between protecting the vulnerable and protecting the economy.  But if we didn’t care about the vulnerable at all, the disease would have already run its course and economic life would already have strongly rebounded.  Wouldn’t self-protection have stymied this?  Not if the government hadn’t expanded unemployment coverage and benefits, because most people don’t save enough money to quit their jobs for a couple of months.  With most of the workforce still on the job, fast exponential growth would have given us herd immunity long ago.  The death toll would have been several times higher, but that’s the essence of the trade-off between protecting the vulnerable and protecting the economy.

From my vantage point in Orange County, that just doesn’t seem feasible.  People here are taking quite aggressive steps to avoid getting the disease, and I believe that would be true regardless of which public policies were chosen by authorities.  Removing the lockdown will help the economy a bit, as would ending the enhanced unemployment insurance program.  But the previous (less generous) unemployment compensation program combined with voluntary social distancing is enough to explain the vast bulk of the depression we are in.

In many countries, the number of active cases is falling close to zero.  In those places, it will be possible to get people to return to service industries where human interaction is significant.  Speaking for myself, I’m unlikely to get a haircut, go to the dentist, go to a movie, eat in a crowded restaurant, or many other activities until there is a vaccine. (Although if I were single I’d be much more active.) If I were someone inclined to take cruises, I’d also stay away from that industry until there was a vaccine.  I’ll do much less flying, although I’d be willing to fly if highly motivated.  For now, I’ll focus on outdoor restaurants (fortunately quite plentiful in Orange County) and vacations by automobile. Universities are beginning to announce that classes will remain online in the fall.

If you think in terms of “near-zero cases” and “herd immunity” as the two paths to normalcy in the fall of this year, I’d say near-zero cases are much more feasible.  Lots of countries have done the former—as far as I know none have succeeded with the latter approach.  Unfortunately, America has botched this pandemic so badly (partly for reasons described by Bryan) that it will be very difficult to get the active caseload down to a level where consumers feel safe.

Don’t get me wrong, both the lockdown and the change in unemployment compensation create problems for the economy.  But they are not the decisive factor causing the current depression.  If the changes in the unemployment compensation program were made permanent, then at some point this would become the decisive factor causing a high unemployment rate.  But not yet.

BTW, I am not arguing that it wouldn’t be better if people had a more rational view of risks, as Bryan suggested in a more recent post.  This post is discussing the world as it is.

Here’s a selection of countries with 35-76 active cases (right column), followed by a group with less than ten.  Many are tiny countries and some have dubious data, but not all.

. . .

 

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