According to the report, released by the Institue of Medicine's (IOM) Committee, the core problem is that the FDA currently cannot ensure the safety of new prescription drugs because of inadequate funds, structural problems, and unclear and insufficient regulatory authorities.
The committee said that the FDA needs more budget and manpower to ensure it keeps its focus on the safety of the drugs it regulates, not only before approval, but also throughout the time they are on the market.
At present, once a drug is approved in terms of safety, it's very difficult for the regulator to withdraw it from the market, unless major evidence shows the drug's risks for patients.
"We found an imbalance in the regulatory attention and resources available before and after drug approval," said Sheila Burke, deputy secretary and chief operating officer of the Smithsonian Institution and chair of the committee.
"Staff and resources devoted to preapproval functions are substantially greater. Few high-quality studies are conducted after approval."
Problems in FDA regulation were highlighted when the popular painkiller Vioxx, manufactured by Merck, was pulled from the market in 2004, five years after its approval, because long-term use was linked to an increased risk of heart attack and stroke.
This highly publicised episode caused the FDA to commission a study of its own system, and as a result, the IOM came up with a series of steps to improve safety review.
It recommended the regulator keep assessing safety and risk-benefits of a drug even after the drug has been approved, by conducting risk-benefit assessments every five years in much the same way as European regulators do.
It also advised the use of labels that warn consumers for two years that a drug is newly approved.
In addition, the report found that the advisory committees that recommend drug approvals tend to have too many members with serious conflicts of interest.
It therefore urged the FDA to require that 60 per cent of the members of such committees be free of financial involvement with companies whose interests could be affected.
Furthermore, the institute says there also should be a mandatory requirement that all Phase II through Phase IV clinical trial results be posted on a federal website to facilitate public access to safety information.
Such changes would alter the present balance of resources and authority, giving the FDA the primary responsibility and funding to monitor drugs once they go on the market.