Should we abolish the FDA?

[Sam_Stone]

@ITR champion

Many of see a special need for regulation of drugs, and this example will make it clear why. With monitors, it’s easy to see whether the thing works or not. If my monitor explodes, I’m going to be on the phone to Dell demanding a refund in about twenty seconds. Dell knows this, and thus has a motivation to only sell working monitors. Since their engineers can presumably fix the problem easily, self-regulation will work in that case.

Really? And how good are you at determining whether multi-link independent rear suspension in a car is better than a solid axle? How about the merits of unibody versus ladder-on-frame construction? The efficacy of multi-valve, overhead cam engine design versus pushrods?

The average consumer doesn’t have a clue. And yet, cars with these advancements do better in the marketplace. How come? Because there are free market content filters. Consumer Reports, Road and Track, etc.

Or for an example of even more hidden features or defects, how about crash worthiness? Are you capable of determining how your car will fare in an offset front-end collision? I’m betting you’re not. But a car will take a hit in the marketplace if it fares poorly, because the insurance industry has a vested interest here, so it has its own testing laboratories and makes the findings public to drive consumer choice towards safer cars. A five star crash rating from an independent testing lab of good reputation will be plastered all over the car’s advertising, and reviews in Consumer Reports will highlight poor ratings.

You are surrounded by products of high quality, not regulated by government, that you don’t understand. The market has many content filters and mechanisms for ensuring quality and minimizing hidden defects.

Drugs are different. Let’s say a pharmaceutical company sinks $50,000,000 into developing a new chemical compound to fight cholesterol, which we’ll call Wioxx. Testing begins, and soon the testers are back with some bad news. Wioxx causes heart attacks in a small but non-trivial percentage of users. Now what does the company do?

Uh, make the risks clear to users and doctors, so they can make informed choices? Let me flip that question around on you: What if Wioxx actually saves tens of thousands of lives, but in a way that is hard to put on the front page of the paper because it lowers cholesterol in diabetes patients and makes it less likely they’ll have heart disease in 20 years, but it kills a dozen people during trials? And just for yucks, let’s say that one of the deaths is a movie star, and the relationship to the drug hits the front pages? Suddenly there’s political pressure on the FDA to ban a drug that saves thousands of people’s lives for every one it kills. Is that a good tradeoff for society? The political calculation is that one highly visible death carries more weight than a hundred lives saved over years of time. Bureaucrats and appointed officials respond to political pressure. No one ever lost their job for banning a substance that might have saved some lives, but they’ll lose it in an instant if they approve a drug that kills people. So the FDA only cares about the risk side of the equation. Long term benefit gets short shrift.

From a financial perspecitve, the choice is clear. Sell the drug and you’ll make a lot of money. If the number of Wioxx-induced heart attacks is small, it probably won’t ever be noticed because it won’t stand out from random noise in the heart attack statistics. On the other hand, you probably can’t fix the problem with a minor change to Wioxx. If you don’t sell the drug, then your entire $50,000,000 goes down the drain.

So would it be your contention then that drug makers never voluntarily pull drugs from the market?

Do auto makers ever voluntarily recall cars? Think of the millions it costs them to do that. Then think about why they might make that choice, and it should become clearer that there’s a lot more complexity in the marketplace than your simplistic ‘evil corporations’ model.

How about this from a financial perspective: A drug company releases a drug that it knows could kill people, but it hides the evidence. Someone dies, and sues them for a billion dollars. Now how do the finances work out?

Or how about a drug company that gets known for shoddy testing and releasing dangerous drugs. How many doctors will prescribe their new products in the future? How many sales are worth destroying your reputation for quality?

As a thought experiment to help you mull over these issues, consider the case of the Tylenol killer. A lunatic was randomly placing bottles of poisoned Tylenol on grocery shelves. The makers of Tylenol were in no way at fault here. They could have just said, “Hey, we didn’t do it. Not our fault. Let the police figure it out.” They didn’t do that. Instead, they spent massive amounts of money telling people to stop using their own products. Then they recalled 31 million bottles of Tylenol, which cost more than 100 million dollars in lost sales. When they finally re-introduced Tylenol, they offered $2.50 coupons to every purchaser induce them to buy the product again, which also cost hundreds of millions.

Johnson and Johnson did this for one reason: To protect the reputation of their company and their product. Given the lengths they went to do this, how likely do you think it is that they will casually sell a dangerous drug just to make some short-term profit?

Good reading about the case and Johnson and Johnson’s response to it: The Tylenol Murders

BTW, I should also point out that corrupt companies might find it easier to bribe one regulator than thousands of doctors. Why is it that those who advocate putting immense power in the hands of a few government gatekeepers always assume that they are pure as the driven snow, while simultaneously assuming that public companies will always act malevolently if they aren’t regulated? Especially given the history of corruption in Washington?

In such a case, the profit motive would drive the company to bury the bad news about Wioxx and sell it anyway. The only way to solve the problem is to have an outside regulatory agency that isn’t concerned with profits.

Right… What if they are so unconcerned with profits that they make regulations so stringent that they destroy a beneficial industry? Have a look at what’s happening with medical devices like artificial organs, pacemakers, and even artificial limbs - the FDA is regulating them with a heavy hand, and driving companies out of the market. The article I linked to before describes the case of a simple rubber sheet that makes breast exams easier and more likely to detect breast cancer not being available in the U.S. because the FDA is regulating it as a medical device, forcing the maker into long trials it can’t afford. There are dozens of cases like this.

[Ravenman]

This is an issue I haven’t thought a lot about, but a few things occur to me:

First, the argument that market incentives without regulation result in better, safer drugs doesn’t ring true to me. There are already market incentives for companies to make safe drugs, but unsafe drugs are still submitted to the FDA for review. How can this be? Why would a company send an unsafe drug to the FDA for review, especially after it has thrown so much money into the development and testing of the drug?

Second, I would have no idea how to calculate how many lives the FDA has saved. Does anyone here know how that can be done? Does the FDA get credit for all the lives saved by the medicines that they did approve? How could one even count how many lives that were saved by medicines that were rejected by the FDA? I think that’s just an impossible question, like asking me how much money I have foregone by choosing a career in public policy as opposed to becoming an investment banker. I just strikes me as a question without an answer, like if I asked you how many people drug companies have killed by pricing life-saving medicines at a rate so as to reap huge profits to line investors’ pockets.

Third, if things like beta blockers were approved for use in countries many years before the US, it seems the more reasonable question is, why isn’t the FDA more like those regulatory agencies in other countries? I can’t figure out why this more reasonable assertion is overlooked in favor of jumping to the most extreme possible position, that is, abandoning regulation entirely in a field that is much, much more complicated than the evaluation of manufactured consumer products. I daresay it is much easier and cheaper for Dell to test the safety of its monitors or Ford to crash test its new sedan than it is for Glaxo to test some new cancer drug. Even then, Sony still made exploding batteries and Ford still made the Pinto. (Anyone care to explain why the market didn’t keep those unsafe products out of consumer’s hands?)

[Agnostic_Pagan]

Sam Stone, if the FDA could be converted into a UL-type organization with perhaps only a federal charter, instead of federal control, I would most likely support it. I am a open-market socialist. I do believe that the market (backed up with very strong liability and tort law) has been proven to be the most effective measure of correction. (And it so happens that Friedman is no small part of why I feel that way.) But I add my caveats, because it has not been shown to be an effective measure of protection. And that is where things get touchy.

I think the greatest difference between the UL and the FDA is that the science behind UL testing has been clearly established. Everything they test has fairly cut and dried answers. But when you consider FDA tests, everything gets squishy, since the science is still in the major discovery stage. For every interaction that we can correlate, there are countless other that we cannot. And each introduction of a new drug, techinque, procedures, etc, can skew even previous correlations. And matters of causation add another dimension that the UL does not have to worry about (barring major changes in the physical laws of the universe).

And this is where it all gets very sticky - how do you ensure the FDA or its successor can be beholden to science, and not politics and big government on one hand, or commerce and big business on the other? Right now, big government, with all its shortcomings, is still the most effective measure of protection against big business (when government actually decides to be, which is too rare for my tastes). I do feel better when those protections are a matter of tort law, and not administrative law or policies, but the whole field of testing and liability is still very raw. And there is no ‘big science’ to act as a countervailing power to either side. A lot of ‘little science’ has to come together over specific issues to act as such, but there is no systemic balance.

On a side note, I am skeptical of all the claims of deaths caused by late approval of drugs by the FDA - how many of those deaths can be directly shown to be caused by the lack of that particular drug? How many of these ‘deaths’ were the difference between dying then and not dying only a few years later from other or the same causes? If someone is suffering from agina and hypertension, for example, then they are most likely older and have made life-style choices that affected those conditions - and the drug is only a treatment, not a cure, if I understand it correctly. Prevention of the addition of a few years to one’s life is tragic, but I cannot equate it with murder.

Medical science has already given those in the industrial world longer lives than most generations ever dreamed of - to not have an even longer life because of a governmental delay - it strikes me as sour grapes for some reason. And even then, I do prefer the FDA err on the side of caution. If clinical trials and approval take too long, then procedural changes should be addressed on that issue, but not abolish them altogether.

Its an ugly equation: needless deaths due to late approval v. needless deaths due to lack of approval. I doubt there is a good answer.

[Shalmanese]

@RickJay

All this is true, but none of it adds up to an argument for having the FDA.

The fact that people are irrational at times simply does not constitute evidence that the FDA has provided a net benefit to American society. Friedman’s argument is being presented simplistically, and I’m sure if he were alive and we asked him he’d admit people can be suckers.

It’s a matter of the extent of the irrationality. I would argue that people are SO irrational about issues of risk and their health that it behooves the government to step in and play a regulatory role. In the same way that people are SO irrational about grifting that the government should step in and nanny the population ratehr than just shrug and say the people brought it on themselves.

But, look, the FDA costs a LOT of money, and represents a minor imposition on the freedom of Americans. For all that cost, surely it’s reasonable to expect that someone can provide an argument **based on objective evidence ** that the FDA’s net effect has been a positive one?

The FDA does cost a lot of money and, to a certain extent, a large chunk of that is overhead. But a huge part of that is neccesary money to prove that a drug actually works. Properly done clinical trials are enormously expensive to do right and there are LOTS of ways to do them subtly wrong and save a whole bunch of money in the process. Even with the FDA watching over, there are still many cases of, if not cheating, at least rampant corner cutting and bias and general shoddy science which occurs under the surface because the financial motivations are huge to pass the trial regardless of the circumstances. If it’s only by extreme FDA insistance that drug companies actually go through a proper clinical trial phase, what do you think the chances of this continuing to happen are?

And yet, industry often self-regulates with great efficiency. Look at the back of your monitor, right now; there’s likely a UL or CSA symbol there, right? That’s the certification that your monitor is tested (or, in most cases, that the way it is made and the prototypes thereof were tested) to ensure it won’t set your house on fire or electrocute you. That standard was completely voluntary to submit to, as are most such product standards; almost everything in your house with a UL or CSA label was so tested just out of the manufacturer’s sense of self-preservation. The general public hasn’t a damned clue about product certification, product testing, standards writing, or any of that… and yet that system works, and it works very well. It’s saved thousand upon thousands of lives.

Granted, drugs aren’t the same kind of product, but this out-of-hand dismissal of the idea of getting rid of the FDA is nothing more than a knee-jerk reaction. I’m not coming down hard on one side or the other because I haven’t studied it, but I can imagine the ungodly, expensive mess product certification would be if the government stuck its nose into it, and it’s reasonable to at least **think ** about the possibility that the FDA is similarly a mess.

I would argue that a large reason the UL came about was because the industry knew that if it didn’t self-regulate, the government would step in and do it for them. Frankly, I don’t know what to make of UL. As far as I know, every product I have in my house has one but I bet you could ask 1000 people and maybe 1 would be able to tell you a single thing in their house which they are sure is UL approved. It’s just not a big part of the consumer mindspace and I don’t know what the incentive is to go through the certification. What would happen if a cheap chinese manufacturer started making non-UL widgets? Whats stopping them from doing that because it’s certainly not consumer demand.

@Sam Stone

I can give you lots of arguments for banning the FDA. Let’s list them:

I want to thank you for joining this argument as I always appreciate the points that you raise. While to a large extent I agree with many of them, I’ll try my best to present the alternative view.

Absent the FDA, the market will develop alternatives
Rickjay Mentioned UL - Underwriter’s laboratories is an arm of the insurance industry. Insurers are one of the larger regulatory bodies in a free market. I can easily see, for example, a drug testing agency set up by a consortium of malpractice insurers, which demands that doctors who want malpractice insurance may only prescribe UL-Approved drugs.

How is this different than government regulation? Because it maintains a better balance between risk and reward. And it retains choice - doctors are free to opt out of the system, people are free to make their own choices.

This is the magic insurance company that libertarians so like to trot out and to be honest, I don’t really have a watertight argument against it because it’s such a hypothetical. I readily admit that it could turn out like what you’ve envisioned but I have grave doubts that this is likely.

One argument that I can make is that it could lead to a huge proliferation of standards and far greater regulatory costs. Determining whether a drug is safe or not is a hugely complex problem and different insurance companies are likely to differ on how to certify such a thing. What this means is that instead of the FDA, drug companies will have to go through 5 seperate certification processes and each certification process will have lots of duplication because none of the certifiers are willing to trust data from other certifiers. And because of the added cost, each certifier will be motivated to cut corners so that they can still compete on the price. Sure, a UL system could come about but if you look at the fractured nature of the modern US health insurance system, I highly doubt it will. And it’s because each insurance company would view it’s certification process as a marketing tool and so there is no incentive to cooperating.

A second point is that insurance companies are not immune to irrational market forces. Look at all the insurance companies that have coverage for homeopathic medicine say, even though they know full well it doesn’t work. They eat the cost because it will allow them to capture more irrational consumers and gain market share. I fear what would happen is that consumers would pressure insurers to add certain drugs to the approved list and remove others and the insurance companies would cave into the pressure even when they know a certain drug is useless or useful. You can guarentee a whole host of homeopathic and other known useless cures would quickly end up on the Insurance approved list of ALL insurers because none of them are willing to alienate that market.

How is this different from UL? Mainly because people don’t care about UL and so they just let the engineers go about quietly doing their job. But people care deeply about their health and they want to feel like they have an involvement in the process even when their involvement may not neccesarily be the best thing for them.

Drugs are introduced more gradually, controlling risk
In the current system, FDA approval is a doctor’s ‘get out of a jail free’ card. If the FDA says it’s good, you’re free to prescribe it without risk to your practice. As a result, when a drug obtains FDA approval, it becomes widely used overnight by millions of people. So if the FDA screws up (and they have), the effects can be far reaching.

Without the FDA, doctors would have to be more cautious. Different people have different levels of risk aversion. The new diet drug would first only be prescribed to people who are at the highest risk of dying from obesity, because the drug risk is overshadowed by the other health risk. If drugs enter the market slowly (by ‘early adopters’), we have a real-world drug trial going on that can be stopped before the drug is taken by millions. Almost every other industry has this phenomenon - high-risk activities or extremely expensive activities are undertaken by early adopters who have great incentive to use it, and they help refine the product and shake out the bugs and expose hidden risks before the general public sees it.

The FDA has been experimenting with this kind of scheme for smaller drugs AFAIK. Doctors can start prescribing them in limited cases before waiting for the final phases of a clinical trial to go about and to an extent, this is an argument about the structure of the FDA and not the concept of government regulated drugs. I certainly agree that the FDA should be experimenting with different systems.

Part of the reason that it’s like this now is simply due to the nature of clinical trials. In order to get a truely representative sample, you have to make some tough decisions with great moral implications. It can be very tough to know your giving a placebo to a person who is on the cusp of death and the alternative is probably going to be much more effective but if you don’t do it, you can never do real science and potentially cause many more deaths down the road. It’s to a degree heartless, but a lot of medicine has to be when you get right down to it.

At the same time, I think what you call the “least risk averse” group, I would call the most desperate and irrational group and I think the government has a certain responsibility not to let these people be preyed upon. Early adopters with regards to health are a VERY different prospect than early adopters in say, technology.

The FDA, being a political agency, responds to political pressure
That means its not immune to adjusting its standards and procedures based on pressure from politicians, rather than the needs of science or the needs of patients. If you’re a liberal, wouldn’t you be worried that a Bush-appointed FDA head might manipulate the agency to delay introduction, of say, a drug developed from embryonic stem cells? In the past, ‘activist’ FDA heads have attempted to push the agency into regulating all sorts of politically incorrect things, such as second-hand smoke. Let’s not put our medicine in the hands of partisan politicians from either side of the aisle.

Sure, the FDA responds to a whole host of political pressures but then again, so does the public. Look at, for example, food irradiation or nuclear energy where the opinions of the public are deeply at odds with those who are more qualified to judge on the topic. Everybody is going to get it wrong some of the time but I think experts in the field who’s job it is to make these decisions every day are on average going to get it right MUCH more often that the court of public opinion and they are HARDER to sway than the public which can often be shifted with just a few well placed news articles and scare pieces.

The FDA is not your doctor. It can not respond to personal requirements.
For example, the FDA will not approve a cancer drug until it can be shown to have minimal risks to the widespread population of people who might take it. It has to be less risky than alternative medicines and procedures that are available to the average patient who might take the drug. But what if you’re 100% terminal with a cancer that will kill you in weeks? Isn’t your condition special? Wouldn’t you be willing to take a drug that has, say, a 20% chance of making you blind, or that could possible kill you, but just might cure your cancer?

Your personal physician can look at your case and weigh those risks. The FDA can’t.

This happened years ago with drugs for HIV and AIDS. Eventually, the FDA had to modify its own policy to expedite the approval of HIV drugs, because so many people were dying waiting for the laborious standard approval process to run its course. And as I recall, the government even legally allowed AIDS patients to do a complete end-run around the system and import unapproved drugs for their personal use. AIDS got this exemption because it was a very politically-correct disease that had huge political pressure behind it, forcing the government’s hand. Too bad people with prostate cancer don’t have the same option. Sucks to be them.

Can your personal physician really do that? Is he at all qualified to look at the data and make the right choice for you? Doctors are not magically infalliable and part of the problem with drugs is that determining whether they work and are not harmful is just such a damn hard job that you really need a specialist to do it.

Again, I think this may be a structural problem with the FDA and it certainly merits looking into to see if we can reform it but I think we can fix this without abolishing the FDA if it even is a problem.

The FDA approval process drives up the price of drugs
Big time. A patent on a drug lasts for 17 years. A drug has to be patented before it enters the expensive and publically visible trial process. The FDA approval process can take more than a decade, and cost the company hundreds of millions of dollars. And when the drug is finally approved, the company has maybe five, six, or seven years to make back its R&D costs, plus the cost of the FDA trials, plus profit, before the patent expires and generic drugs flood the market and drive down the price.

The result of this is that new drugs are horribly expensive, putting them outside the reach of the poor and uninsured. So the rich get the new drugs and the poor suffer for years until generics become available.

Another effect of this is that manufacturers have to target their R&D at drugs that have mass appeal. If you’ve got a rare disease that only a few hundred or a few thousand people have, well, you’re just out of luck. No one’s going to go through a 12 year drug trial to make a drug they can sell to 500 people.

Like I said above, how much of this is unneccesary waste and how much of it is just simply the cost of doing business? Under a UL system, drugs would ideally still have to go through a multi-phase clinical trial exactly like they do now and it’s not clear it would be all that much cheaper.

A third effect is that it can be almost impossible for new drug startups to enter the market. The regulatory process is so heavyweight that new companies can’t break in. So a handful of drug giants like Merck and Pfizer own a huge chunk of the market. How much innovation are we losing as a result of this?

This is absolutely untrue. I think the majority of drugs are actually developed by small biotech firms running on venture capital which eventually get acquired by these drug giants when they show promise. In fact, this is one of the capitalist success stories where high costs of entry are not a large barrier to the market because efficient use of capital markets and the spreading of risk promotes innovation from all sources and allows good ideas to flourish.

The FDA approval process undervalues the risk of delayed entry of drugs to needy patients
The AIDS example above illustrates the cost of keeping drugs away from people when they really need them. A classic example is beta blockers - they save many, many lives by preventing recurring heart attacks in people with heart problems. They become available in Great Britain years before they were available in the U.S., because the FDA, fresh from its PR triumph over Thalidomide, was being ultra-cautious.

Here’s an interesting article (google cached version - can’t find the current one): Death by Regulation - The Price We Pay for the FDA

From the article:
(emphasis mine)

So the question really boils down to how do you weigh the risk of introducing a drug with the benifit. Any estimate is inevitably either going to misestimate it in some direction, you can never get it exactly right. The goal is to minimise this delta between the actual and the ideal. But what I’m arguing is that the FDA misestimates the risk far less than a free market solution would. Because of gross human irrationality, almost every decision will hit far away from the mark, either by grossly undervaluing or overvaluing the risk involved, simply because of the way the human mind works.

@Opus1

Anyway, I’ve yet to see anyone provide any evidence that the FDA has saved more lives than it has cost. Sam Stone has provided yet more evidence showing the opposite.

I think it’s going to be hard to prove a hypothetical like this but lets flip this the other way and ask it about the free market. Even though in theory, any manufacturer in the free market is free to sell irradiated foods and there is a large demand for irradiated foods from consumers, nobody is willing to come out with them because they know they would suffer a massive consumer backlash from the anti-irradiation crowd. How many consumers have been killed be spoiled meat because they couldn’t buy irradiated products? How many lives would have been saved if the USDA used government force to irradiate all meats? I know this is a somewhat specious argument but just by pointing out the flaws in any particular scheme is not proof that all the alternatives will not be worse.

[Steve_MB]

@ITR champion

With monitors, it’s easy to see whether the thing works or not.

Er, no. How much would you be willing to wager on your ability to tell a properly built monitor from one that used substandard electrical wiring, examining each as thoroughly as you could in the store (i.e. you get to look at the outsides closely, but you don’t get to disassemble anything)?

[The_Octagon]

@Opus1

So no one has any stats on how many lives the FDA has saved? But we all just somehow know it would be a disaster to let people decide for themselves what drugs to put in their own bodies?

No, because it’s mostly guessing. How many lives have the police force saved? How many lives have doctors saved? How many lives have you saved? Every choice and every action has an unthinkable and unpredictable effect (and subsequent ripple effect) on the lives of others, be it small or large. Even if you narrow it down to “how many lives has doctor X in anytown, usa saved?” you still have flawed results, unless doctor X is physically reviving a dying patient. “Saving lives” is just too vague to categorize statistically, although that hurdle has not stopped some people.

[Kimstu]

@Opus1

Anyway, I’ve yet to see anyone provide any evidence that the FDA has saved more lives than it has cost. Sam Stone has provided yet more evidence showing the opposite.

No he hasn’t. He provided a link claiming that “The regulatory delay of this single drug may have been responsible for the death of more Americans than all other deaths from drugs in this century” (bolding mine).

But that says nothing about the relationship between the number of deaths caused by regulatory delay on this drug (or on all FDA-approved drugs for that matter) and the number of deaths that would have occurred if there had been no FDA to keep deadly drugs off the market in the first place.

To know how many lives the FDA has saved, you’d have to have an alternative-history time machine that would take you to the alternative universe in which there was no FDA and collect data on the number of unregulated quack drugs and treatments that were marketed to the public, and the number of deaths caused by them.

Obviously, we can’t do that. But the history of quack drugs and treatments in pre-FDA America does not inspire confidence that market forces would have been as effective in protecting consumers as regulation has been.

Remember also that a drug or treatment doesn’t have to be actively poisonous or harmful to kill you. It can also kill just by being merely ineffective and lying about it, so that hopeful patients are seduced away from treatments that will actually help them.

The example of Underwriters’ Laboratories, beloved though it is by libertarians, also doesn’t make a very persuasive case for the superiority of market forces over government regulation. A large part of UL’s business in fact depends on government regulation of various kinds, from fire and building codes to environmental regulations.

Because governments set regulatory standards, UL makes money evaluating products in accordance with those standards. Take away government public-safety regulations, and you take away a significant part of the incentive to spend money on product testing and evaluation by a firm like UL. Libertarians often ignore this in trying to argue that UL is a market-forces success story that shows the superfluousness of government regulation, but the facts simply don’t bear out their claims.

And on this kind of flimsy (if not downright disingenuous) argument we’re supposed to seriously consider tossing out all governmental regulation of medical drugs and treatments? Sheer utopian piffle. I don’t think the FDA is anywhere near perfect in its regulatory functions by any means, but I need much stronger evidence than the libertarians have been able to show before I’ll believe that we’d actually be better off without it.

[Loopydude]

Kimstu basically beat me to it: The notion that one can derive any lesson from the example of one drug and extrapolate it into an adequate comparative analysis of the entire record of U.S. and European drug regulatory agencies is…well it’s staggeringly absurd. It’s an oversimplification that is beyond comical. These people win Nobel Prizes? One should, if they cared about the real world at all, consider a substantial portion of the history of either system, all the drugs approved in both regions during that period, all the drugs that were approved in one region but not another, all the drugs that had to be recalled due to troubling adverse events in either region, redundancies in drug classes, differences in what is distributed by prescription or OTC, the comparitive impact of said differences on public health, the list just goes on.

I’m also gobsmacked that one can seriously propose, upon noting in this oversimplistic fashion that one regulatory agency approved a particular drug earlier than the other, that the dilatory agency’s main problem is its very existence. How did we skip over perhaps more cautious approaches, such as, say, attempting to approve the efficiency and efficacy of the existing system? Where is the justification for jettisoning it entirely?

And also, why should consumers be in better hands if drug approval were handled by insurers? As the primary motivation of any insurer is to maximize income, and minimize payout, it would seem to me that it would be in the insurer’s best interest to delay the approval of new drugs as much as possible, so as to make absolutely certain that liabilities are minimized by avoiding the potential for adverse events. Also, why approve new drugs at all, when costs can be kept to minimum by prescribing older drugs that no longer enjoy patent protection and are “good enough”? New approvals could be limited to indications for which there are no treatments whatsoever, and again, delays would be in the interest of the regulatory body, as new markets mean increase need for reimbursement. This strikes me as a rather obvious conflict of interest.

[Sam_Stone]

All you have to do is look around you. Every time one of you market skeptics comes along and claims that government regulation is the only thing protecting us from the evil, rapaciious capitalists of the world, I glance around my room and wonder how you could be so blind. I’m sitting in front of dozens of complex products that have high quality and perform as expected, and almost none of it has anything to do with the government. The government regulates the power cord on my monitor, but it doesn’t prevent a company from sellig me a monitor that only lasts until the end of its warranty and dies. No one told the company that makes the desk I’m using that the laminations on the surface had to stay on for 6 years. But here we are, six years later, and the thing looks like new.

I’m typing on a computer that communicates through numerous standards that no government mandated. Almost nothing about my computer was regulated other than the power supply and RF interference limits, and yet almost everything about it is of superlative quality. It never fails. My car has active head restraints, side curtain airbags, door reinforcements, ABS brakes, and other safety systems that the government did not mandate. But it got the car a ‘top safety pick’ rating from the IIHS, another non-governmental regulatory body. As a result, my insurance is lower, and the market offers an incentive to buy safer vehicles. It’s a wonderful thing.
I work in engineering for a large company, and I can’t remember any meetings where we al cackled and plotted evil schemes to screw over our customers. In fact, our days are filled with activities to drive up quality. Quality, quality, quality. That’s all we care about. Why? Because the market demands it. Not because the government told us to.

You call us free-market adherents utopians. I’d say that those of you who keep claiming that the market isn’t capable of providing adequate levels of safety, and who seem to have a knee-jerk belief that government regulation is obviously the only solution, are the real utopians. Your beatific belief in the superiority of government flies in the face of evidence in front of your nose. At a macro level, you can look at those countries that embraced capitalism and how they performed over time against those countries who had a greater tendency to regulate their economy. At the micro level, you look straight past all of the complexity, quality, and capability of the free market and claim it can’t work.

I provided hard, concrete examples of companies that behave the way you claim they don’t. Voluntarily recalling products to save their reputation. Striving for quality and safety far in excess of what the government demands. In 95% of their transactions, with no government interference whatsoever. In return, you offered your ‘feelings’ as to what would happen, and hand-waving away serious arguments with little more than, “I don’t think so.”

Do you want to know why there was a big problem with quack medicines before the FDA? Because back then, people didn’t know as much, people were poorer, and there was a huge demand for it. The market complied. And I’m confused about the claim that the FDA actually solved this problem. ‘Cause frankly, I can’t get through an hour of late night TV without seeing some ad about some new universal rostrum or quack device. My grocery stores’ pharmaceutical section has a huge herbal and non-traditional drug section, most of which is crap.

But you’ll notice that when people’s lives are really at risk, then tend to go to real doctors. The government doesn’t force them to. If I develop cancer, I can sit home and chew cancr-b-gone, the newest herbal medicine, until my tumor kills me. I notice that a lot of people don’t do that.

People want effective, safe medicines. The market complies. Companies don’t rapaciously screw over the people, because companies that try go out of business.

Speaking of that, I’d like you to consider Enron. Often held up as an example of failed markets, it was the exact opposite. Enron existed in a highly regulated field, yet the government never stopped them until they had done tremendous damage. And when they were caught, what did the government do? A couple of executives went to jail. That’s it. Now imagine that if, as you claim, the market had no power to regulate itself. If the only risk for stealing billions was to lose a couple of executives, what do you think shareholders would want? THEY’RE not the ones at risk, right? So there would be huge economic incentive to continue to rip off people. The government would lose that battle, just as they’re losing the drug war.

And how did the market react? Well, let’s see - the shareholders lost almost all their investment. But not only that, companies began to immediately be punished for lacking good financial controls, or for having business models that looked similar to Enron’s.

When this new risk in the market was uncovered, the market reacted almost like an immune system. Companies with similar business models saw their stock prices collapse as the market reacted to the new risk and capital flowed away. This forced companies throughout the market to instutute new financial controls. My company had a big financial division, and the share price took a hit. You should have seen the scrambling from management to bring in auditors and overhaul its bookkeeping. As I recall, we even sold off a company or two. Everyone was doing it. Private market regulators, as opposed to government regulators, abounded. Price-Waterhouse, various ISO certification groups, even large customers who have enough clout to be allowed to come in and inspect our operations.

In the years I’ve been with this big company, I’ve never seen a government inspector. But I get audited every year by a private firm with a tough reputation which my company hires to come in each year and do a top-to-bottom audit of the organization. We do it to prepare for our ISO9001 certification, a completely non-governmental, voluntary regulation system that we not only adhere to, but exceed.

On the other hand, the Soviet government completely regulated every aspect of its market. Would you feel safer in a Volga? A Yugo? How about living near Chernobyl?

China completely regulates its market, and it’s trying as hard as it can to get into the worldwide car market. So far, it has failed because its cars simply can’t meet our standards of quality and safety. But they’re better now than they were a while ago. And why? Because China started instituting free-market reforms in its auto sector.

[Loopydude]

@Sam Stone

All you have to do is look around you.

Well, no you don’t. You actually have to study the problem carefully, rather than throw out specious (at best) sound-bites about beta blockers and the murderous FDA. It’s a practice libertarians are typically rather loathe to do, since it forces them to confront the absurdity of their idealized notions about rational consumers, or their irrelevance of their comparisons of pharmaceuticals with, say, consumer electronics.

[Sam_Stone]

@Loopydude

Well, no you don’t. You actually have to study the problem carefully, rather than throw out specious (at best) sound-bites about beta blockers and the murderous FDA. It’s a practice libertarians are typically rather loathe to do, since it forces them to confront the absurdity of their idealized notions about rational consumers, or their irrelevance of their comparisons of pharmaceuticals with, say, consumer electronics.

Then why don’t you give us the nuanced argument? Let’s have at it.

[Opus1]

I’ll do my best to reply here to all the points everyone has made. One of the disadvantages of holding a minority position is that you generally get five posts you need to respond to before you can even finish typing the last one.

1. Lives saved by FDA vs. lives costs
   I admit this is a very difficult area to provide conclusive numbers on. You could look at drugs that were introduced in another country that later proved deadly, figure the approximate mortality rate, and scale to the U.S. But it’s all back of the envelope calculations anyway. Nonetheless, I’ve provided several links showing that FDA delays in approving drugs seems to have had some pretty deleterious consequences for hundreds of thousands of people.

2. The moral argument
   Haven’t seen this addressed yet. This is actually my bigger claim. It doesn’t matter if the FDA results in a net savings of life–it is doing so in a morally impermissible way, no different that a doctor killing one patient for his organs. The govt shouldn’t be able to stop some people from taking life saving medications just because other people might do something stupid.

3. Corporate incentives/ past experience
   Several people have pointed out that the history of the drug industry before the FDA wasn’t so pretty. I agree. But I would argue that govt regulation–of drugs and other things–is reflective of general marketplace trends rather than a driver of them. Doctors bled people 150 years ago not because the govt didn’t forbid it, but because that was all people knew back then. The modern trend toward clinical trials, study of side effects, large scale research, etc. is a byproduct of a growing understanding of medicine, toxicology, and catering to more sophisticated consumer demands. And I would extend this argument to all products. Think of cars. The cheapest, least safe, crummiest car today is 1000 times better than the safest, most expensive car in 1920. This is not due to govt safety standards, but rather because car manufacturers try to satisfy consumer demand for safe, effective cars to the greatest degree possible. They always have; it’s just that their ability to do so is great today than it was 80 years ago.

4. Centralized regulation/ libertarianism
   This thread seems to have turned toward arguments about the need for regulation in general vs. libertarianism. Not suprisingly, I come down on the latter side of the argument. To briefly explain why, I’ll state that I find polycentrism a better method of quality and safety assurance than top down regulation due to superior feedback mechanisms. I find the problems I’ve mentioned with the FDA to be largely due to unidirectional feedback. But this is probably yet another thread, so I’ll leave it here.

(Sam Stone responded while I was typing this and said a lot of what I’d like to say about the working of the free market to produce safe and effective products, and much better than I could. Thanks Sam).

[Loopydude]

Actually, people have been citing real-world examples this entire thread, and not the sort that focus on one single drug and claim a useful point has been made. Pharmaceuticals are not like cars or TVs. I struggle to find the ability to inject nuance into what is so obvious a difficulty with any line of argument that seeks to compare antihypertensives to, say, camcorders. And in terms of the pure hypotheticals the average market fundy is so fond of (because only in a completely artificial construct can their ideas actually work) the conflicts of interest inherent in making for-profit entities the arbiters of approval should be quite obvious. If the FDA is unduly influenced by public opinion, then heaven help us when the market is in charge, because public opinion is all that matters in that realm.

Quite simply, most people can’t handle medicating themselves. It’s just the fact of the matter. When left to their own devices, people without medical or pharmaceutical training almost unfailingly make bad decisions about what they put in their bodies to treat various ailments if those products lack any regulatory restrictions. The afore-mentioned supplement market should be troubling enough on its own. Would people have stopped taking ephedra if it weren’t banned? Has anyone paid attention to the fact that the multivitamins taken by tens of millions every day do, at best, absolutely nothing but produce expensive urine, and are even being shown to be harmful in some cases? Has their consumption changed at all?

If the FDA must be improved (and it surely does), it must be improved in a rational way. I’ll leave that to public health experts, and not market fudies with delusions of utopia.

[Loopydude]

Little more on dietary supplements. As roughly half of Americans take them, I take that as a bit of actual evidence, as opposed to free-market-fundy idealization and obfuscation, of what happens when the market decides on its own about ostensibly therapeutic and health-enhancing agents: It behaves like a blithering idiot. By and large, there are two kinds of supplements: those that do jack squat but waste your money, which are the great majority, and those that are liable to hurt you. The industry is almost entirely a gigantic scam, and it happens to be almost completely unregulated. Again, so much for “the market”, and its infinite wisdom in all things consumable. Maybe it works for cell phones. Not so much for the pharmacopoeia.

[Shalmanese]

@Sam Stone

All you have to do is look around you. Every time one of you market skeptics comes along and claims that government regulation is the only thing protecting us from the evil, rapaciious capitalists of the world, I glance around my room and wonder how you could be so blind. I’m sitting in front of dozens of complex products that have high quality and perform as expected, and almost none of it has anything to do with the government. The government regulates the power cord on my monitor, but it doesn’t prevent a company from sellig me a monitor that only lasts until the end of its warranty and dies. No one told the company that makes the desk I’m using that the laminations on the surface had to stay on for 6 years. But here we are, six years later, and the thing looks like new.

To a large extent, the government will step in and regulate an industry if there is a problem so the observation that all the unregulated industries have no problems is a product of selective bias. I’m not 100% certain about my history but it was only after the Chicago fire that the government instituted fire codes and only after the LA earthquake that they forced mandatory building codes.

What your argument fails to take into account is that there are naturally some industries in which consumers will behave in a largely rational manner like consumer electronics and ones in which consumers will behave in a systematically irrational manner like building standards and drugs. You can’t use examples in one field to justify the other.

Do you want to know why there was a big problem with quack medicines before the FDA? Because back then, people didn’t know as much, people were poorer, and there was a huge demand for it. The market complied. And I’m confused about the claim that the FDA actually solved this problem. ‘Cause frankly, I can’t get through an hour of late night TV without seeing some ad about some new universal rostrum or quack device. My grocery stores’ pharmaceutical section has a huge herbal and non-traditional drug section, most of which is crap.

What? You go straight from saying that quack medicine is a relic of the past to PROVING that quack medicine is filling out airwaves. The herbal supplement market is NOT regulated by the FDA and thats precisely what it’s become. It’s always been with us and it’s not likely to ever go away.

But you’ll notice that when people’s lives are really at risk, then tend to go to real doctors. The government doesn’t force them to. If I develop cancer, I can sit home and chew cancr-b-gone, the newest herbal medicine, until my tumor kills me. I notice that a lot of people don’t do that.

People want effective, safe medicines. The market complies. Companies don’t rapaciously screw over the people, because companies that try go out of business.

I dunno, do people become instantly more rational about big health risks than small health risks? I would have to see some evidence to back this up as I am sceptical. You may have a point though.

On the other hand, the Soviet government completely regulated every aspect of its market. Would you feel safer in a Volga? A Yugo? How about living near Chernobyl?

China completely regulates its market, and it’s trying as hard as it can to get into the worldwide car market. So far, it has failed because its cars simply can’t meet our standards of quality and safety. But they’re better now than they were a while ago. And why? Because China started instituting free-market reforms in its auto sector.

This is a massive strawman. I don’t think many people in this thread are advocating a wholesale communist command and control regime. It’s not an either or situation. What they are trying to argue is that in the specific domain of health and drug regulation, government regulation is far better than the free market alternative. That you can’t seem to distinguish between arguments about a regulation in a very specific context and abstract arguments about all regulation means that we don’t seem to be making much headway on the issue.

[FRDE]

@Opus1

Ugh. I hate to get off topic again, but I don’t even know where to begin on this one. Economists have known that tariffs are a bad idea for two centuries. They exist largely because they benefit small, discrete groups with large political power at the cost of large, diffuse groups without such power. The fact that you can even argue for tariffs with a straight face given all the harm they’ve done to mankind for centuries undermines pretty much any credibility you might have on economic matters.

I guess that you have never heard of ‘the Optimum Tariff’ ?

Actually benefiting from free trade is something of a special case, the main reason for getting rid of them is that they are irrationally applied.

Economists know about the oddities of Indifference Curves, but they tend to be politically correct and keep quiet.

[FRDE]

On the FDA question, well as I have said before, Milton Friedman had no idea of the real world.

Heck, I am here for the short term, my position as CEO or research chemist is about five years.

I’ll just scoop up all I can, and get out while the going is good.

The ‘shareholders are smart’ argument does not wash, they aren’t, or rather the smart ones get out early - the drongos don’t survive.

Actually there is quite a good argument for perverse economic behaviour, it pays off rather well as those that learn to avoid, are replaced with new suckers.

Friedman was not streetwise - he did not have a streak of criminal mentality.

[mack]

I can easily see, for example, a drug testing agency set up by a consortium of malpractice insurers, which demands that doctors who want malpractice insurance may only prescribe UL-Approved drugs.

I don’t see how off-loading the nation’s drug safety and efficacy analysis to a consortium set up by insurance companies wouldn’t drive up insurance costs beyond the problematic levels they’re at now.

[mack]

sorry, quote = Sam Stone

[BrainGlutton]

@Opus1

Ugh. I hate to get off topic again, but I don’t even know where to begin on this one. Economists have known that tariffs are a bad idea for two centuries.

:dubious: Henry Clay and Abe Lincoln thought very highly of them. Both the U.S. and Japan developed their industry behind protective tarrif barriers and probably could not have done so without them (Britain having such a long head start, and a policy in the early days of dumping its manufactured goods on the American market with the conscious intention of strangling infant industry here in the cradle). These and other relevant points are discussed here. As for Iraq, the abolition of tariffs by the neocon CPA devastated both the industrial and the agricultural sectors there, which simply could not compete with American imports (e.g., Cargill’s wheat).