In this city of high rollers, a retired real estate entrepreneur is taking one of the biggest gambles of all. He is betting his bankroll that he can beat the Food and Drug Administration.
Marvin Kratter is a feisty, 61-year-old businessman who has owned such properties as the St. Regis Hotel in New York, the Mark Hopkins in San Francisco and the Americans in Miami, and has run such ventures as the Boston Celtics and the Jacob Rupert Brewery in New York, Kratter says the FDA is killing small drug companies.
Early this year, he bought a failing drug company called Rom-Amer Pharmaceuticals, Ltd. The reason the firm was failing was that it had spent $1 million trying to get its only drug, Gerovital, approved by the FDA for use in the United States. After five years, approval was nowhere in sight.
So Kratter bought the company at the turn of the year for $1 million and decided to try a new course of action. He began an intensive lobbying campaign in the Nevada State Legislature. Before the FDA could say "regulatory lag," Kratter had won approval for the sale, distribution and consumption of the drug within the state's borders.
At the time of state approval of the drug, the FDA was forced to admit that if Kratter could keep all aspects of production, distribution and consumption of the drug within state borders, the federal agency was powerless to stop him.
"The drug has not been proven safe and effective by our laws," said the FDA's western district director, William Hill, when Gerovital was before the Nevada legislature. "And in any case, the (Rom-Amer) would have to register with the FDA as a drug manufacturer."
The FDA, in fact, can scrutinize Kratter's plant, when he builds one, but outside of that Kratter has a clear shot at finally selling some Gerovital. First introduced in Romania several years ago by Dr. Ana Aslan, a director of the Romanian Institute of Geriatrics in Bucharest, Gerovital is a procaine substance similar to Novocaine.
It purports to make elderly people feel better.
But the Gerovital situation has renewed interest in a larger issue - the future of drug regulation in this country. Kratter, with his small venture, is forcing the question on two fronts: Is there too much regulation in general, and should the law be changed to no longer require the FDA to rule on whether a drug is effective in addition to whether it is safe?
Although Kratter can find few who will agree with him on the issue efficacy - better known as effectiveness - he has support from many sides on the issue of overregulation.
Recent estimates by medical researchers place tyhe cost of getting a new drug tested and approved by the FDA at up to $55 million. And the time it takes to get that approval ranges from four to eight years. Kratter says those restraints all but eliminate chances for small drug companies.
Most industry and FDA sources place the blame for "drug lag" - the name given to the long delay between introduction of a drug in the United States and FDA approval - on Congress. There was such a push for safety in drugs after the 1962 incident involving the drug Thalidomide in Europe and deformed babies that Congress passed stiff legislation mandating strict scrutiny.
But Congress could not have imagined the kind of drug lag that developed out that legislation. Only now is the FDA beginning to ease up, according to industry sources.
Economist Milton Friedman, a winner of the Nobel prize, attacked the FDA for its slow approval of critical drugs in an article in Commitment magazine earlier this year.
"The drug industry is an example of an industry that has been seriously hampered by government intervention and regulations," he wrote. "The FDA has done more harm than good. The reason is very simple - no Food and Drug administrator has ever been pilloried for not approving a drug which was potentially capable of saving many lives.
"Any Food and Drug administrator is bound to be pilloried for making the other mistake, namely, approving a drug which turned out to be harmful. As a result, the Food and Drug people have a bias in favor of holding up good drugs in order to avoid the possibility of mistake in approving a bad one," Friedman continued. "The result is that there are many effective drugs which cannot be purchased by people in the United States, but which might very will save lives."
Over the years, complaints about the FDA have centered on the failute of the agency to accept European research, and the duplication of many of the required tests.
"There is no question that a lag is taking place in the availability of new drugs in the United States," said Dr. Michael DeBakey, a leading cardiovascular surgeon, in a recent interview.
"If you had to clear penicillin or aspirin today, you couldn't do it under the present law," said Rom-Amer's Kratter. He had several major medical researchers who had tested his drug. Gerovital, writer letters in support of the drug as a safe and apparently effective antidepressant.
But the FDA told Kratter that because there were press reports claiming Gerovital was a "fountain of youth," Rom-Amer would have to submit tests showing Gerovital's antiaging qualtities.
Rom-Amer never had claimed Gerovital was a "fountain of youth," and company officials had to spend several months fighting the FDA before the "youth" test requirements were dropped.
"No one is advocating that the FDA should give up testing for safety, but why prevent someone from getting a drug that is proven harmless and probably effective?" Kratter asked.
"I'll tell you why effectiveness is important," answered Dr. Richard Crout, head of the FDA's Bureau of Drugs. "It is the basis for rational prescription of drugs. If you want different brands of the same drug to be equally effective, you have to have an effectiveness requirement. It helps keep off the market, folk remedies and frauds perpetrated by people who want to do nothing but make money."
A drug industry analyst agrees with Crout, adding: "The concept of efficacy gives you the possibility of testing the strength of a drug. That's important for a doctor to know, so people can get drugs with the right amount of strength and not, for instance, be knocked out because an antidepressant proved to be super powerful."
"It's a question of freedom of choice," Kratter said. "Why should the rich be the only people to get this drug because they're the only ones who can affort to go overseas for treatment?"
Gerovital's effectiveness aside, there had been a tremendous movement in recent months to ease the drug lag, and make avenues available to the FDA to get certain drugs on the market faster than others.
Prof. William Wardell, head of the University of Rochester's Department of Pharmacology, has written extensively on the issue of drug lag.
"The lag has decreased significantly since our last study in 1972," Dr. Wardell said in an interview last week. He cited recent regulation changes that allow the FDA to accept more data from foreign submission as one reason the lag may be easing. "Another reason is that the FDA has been issuing guideliness, and if the drug companies follow the guidelines, they are more likely to do studies that meet FDA standards."
Wardell said the FDA still must improve its activities concerning drugs "that can help a few people a lot, but have side effects that can hurt people."
"There should be a way to make useful drugs available sooner for people who need them, while at the same time, protecting the general population," Wardell said.
According to Joe Parrish, who is a drug industry analyst for Sanford C. Bernstein & Co., an investment research firm. "The FDA has nothing to gain by expediting a drug. They aren't commissioned to save people's lives, just to see that drugs are safe."
But Parrish said, "The regulatory process is better organized under Donald Kennedy's reign at the FDA. The feeling in the industry is that the drug lag is starting to decrease."
Parrish pointed to Sweden and Japan, where he says the drug lag is even longer than in the United States. He estimates that in this country now, the lag is really only about four or five years, and the cost of developing a drug has dropped to between $15 and $20 million.
There are strong indication that the Carter administration plans to open up the regulatory process even more. THe first of these indications were included in speeches delivered recently by FDA Commissioner Kennedy and Secratary of Health, Education and Welfare Joseph A. Califano Jr.
"We require greater flexibility in the clinical testing and marketing of drug products, particularly those entities which may represent significantly or urgently sought therapeutic breakthroughs," Kennedy said in remarks to a Senate subcommittee last summer.
"An ideal system, in our view, must permit a new drug to be used in an increasingly larger number of individuals who can benefit from its effect in decreasingly sophisticated medical settings - beginning with the research scientists in the labortory and going towards the family physician in the community," he said.
Califano picked up the ball last month with a speech to the Public Citizen Forum. Calling for "a top-to-bottom thorough overhaul" of the drug regulatory laws, Califano said there is a "problem of multiple, inconsistent and inflexible standards."
He called for a new system to "allow us to put promising drugs on the market faster," claiming that present drug laws "haven't kept up either with scientific advances or with chaning needs of society."
"It is time to establish a single, coherent system of regulation for all drugs," he said.
Califano's remarks are founded on contacts he has made with FDA personnel already working on reform from within. "Califano's speech was known to us and supported by us," said the FDA's Dr. Crout. "We are writing our own initiatives, and Califano was signalling those in the speech."
Crout indicated that the FDA is working on new regulations that will enable it to approve certain drugs under a surveillance system, like controversial drugs that might be needed to fight an impending epidemic.
"A new flu drug is a good example," Crout said. "If we can show that it would likely be useful if an epidemic is coming, we better be prepared by stockpiling and marketing it in some way or take the risk of having it not be available when we need it."
While the wheels of government roll slowly, Kratter is gearing up to get Gerovital on the market in Nevada despite the FDA. He can envision the drug, which can be acquired only by prescription, being used at spas around the state.
"I know people call Gerovital a ripoff because they read that it is supposed to be a "fountain-of-youth," said Kratter. "But if one out of ten people get out of a nursing home because it makes them feel better, then the "ripoff" is worth it."