SeekerBlog

Neither. Though the costs to the public of the FDA regulatory web are much greater than the benefits, most public discourse ignores the costs. I recommend a careful review of the research that has been collected at FDAreview.org — assembled by economists — Daniel B. Klein and Alexander Tabarrok.

A good place to begin is the section Quotations: Economists’ Judgments about the FDA. Like all the documentation on the site, there are thorough references so you can study the full text from which the quotations were extracted. E.g., this example introduces one of the central ideas — that we need to carefully consider the harm done by the FDA scheme, as well as benefits:

Dale H. Gieringer: “[T]he benefits of FDA regulation relative to that in foreign countries could reasonably be put at some 5,000 casualties [not lives] per decade or 10,000 per decade for worst-case scenarios. In comparison, it has been argued above that the cost of FDA delay can be estimated at anywhere from 21,000 to 120,000 lives per decade. . . . Given the uncertainties of the data, these results must be interpreted with caution, although it seems clear that the costs of regulation are substantial when compared to benefits” (italics added).

Another section to begin your study is The Sensible Alternative: The Voluntary Provision of Assurance, which concludes with these paragraphs:

A thought experiment: Suppose someone proposed that the system in electronics were replaced by a regime that forbade manufacturers from making a product until it was specifically tested and permitted by a central government agency (the “Federal Electronics Administration”). What would you think of the proposal? Probably you would think it is crazy. There is no apparent problem with the current free-enterprise approach to safety assurance in the electronics industry. The twentieth century supposedly taught humanity that command and control is inefficient and potentially life-threatening.

But the command-and-control approach is the system we have in drugs. It is inconsistent to favor the free-enterprise approach in electronics but the command-and-control approach in drugs.

Sometimes people rejoin: “But drugs have larger effects on physical well-being. They are too important to be left to free enterprise.” The point, however, cuts both ways. As we have seen, the harms of government control also are great. Drugs are too important to be controlled by politicians and bureaucrats.

Do the math. The historical record—decades of relatively free enterprise up to 1962—shows that free institutions and the tort system succeeded in keeping unsafe drugs to a minimum. The Elixir Sulfanilamide tragedy was the worst of those decades and far exceeded any other of the kind. (The thalidomide tragedy happened in Europe, not in the United States) The comparison is a grisly one, but we must face harsh realities: The 107 people killed by Elixir Sulfanilamide is a drop in the bucket compared to the yearly—or even weekly—death toll of the post-1962 FDA era. (Peltzman 1973 thoroughly “did the math” on this comparison and reached the same conclusion.)

A nexus of assurance is readily available without the FDA. A drug company suffers devastating losses when it harms consumers with an unsafe drug. Its reputation suffers, and it pays hefty tort damages to victims. Drug safety is assured by brand names, by merchant middlemen, by seals of approval, by newsletters, by medical testing and publishing (the New England Journal of Medicine, etc.), by consumer research (extensive drug information on the Internet), and by the consumer’s questions to the doctor about which drug to take. And the tort system further discourages negligence or fraud (Krauss 1996).

If one examines the policy options to address the exploding costs of health care, one fact that emerges is that drugs are vastly more cost effective than procedures. The current FDA regime inhibits both innovation of both new drugs and devices. Some of the most promising new cancer therapies are compound molecular biology — to function there is seeker molecule that identifies and bonds to the tumor cell + a drug molecule that disables a pathway required for the tumor to grow. Neither molecule works on its own. FDA regulations do not permit approval of compound therapies.