Regulation and Robert Higgs’ objection

Regulation is the kind of law that says, “This isn’t a crime, but I’m going to stop you from doing it anyway” that is, the kind of law that intervenes and prevents admittedly innocent activities, insisting that oversight is needed, even where everyone involved consents. It’s very easy to attack the “bad” kind of regulation, as in the familiar inept or corrupt building official or the captured agencies overseeing banking; but attacking “bad” regulation gets us nowhere on the question of regulation itself, because people merely think it needs to be replaced with “good” regulation. So let’s discuss the most popular major regulatory agency in the US: The Food and Drug Administration. The FDA receives more consistent applause for the importance of its mission and its performance than any other regulatory outfit. If we take this as “best case” for the regulatory state, perhaps we can show the fundamental error, and not just the incidental failures, of the whole practice of interfering with innocent, voluntary exchanges.

What makes the FDA a regulatory body, as such? A single quality, and that is its police power. The FDA stops everyone hoping to bring a medicine to market, and checks it for safety and efficacy. Now, checking a medicine for safety and efficacy is obviously a positive thing, how could anyone oppose that activity? Well, let me ask this in reply: Does checking a medicine for safety and efficacy require police power? If we simply agree that the actual scientific studies performed by the FDA are a positive good, revealing information that is of benefit to the public, would it be possible to have 100% of that good done without the FDA being a regulatory agency at all? Obviously, if the good done by the FDA is simply done by discovering the truth about a substance, and revealing it, police power is not essential at all; for the regulatory nature of the FDA to be positive, its police power must add something beyond the mere practice of discovering bad drugs and warning people against them.

Now obviously the FDA’s police power does prevent some poisons from making it to the shelves at all, which is a slightly stronger effect than merely preventing anyone from consuming them by warning of their dangers. A loud publication of the dangers of a drug, by a reputable scientific source, may indeed have a lesser effect than an outright legal prohibition, in terms of preventing people from ingesting a dangerous substance. People with a greater risk tolerance than that of the body studying the drug may indeed still consume it, in spite of warnings of its dangers, as in the case of illegal drugs, which continues in spite of legal prohibitions as well. In other words, in the comparison between the FDA operating with the power to warn and the FDA operating with police power, what the police power adds is the ability to impose on all people a single level of risk tolerance. This is viewed as a positive thing when we expect fools to consume dangerous drugs in spite of warnings as to the dangers. There is another side to consider, however.

It has been said that there are no solutions, only tradeoffs, and in the world of drug regulation, it certainly holds true. The tradeoff to having every drug pass through the FDA’s quality assurance process is roughly ten years, and a billion dollars, per drug. Now, that may well be a fair price to pay for the protections offered by the process; if without this process, young children would be defenseless against senseless accidental death from drug poisoning, such a cost might well seem reasonable, since we have a rather high level of risk aversion when it comes to exposing children to poisons. The problem is this level of risk aversion is appropriate for parents, but wildly inappropriate for others. AIDS activists have taken a stand against the FDA’s practice of holding drugs within its bureaucracy for a decade, because of the obvious fact that a lot of AIDS patients have died knowing that the treatment that could have helped them was on someone’s desk inside the FDA. The fact that after a few years the FDA announces that the drug was perfectly safe (or wasn’t, perhaps it carried a risk that would have been of concern had the patient survived…) does nothing to help the man who is now in his grave. And this death by bureaucratic delay is the primary force which has brought into question the net value of the FDA in the public eye. In fact, it can be mathematically argued (based on rates of death for various diseases with and without the treatments introduced on the FDA’s watch), that ten years of delay is a deadlier policy than none. Robert Higgs maintains that the Food and Drug administration is more lethal than the Department of Defense, when one considers how many people have died of diseases treatable by drugs which were in the FDA’s hands at the time of their death. Certainly this drug gap is more lethal than the potential effects of simply releasing every drug untested into the market: Even if we assume that the bad drugs we have been saved from by the FDA were of the worst sort, and we would have been subject to a series of the worst tragedies of bad medical treatment…even then, the drug gap has been more destructive to lives. And the reason should be easy to see: Heart disease, cancer, HIV, influenza, ie diseases in general, are together a bigger problem than accidental introduction of poison into medicines ever has been. Every year that the FDA withholds a potential treatment, it saves us from what is (mathematically) a smaller threat than the sickness to which it leaves us exposed.

Going back to the question of risk tolerance, and the plight of the AIDS patients, obviously, terminal patients for any disease RIGHTLY have a very different set of risk preferences than do parents of young children. How would a terminal patient feel about a treatment that had a 50% chance to save his life, and a 50% chance to cause him to burst into flames? Such an absurdly risky proposal isn’t absurd at all for someone in a particularly desperate situation. Is there any way that a regulatory agency, having the authority to simply approve or disapprove the sale of some drug, to simultaneously respect the needs of the parents of young children and those of terminal patients? Is there any way to balance the dangers of withholding potentially helpful drugs with the dangers of untested ones?

Obviously, there is a way, and it is already in force: The prescription system leaves it up to a physician to determine the treatment for a specific patient. Where the FDA can’t tell if it’s rightly protecting infants from the slightest risk or depriving a free adult of his only chance at survival, the physician and patient are capable of taking into account risk tolerance in determining treatment. Yes, physicians and patients will make mistakes on this front; normally i’d point out that such errors are a quality of humanity and exist in any system, but in this argument, it’s not even necessary. In arguing that physicians and patients should be allowed to decide for themselves what treatments to pursue, and not hamstrung by the police power of a bureaucracy, i need only point to the results of that bureaucracy’s performance and state the obvious: Stripping the FDA of its police power will save lives. And removing this police power will do nothing to compel people to take on greater risk, either. No one will be exposed to drugs not approved by the FDA unless he chooses to be. The police power works specifically to prevent those who would tolerate risk from doing so, often at the cost of their lives or health. This power adds nothing to the safety of those who would rely on the FDA to warn them of dangerous drugs. If someone wants protection by the FDA, he need only listen to its guidance; police power adds nothing to his safety. But if someone wants to try an untested treatment before he dies, rather than after, the police power really does hamper him. The conversion of what should be an advisory function into a compulsory one converts a positive service to humanity (that of discovering and revealing good and bad medicines) into a horrible disservice. Not only is this “best” kind of regulation demonstrably more harmful than beneficial, but the specific reason it is capable of doing harm at all is that it is regulatory power! If the FDA did everything it does except regulate, that is, wield the force of law, every criticism leveled against it would evaporate, whether from the Libertarian Right or the Activist Left. As it is, for no reason except the inevitable nature of regulatory power, the blood of many thousands is on the hands of an organization whose only purpose was to protect them.


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