Regulatory Focus™ > News Articles > US Regulators Interested in Assessing Regulatory Economic Impact Analyses Conducted by Industry

US Regulators Interested in Assessing Regulatory Economic Impact Analyses Conducted by Industry

Posted 24 June 2013 | By Alexander Gaffney, RAC

Unlike some of its international regulatory counterparts, the US Food and Drug Administration (FDA) is required by law to estimate the economic impacts of the regulations and rules it promulgates.

If, for example, it puts forth a proposed regulation on labeling a medical device, it would need to figure out the current cost to a manufacturer to meet its present obligations, how the rule affects various entities (e.g. small business) differently, the costs of transitioning to a compliant system, the cost of maintaining a compliant system and various other negative (or positive) externalities. The goal is to make sure the benefits of any rule outweighs its costs.

But the process by which this assessment occurs is one that largely stays out of the limelight, even if its results are subject to intense scrutiny by members of industry and the public who may disagree with its methods or results. As FDA explains in a contract notice, the work produced by the Office of Planning (OPl) is subject to "intense scientific and technical review and scrutiny by diverse audiences including the public, regulated entities, Government agencies such as the Department of Health and Human Services (DHHS) and the Office of Management and Budget (OMB), the US Congress, professional economists and the scientific and medical community."

This situation understandably leads to high-stress situations, even as the ever-changing scope of FDA's work challenges the depth and breadth of its expertise.

FDA in Need of Economists

This has apparently led to an epiphany for the agency: It needs some help.

That help will likely come in the form of an outside contractor whose help it is now soliciting. In a 21 June 2013 posting on the Federal Business Opportunities website, FDA said it needs to expertise of an economics contractor to provide it with "accurate information, data and analytical models for use in assessments of the economic impacts of FDA actions or contemplated actions."

Noting that it often needs help generating "novel analytical approaches to evaluate potential effects," the agency said any contractor will need to generate estimates of employment levels, profits, product pricing, competition, outsourcing, industry practices and performance and international effects.

Double-Checking Industry's Analysis?

The notice also contains several interesting points both related and unrelated to the work FDA conducts. For example, FDA says it is "interested in assessing the validity of the growing number of cost effectiveness analyses prepared by pharmaceutical companies."

"The contractor would assist in the development of appropriate methodologies" to do so, it added.

Elsewhere, FDA says it is interested in "assessing the effects of requiring informational or warning labels on consumer labeling."

"The contractor would assess the behavioral responses of consumers and domestic and foreign industry to different proposed labels for the different product categories regulated by FDA."

The notice also calls on the contractor to develop models of how international firms might react to proposed regulations, how to regulate diagnostic tools (e.g. pharmacogenomics), and surveying members of industry to get anecdotal feedback.

FDA said it plans to spend as much as $9 million over five years on the added economists.

Federal Business Opportunities Notice

Tags: Solicitation

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