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The Data-Driven Economy and the FDA

By and / 9.9.2014

The shift to data-driven growth is the single most important reason why the U.S. economy is far outperforming the European economy these days. Online sales are up by 16 percent over the past year, and Americans are getting more and more of their information online, spending an average of 40 minutes per day on Facebook alone.

Yet regulators are struggling to keep up with the data-driven economy.  Regulatory assumptions designed for a slower, information-poor age are ill-suited for today’s information-rich environment, both failing to take advantage of new opportunities and failing to protect consumers against new threats.

Nowhere is this regulatory struggle clearer than the attitude of the Food and Drug Administration (FDA) towards social media. Rather than embracing the astonishing power of social media to inform the public, the FDA is proposing to protect consumers by greatly hobbling the ability of pharmaceutical companies to communicate directly with them. The FDA implicitly assumes that communications from pharma companies regarding prescription drugs and medical devices are likely to be promotional or marketing in nature.

Certainly the FDA is justified in its mission to protect consumers against false or misleading information. There are serious risks associated with prescription drugs and medical devices, some of which could be fatal.

But in its approach to protecting consumers, the FDA is ignoring the trade-off between consumer protection and promoting cost-saving healthcare innovation in an economy dependent on constant communication.

The FDA’s outmoded thinking threatens to hold back cost-saving innovation in healthcare design and delivery. Pharmaceutical companies don’t just produce drugs, they produce information that is useful to consumers, and not intended for promotional or marketing purposes. By restricting the transmission of information, the FDA is increasing costs and reducing productivity.  Consumers could greatly benefit from increased access to truthful and non-misleading healthcare information, but pharmaceutical companies need flexibility in how they can communicate.

For example, proposed January guidance would dictate that every interactive “promotional” communication – including items on blog sites, Facebook, and Twitter – must be submitted to the FDA. This would apply to any interactive communication that is owned, controlled, created, influenced, or operated by the company, regardless of the intended audience. Further, every month pharmaceutical companies would have to submit reports on interactive or real-time communications for any site in which they are actively engaged.

In June, subsequent draft guidance from the FDA would further restrict how drug companies can communicate online.The “Internet/Social Media Platforms with Character Space Limitations-Presenting Risk and Benefit Information for Prescription Drugs and Medical Devices” draft guidance requires that each communication must include detail about risk, established name, and dosage information, in addition to a clearly marked link to a more complete risk discussion. (A corresponding draft guidance would provide a narrow exception to the rules when correcting explicit cases of misinformation.) So comprehensive are the requirements, communicating information about prescription drugs and medical devices on sites like Twitter and Facebook would be very onerous.

The FDA should rethink its approach to communications regulation to embrace the data-driven economy. Pharmaceutical companies need more flexibility in their communications, not less. A greater ability to share information will enable these companies to reduce healthcare costs, through innovation in healthcare design and delivery. Moreover, it will promote gains in consumer welfare, as people are able to get better quality healthcare information faster online. Finally, such regulatory reform will actually better protect consumers against risk, because it will enable rules to remain effective in a constantly changing communications landscape.