Friday, December 29, 2006

There's a New Blogger in Town

Freemarket. Welcome to the HoCo Blogosphere.

Freemarket asks a good question: Is the Food and Drug Administration (FDA) "good for us?" Freemarket prefaces his question with the following commentary:
When the FDA makes a mistake, one of two things will happen. Either a drug that is harmful will be approved, or a drug that is beneficial will be delayed or unapproved for use. Both of these mistakes will cost lives, but which would the FDA be more fearful of? Surely litigation and sullied reputation would be strong incentives for the FDA not to approve a drug that hurts people, but these same fears of litigation and embarrassment impact the behaviors of the drug companies as well. For this type of mistake, I doubt that the FDA adds much to the protections already in place by the legal system and the market. However, when the FDA delays or rejects a drug that is beneficial or the regulations of the FDA makes drug research so expensive that rare diseases are not worked on by drug companies, who bears the cost of this mistake, and who even knows about it? The sick who could have been helped have no knowledge of the harm caused to them by the FDA.
I respectfully dissent Freemarket. First, Freemarket assumes that the legal system and marketplace will both work to ensure a supply of safe and effective drugs. In theory, that is correct. However, there is no real world evidence to support this theory. On the other hand, the state of affairs that existed before the creation of the FDA is proof positive that the legal system and "freemarket" were insufficient to protect consumers (and legitimate business people too, who had to compete with the corner cutters too). I've been working in the legal profession and in goverment(s) for over 20 years now, and I would trust Government Bureaucrats over the legal system any day to protect my safety. (In my opinion, Government bureaucrats are unfairly maligned). Since safety is an externality, it can't be trusted to the "freemarket." (The quotation marks are used to indicate my doubt that truly free markets exist often in the real world, rather than any personal distrust of our newest blogger). Who would you rather have judge the merits and safety of a drug: a jury of twelve people off the street or pharmaceutical experts? Did the legal system stop the marketing of tobacco and asbestos?

Second, no drug is completely safe and completely effective. What is important is that any drug's side effects are well understood and that their effectiveness is throughly tested before being placed in the market place. And its important that there be a unbiased referee to make these judgments in an impartial, objective and fair manner. One of the reasons the question posed by Freemarket is a good one, is that the FDA no longer functions as originally intended, its become over politicized and a pawn of the Pharmaceutical Industry.

Its actually pretty rare that the FDA rejects a drug thats been submitted by the pharmaceutical industry (most of the bad drugs are dropped by the companies who don't want to waste money and potential liability on drugs that have a long shot at FDA approval).

It rankles me to read the line about FDA approval costs causing the lack of drugs for rare diseases. Are you aware that the Pharmaceutical Industry is the most profitable major (legal) industry out there? Whats wrong with requiring a drug to be throughly tested before its marketed? Could the fact that rare diseases don't get the needed research be that the potential market is so small? Could it be that this is just one more example of why the free market can't be trusted to do everything?

And can you name a single drug that has been pulled from the market, by the FDA, because of a single death?

I'm not saying that the FDA is perfect or even operating in an acceptable manner. I do think that the United States needs to have a fair and effective program regulating the safety of pharmaceuticals.


Kevin Dayhoff said...

Happy New Year to you, your family and the four rabbits. Kevin Dayhoff

FreeMarket said...

Steve- Thanks for the shout out. Good post, although I respectfully disagree with the most fundamental thing that you said. When you say “since safety is an externality, it can't be trusted to the "freemarket", what does that mean? An externality is a cost imposed by two parties to a transaction on some third party not part of the transaction. When a chemical company pollutes a river, the pollution is an externality. Safety is not an externality. Safety, especially when dealing with drugs, is an integral part of the product. A drug that is known to be unsafe is worthless.

In reference to the following: “Who would you rather have judge the merits and safety of a drug: a jury of twelve people off the street or pharmaceutical experts?”

What are you talking about here? This is a fallacy of the wrong alternatives. Drug companies are pharmaceutical experts that have invested a large amount of capital into the drugs they produce. They have a strong incentive not to get sued. Thus, they will make sure that the drugs are safe. Of course bad drugs will slip through the cracks, as they do even with the FDA. Vioxx comes to mind. My point is that the extra layer of the FDA does not seem to do anything but add cost to good drugs and delay their implementation. What knowledge of analyzing drugs does the FDA have that the pharmaceutical companies do not have?

Steve Fine said...


Often a manufacturer will intentionally produce a product they know is inordinately dangerous because they believe that even with the lawsuits they will still get a good return on their investment. Remember the Ford Pinto? Tobacco? Asbestos? (And yes Vioxx too).

One can't trust drug companies to self-police themselves, its been tried and its failed over and over again in many industries, including the Pharmaceutical industry. The pressures to cut corners to get ahead (I.e., the conflict of interests) of the completion are just too great.

What do you think lead to the creation of regulatory agencies, in every modern democracy?

Anonymous said...

"the state of affairs that existed before the creation of the FDA is proof positive that the legal system and "freemarket" were insufficient to protect consumers"

At least that's all in the past, right? Greed and incompetence are never out of style, thus the checks and balances provided by regulatory agencies beholden solely to the public welfare and access to unfettered civil recourse are necessary to combat abuses in a free market.

Anonymous said...

Of all the things to choose to be libertarian about, powerful, dangerous, and extremely profitable drugs are among the worst. This argument detracts from the libertarian philosophy.

Points about NY and trans fats, Ulman's first claim to fame (outlawing street vending), and smoking outdoors are some areas you might tackle, but legalized corporate drug pushing is far wide of the reasonability mark.

FreeMarket said...

If many people like the extra protection of the FDA, and based on the sentiment here it appears that many people do, why can’t the FDA give their stamp of approval on drugs without requiring their stamp of approval for the drugs to come to market? For those who want the extra protection, they can tell their doctor that they only want to use drugs approved by the FDA. Everyone else can use any prescription drug without waiting for approval. This way people have the option to choose the treatment that they feel is best. The authority for the FDA to interfere with personal rights seems very draconian to me.

Anonymous said...

Why? Because a large segment of our population could then be taken advantage of by some institutions driven primarily by dollar signs that are willing to rationalize "occasional negative patient outcomes". Combine an unregulated environment like that with "tort reform" and heaven help the pour souls that suffer as a result.

Let's make seat belts, highway guard rails, building fire codes, and common funding for a national defense optional, too.

Oh wait, I think there's some piece of paper that says it is a good idea to provide for the common defence.

If there's other means to accelerate drug approval timelines, perhaps by applying more resources, I'm all in favor, but solely cutting those timelines or making FDA approval optional and just saying caveat emptor seems unwise.

Anonymous said...

At least only the most qualified are dispatched to inform the medical community of a new wonder drug's availability.

Anonymous said...

What happened to letting the masses pursue their life, liberty and happiness? Who the hell is the FDA to tell people what drugs they can or cannot use to treat their diseases. That choice should ONLY be between a patient and their doctor.