America’s drug regulator is in turmoil

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TO APPRECIATE the dilemmas the Food and Drug Administration (FDA) faces when it reviews new drugs targeting rare diseases, consider the recent rollercoaster ride of Sarepta Therapeutics, a biotech firm. In 2023 the FDA granted accelerated approval for its gene therapy for Duchenne muscular dystrophy, a rare genetic disorder that typically causes death in early adulthood. Peter Marks, director of the FDA’s biologics centre at the time, approved the treatment despite reviewers’ concerns about limited clinical data. Some hailed that as proof the FDA could be nimble in cases where sufferers had few options. The treatment costs an eye-watering $3.2m per patient, so the drug’s approval delivered Sarepta a major payday. But in the past four months three patients on Sarepta’s treatments have died from acute liver failure. On July 18th the FDA asked the firm to suspend distribution. Within days its stock lost nearly half of its value (see chart 1).

Political drama followed. Laura Loomer, a conspiracy theorist with access to President Donald Trump, accused Vinay Prasad—Dr Marks’ successor and a long-standing critic of loosening evidentiary standards for drug approvals—of being a “leftist saboteur” bent on derailing “Trump’s deregulatory mission”. Her attack was widely seen as criticism of his decision to pause Sarepta’s therapy. On July 28th the FDA reauthorised the treatment’s use for some younger patients. By the next day Dr Prasad had resigned to “spend more time with his family”.

George Tidmarsh, a physician-scientist newly in charge of the agency’s other key drug-evaluation division, became acting head of this one, too. But on August 9th Dr Prasad was re-hired, apparently after being persuaded that the FDA’s commissioner, Martin Makary, supported him. Ms Loomer responded by threatening exposés of FDA officials. It is hardly a picture of stable decision-making at an agency responsible for regulating products that account for some 14% of America’s GDP.

Drugs that target rare diseases, known as orphan drugs, constitute a distinctive segment of the pharmaceutical industry, one that is replete with extraordinary financial promise, scientific risk and knotty ethical considerations. The FDA polices this frontier. It is a treacherous mandate even without interventions by the likes of Ms Loomer. And while the challenges for rare-disease drugs are especially acute, they mirror those facing the entire sector in a regulatory landscape for drugs and new treatments that is growing ever more politicised and unstable.

Though 200m-500m people worldwide suffer from rare diseases—and nearly half of these illnesses affect children—drugmakers had long neglected the development of treatments. To spur such work Congress passed the Orphan Drug Act in 1983. It offers companies seven years of market exclusivity. Between the legislation’s strong incentives and advances in cell and gene therapies, orphan drugs have become an important sector for biotech firms. Today these therapies account for roughly half of the new drugs the FDA approves. They are lucrative, too. Some companies, such as Sarepta, rely almost entirely on orphan drugs for their revenue. Even Johnson & Johnson, a pharmaceutical giant, earned roughly a third of its revenue from these treatments in 2024, according to Evaluate, a pharmaceutical-analytics firm (see chart 2).

Mr Makary, the new commissioner of the FDA, has joined a long line of agency chiefs in calling for faster drug reviews, which can take ten months. In June the FDA launched a pilot scheme to cut that to just a month or two for treatments deemed to support “national interests”. Because robust randomised trials are often unfeasible for rare diseases given the tiny patient pool, Mr Makary has also talked about developing quicker alternative approval pathways for orphan drugs.

But these moves towards innovation have been undermined by the administration’s inclination to shoot first and aim later. Speaking on the Megyn Kelly Show, a podcast, Mr Makary announced a plan to speed up drug approvals for ultra-rare diseases by relying on “a plausible mechanism”, meaning a scientific explanation showing that treatments could theoretically lead to improved outcomes. Such a standard would be “about as low as it goes”, argues Daniel Kracov, a lawyer who advises pharmaceutical firms on regulation. However, parents of patients with diseases so rare that they can be impossible to run trials for are pushing for new ways to win approval for novel drugs.

Officials at the FDA worry that the push to accelerate approvals without hiring more staff will backfire. One reviewer who works on rare diseases notes that during evaluations of proposed treatments for them, the science can be less familiar, the clinical trials smaller, and approval may hinge on less conventional intermediate evidence. This uncertainty can breed scepticism initially. What often persuades reviewers of a treatment’s safety and efficacy is statistical stress-testing and other scrutiny of the evidence that can take months. Speeding this up risks causing reviewers to err on the side of caution, which could lead to fewer approvals, not more.

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Congress is another source of uncertainty. Lawmakers have so far failed to reauthorise a voucher programme that encouraged drugmakers to pursue treatments for rare pediatric diseases. In exchange, companies received a voucher granting expedited FDA review for another drug. The vouchers are transferable and can be sold for tens of millions of dollars on a secondary market (see chart 3). Amid instability, “vouchers are selling for more, because there is some possibility that Congress will not get this done by the end of 2026”, says David Ridley, a health economist at Duke University.

Drug development typically takes a decade or longer, which is why investors prize policy certainty. “The biggest thing is, you want the FDA to be consistent,” explains Matt Phipps, a biotech analyst at William Blair, an investment bank. “You want them to tell you something and then stick with it and not change their minds at the last minute.” Smaller biotech firms that fuel early innovation across the industry will struggle most to ride out the volatility. Funding cuts at the National Institutes of Health, the wellspring of biomedical research, and threats of pharmaceutical tariffs have given a hypersensitive industry additional reasons to retreat. More uncertainty at the FDA is likely to make it harder to approve drugs in general, and possibly orphan drugs especially. Rollercoasters are no fun when you have no choice but to ride them.