Costs have also nearly doubled, much due to indirect costs aroused by wayward FDA procedures; pharmaceutical companies currently spend $800 million to introduce a new drug to the public. Not to mention, less than one-third of all FDA-approved drugs recover their development costs. In 2002-04 a whopping 58 new drugs received FDA approval, a 47 percent decline since the 1996-98 period. 

FDA reviewers are trained to be risk-averse (which within reason isn’t necessarily a bad thing), so much that FDA Commissioner Alexander Schmidt admitted, “In all our FDA history, we are unable to find a single instance where a Congressional committee investigated the failure of the FDA to approve a new drug. But the times when hearings have been held to criticize our approval of a new drug have been so frequent that we have not been able to count them. The message to FDA staff could not be clearer.”  Poor management and strict regulation has made reviewers paranoid in their approval of new drugs, delaying—or refusing altogether—drugs that cure disease and illness. 

The FDA has a fatal track record. In August 2007, the D.C. Circuit Court of Appeals reversed a previous ruling that restricted a patient’s right to take investigational, FDA-unapproved drugs. The leukemia drug Gleevac passed its first phase of testing in 1998—ruling that it was both safe and effective—and when physicians requested the drug for treatment in June 2001, the FDA denied their request. Gleevac finally gained approval in March 2003, after 3,600 patients had been denied the drug, many of which died in waiting. The efficacy of Gleevac is displayed through the clinical trials: 80 percent are still alive today. 

The FDA has delayed many other cancer drugs, and thousands of people have died because of it.  Ronald Trowbridge and Steven Walker report the FDA’s deadly paradigm, relating to cancer patients, in the Wall Street Journal:

The American Cancer Society reports that some 550,000 cancer patients die annually, making the number of cancer deaths from 1997 to 2005 about 4.8 million. Over that same period, the FDA reports granting individual access to an investigational drug to not more than 650 people per year for all diseases and drugs—a pathetic, even cruel, pittance. A few thousand more patients managed to gain access by enrolling in relatively small clinical trials or exceedingly rare expanded access programs.

Government also intervenes in what benefits insurance policies must cover. Part of the problem lies with crooked constituencies that arouse biased legislation. Lobbyists and advocacy groups invoke mandates by using constituencies that provide lush political contributions to politicians. The Council for Affordable Health Insurance found that state governments have legislated 2,133 benefit mandates that require insurers to cover services such as “acupuncture, massage therapists and hair prostheses (wigs).” Not surprisingly, supporters of such mandates, who lobby for heavy regulation, include acupuncturists, massage therapists, and chiropractors. 

In the 1960s there were only a handful of benefits that government mandated, and now there are a couple thousand.  It is no wonder health care costs have skyrocketed over the past couple decades. Mandated benefits may make insurance policies more comprehensive, but they also make them more expensive—at an expense that is not always beneficial. They force insurers to cover benefits that are usually paid out-of-pocket, oftentimes benefits that are not necessary in maintaining health quality. 

William Congdon, Amanda Kowalski, and Mark Showalter published a paper, “State Health Insurance Regulation and the Price of High-Deductible Policies”, that analyzed premium data from Golden Rule insurance and eHealthInsurance.com (one health insurance provider and one internet brokerage).  The study focused on four categories of state regulation:

(1) mandated health benefits, which require insur­ers to cover particular treatments or particular ser­vices; (2) “any willing provider” laws, which restrict insurers’ ability to exclude hospitals and doctors from their networks; (3) community rating laws, which require insurers to limit premium dif­ferences across individuals; and (4) guaranteed issue laws, which require insurers to sell insurance to all potential customers regardless of health or pre-existing conditions.

The analysis was consistent across both datasets: eliminating state regulation would lower annual premiums by $2,000 per individual. This study, along with subsequent studies, shows that on the national level states with heavy regulation have higher insurance premiums than states with looser regulatory standards. Accounting for 12 cents on every premium dollar, mandated benefits hike premium rates. The average state mandates 26 benefits that insurance providers must cover—mandates such as hair prosthesis, athletic training, birthmark removal, and pastoral counseling.  Statistically, individuals in states that mandate more than 26 benefits pay higher premiums than individuals in states with fewer than 26 mandated benefits.