A heavyweight group assembled in the ornate Roosevelt Room of the White House last March to discuss whether to allow dying patients to buy promising experimental drugs before the drugs had been fully tested. Vice President Bush, Attorney General Edwin Meese III, Commerce Secretary Malcolm Baldrige and other top officials sat attentively as Dr. Frank E. Young, commissioner of the Food and Drug Administration, set up a chart he had drawn with felt-tip markers on white posterboard.

The recently revived Vice President's Task Force on Regulatory Relief had summoned Young to talk about a new federal regulation easing access to experimental drugs, a rule the Office of Management and Budget had sought -- and the FDA resisted -- for more than two years.

It was like commanding a recalcitrant priest to defend his views before the College of Cardinals.

By all accounts, the session in the Roosevelt Room was a critical moment in the development of the Investigational New Drug Rule, a regulation that may mean the difference, literally, between life and death.

But this case study of that almost unreadable regulation teaches a dual lesson about the Reagan administration's deregulatory drive:That OMB, backed by the vice president's task force, has formidable power to browbeat government regulatory agencies to adopt rules they do not want.

That the regulators, by marshaling their most reliable weapons -- delay and public opinion -- can still fend off the most unwelcome of the changes sought by the deregulators.

As the session before the vice president's task force loomed, Young scrambled for time and maneuvering room. He won an important technical concession that made the rule preliminary instead of final.

So when the task force convened on March 9, the meeting was an anticlimax. There was "no discussion of the substance," said a participant. There was no full-dress airing of the FDA staff's concerns that unscrupulous drug companies might take advantage of a compassionate loophole to fleece the dying with quack drugs.

Instead, Young used his homemade chart to discuss how many days the public should be allowed to comment on the rule before it went into effect.

Young "didn't want to take his arguments to the task force. He knew they wouldn't be well-received, so he caved," said an official familiar with the negotiations.

"Agency heads are very much worried about the political ramifications of what they do," said another official. "Usually just the determination by OMB to take the issue all the way to this level is enough."

The next day, at a hastily summoned news conference, Young announced a dramatic proposal to make it far easier for victims of AIDS and other life-threatening diseases to obtain new experimental drugs while the drugs are being tested.

The proposal created a furor from one end of the ideological spectrum to the other. The Ralph Nader-affiliated Public Citizen Health Research Group opposed it as clearly circumventing the legal requirements that drugs be proven effective before they can be sold. The Pharmaceutical Manufacturers Association had "serious reservations." Five former FDA commissioners and four former FDA chief counsels, Republicans and Democrats, proposed tightening the rule.

On June 22, the rule became law, but it was only part of the controversial proposal OMB had sought. In the end, OMB also caved in. The administration took up the concerns of the former commissioners and general counsels and incorporated their language verbatim in the final product.

The story begins 25 years ago, Sunday, July 15, 1962, when an article about a sedative named thalidomide appeared on the front page of The Washington Post. Thalidomide caused thousands of babies in Europe to be born with tragic deformities -- tiny malformed arms and legs that looked like flippers.

Dr. Frances Oldham Kelsey, an FDA medical officer, had held out against approving the drug for use in the United States for 10 months in a fierce battle with the U.S. licensee of the West German manufacturer. FDA rules allowed 60 days for consideration.

Thalidomide, she said, "seemed peculiar."

The article was one of those rare reports that change the course of events, according to former FDA officials. Landmark amendments by Sen. Estes Kefauver (D-Tenn.) to require that drugs be both safe and effective had been heavily watered down and were foundering in the Senate Judiciary Committee. Within three weeks they had been rewritten, and they were unanimously approved by Congress before Columbus Day.

The Kefauver amendments established elaborate new safeguards against another thalidomide disaster, but the new testing procedures took years. Almost immediately, the FDA came under pressure to grant "compassionate exemptions" to the strict regulations governing approval of new drugs.

"What do you do about people who are quite literally going to die without it?" asked Peter B. Hutt, former FDA general counsel.

"Probably the day after the new IND {investigative new drug} regulations went into effect, the first 'compassionate IND' was issued," Hutt said. "The rules were ad hoc. Frequently it would be done over the phone or by letter, and the FDA would say, 'Go ahead and ship.'

"I got there in 1971," Hutt said, "and the situation was hopelessly confused. The regulations had been amended dozens of times until you could no longer read them. We were going to revise them with the absolute clear intent of writing compassionate use into the regulations, but a whole series of events intervened, and I was gone."

The public's faith in the agency had been shaken by thalidomide and a continuing series of allegations of laxity. The troubled agency was under almost constant congressional investigation during the 1970s. From 1970 to 1976, FDA was investigated 46 times by the General Accounting Office and appeared before 20 to 25 subcommittees in at least 35 formal hearings each year. According to Hutt, this "paralyzed the agency."

Meanwhile, "breakthrough" drugs were putting more pressure on the ad hoc procedures that had evolved to help the desperately ill.

Beta-blockers, which act like chemical pacemakers, and antiarrhythmics, which prevent or suppress abnormal heart rhythms, were discovered. "It became very hard to have controlled trials for some of these drugs because after an episode of sudden death, nobody was willing to put a patient back on a placebo" or dummy pill to find out if the drug was more effective, said an FDA official.

Some drugs looked so promising that they were given to between 20,000 and 30,000 people before they had been approved, the official said.

"It was purely arbitrary," said S. Jay Plager, now counselor to the undersecretary of the Department of Health and Human Services. "If you knew how to get things done, you could have access, but you may not have known who to ask. We had to get away from that kind of discretion."

Then came Laetrile, an apricot pit extract produced in Mexico as a cure for terminal cancer. The FDA refused to approve it, saying it was worthless. The manufacturer produced testimonials from people who claimed to have recovered when doctors had given them no hope. The drug touched off a "freedom of choice" argument over whether the government should interfere with a dying person's right to try virtually anything that he and his doctor thought might save his life.

Twenty-seven state legislatures legalized Laetrile before official FDA trials showed that the drug, in fact, did not cure cancer.

Although Laetrile was discredited, the debate over "freedom of choice" lingers.

In 1980, President-elect Reagan told the Medical World Tribune of a "clear need for the FDA to ensure the safety of drugs" and said the thalidomide tragedy was proof of that.

But, he added, "The FDA should not be allowed to forbid physicians from prescribing promising new drugs while it engages in seemingly interminable tests to measure . . . effectiveness in all conceivable applications."

Within a month after taking office, Reagan ordered all major rules cleared through OMB, and a torrent of them poured through a small new regulatory office -- including two to revise and streamline the drug development and review process.

Almost in passing, one of them allowed patients access to experimental drugs only "after sufficient evidence of the drug's safety and effectiveness has been obtained to warrant such use." An FDA official described it as "writing down what we had been doing."

But it was enough to raise eyebrows at OMB, according to internal documents and interviews with most of the participants.

"Currently it is difficult for patients to obtain promising drug therapies that are in the drug-testing process," the OMB regulatory officer for the FDA, Bruce Artim, wrote in an internal OMB memo. "Essentially . . . it is not a federal responsibility to second-guess a licensed medical practitioner's judgment that his patient will benefit from a particular drug."

Artim sent a checklist of about 20 items to his boss, Robert P. Bedell, then deputy administrator of OMB's Office of Information and Regulatory Affairs.

Among them were proposals to provide access to experimental drugs to the seriously ill as well as the dying, to experiment with "outside review boards" to judge whether to grant access, and to allow companies to sell experimental drugs instead of giving them to people on whom they were being tested.

Bedell adopted four of Artim's suggestions, including those three and one that proved to be the most controversial: the proof the FDA would require that a drug might work before it could be sold.

"The original position of the FDA was the status quo," said an official familiar with the negotiations. "The original OMB position shook up FDA very badly. They viewed it as an absolutely irresponsible change. They were adamantly opposed. There was a standoff."

OMB gave up on making drugs more easily available to the seriously, as well as the terminally, ill. FDA gave up and agreed to try outside review boards, and to allow drug companies to sell some experimental drugs.

Young dragged his heels. Finally, in early March, with Young refusing to budge on language requiring considerable proof of effectiveness before a drug could be sold, OMB scheduled the experimental drug rule on the agenda of the vice president's task force.

At the last minute, Young appealed over Bedell's head to Wendy Lee Gramm, head of the Office of Information and Regulatory Affairs, to relent and publish the controversial parts of the rule as a proposal, not in final form.

The day after the task force meeting, the proposed regulation was announced with great fanfare. Lawyers noted that it shifted the burden of proof. Drug companies would no longer have to prove that an experimental drug would work. The FDA would have to prove it wouldn't. Many people read the rule as making it almost impossible to ban anything.

Young loyally defended the rule in public meetings and forums, stressing its value to AIDS patients. Even in private, he insisted to his staff that he could live with it -- that language he had inserted in the preamble would give him discretion to ban drugs that were truly ineffective.

Six weeks later, the administration's public facade began to crack when Young acknowledged at a congressional hearing that he had initially opposed the idea.

Armed with a sheaf of internal memos Young could hardly dispute, Rep. Ted Weiss (D-N.Y.), chairman of a Government Operations subcommittee, traced the proposed regulation to "the swamp of OMB. They have no expertise in this field and they override you!"

Young insisted that the preamble "maintains the ability of the commissioner to have flexibility and judgment in dealing with this issue."

At the same time, the five former FDA commissioners and four former chief counsels "strongly urged" the agency in formal comments and testimony to change the rule to "require a rational basis for believing that the drug may be effective."

Young, in Geneva, Switzerland, at an international conference, was on the phone four hours a day to his office as public opinion, focused by the Weiss hearing, turned the tide. Language was lifted wholesale from the former FDA commissioners and general counsels and inserted in the final rule.

In the end, everyone declared victory. The FDA said it prevailed on effectiveness. OMB said the rule would never have existed without its intervention.

"If you ask the FDA about the effect of the rule, they'll say, 'I will continue to do my job the way I've always done it,' " said one official familiar with both sides of the issue. "If you ask OMB, they'll say it will be dramatically different."

And then there are outside experts. Dr. Marion Finkel, executive director for research and development of Berlex Labs and for 20 years associate director for new drug evaluation at the FDA, said: "You can't tell the way {the rule} is written whether new drugs will be distributed any more widely or rapidly than now. Only time will tell."