Hoover Institution Press • 2000 • 112 pages • $14.95 paperback
The Food and Drug Administration has a stranglehold on the introduction of new drugs, medical devices, and manufacturer-written information about products. The rationale is to assure quality and safety. Although consumers demand quality and safety assurance, the free-enterprise and tort system are supposedly unable to supply it. The way to help consumers is, of course, to deny their freedom of choice, curtail their access to information, fetter the enterprises of their trading partners, and stunt the prerogatives of their doctors, hospital workers, pharmacists, insurers, and other agents and advisers.
Almost every economist who has written about the FDA has favored reform in the libertarian direction. A stream of literature has for decades explained why massive bureaucracy and the strangulation of enterprise are no aids to quality and safety. And the literature has in several ways proved the point empirically. Yet FDA feel-good fascism persists and expands, because enlightenment is unpopular at the NBC “Nightly News.”
Physician and Hoover Institution fellow Henry Miller makes a splendid contribution. He covers briefly the familiar ground, including the history of drug control, the expansion of FDA power, its procedures and practices, the perversity of its incentives and agenda (such as the bias toward withholding approvals), the damage to drug development, and the consequent death and morbidity for the American people. The book enriches understanding with several insights that come by virtue of Dr. Miller’s personal qualification: He worked in the FDA’s regulatory apparatus from 1979 to 1994. Thus we have in Henry Miller a medical doctor, an expert on the pharmaceutical industry, and an expert on the internal workings of the FDA itself. His personal story must be a fascinating one of dissidence and eventual defection.
While enlightened criticism continues to hit at the exterior walls of the FDA, how do those inside respond? Not seriously. Miller writes, “[B]oxes on the organizational chart are arranged and rearranged, added and eliminated; names of entities are changed (and then changed back); and various pilot programs come and go. FDA managers avidly craft and meet new performance milestones, but there is little impact on the bottom line of timely patients’ access to new therapies.” FDA “reforms” are often merely the codification of old internal practices and its pronouncements are often merely criticism deflectors and public-relations exercises. When the House of Representatives in 1996 wrote a significant reform bill, the FDA and Clintonistas “pulled out all the stops to defeat it.”
Miller supplies several glimpses into the banality of FDA evil. The agency is perfectly willing to lie through its institutional teeth, as was made plain in the assault on silicone breast implants. That assault killed Dow Corning, but the large pharmaceutical companies have developed “formidable regulatory affairs apparatuses [and] have become comfortable with the present system.” They can beat any small outfit or newcomer in the fine art of “negotiating their way through the regulatory maze.” This helps explain their complacency, though Miller also notes that companies are disinclined to antagonize their masters.
The book compares the FDA to drug-control systems in Europe, where the regulatory authorities are less Naderish in their attitudes and relationships with manufacturers. Swedish regulators know that AstraZeneca representatives from Södertälje are fellow Swedes and not bent on cheating or poisoning their customers. The drug-delay victims too are fellow Swedes, probably even second cousins. The European agencies use and trust external reviewers, cooperate with applying companies, and grant reciprocal approval across national boundaries. “The FDA, by contrast, is compliance-oriented, comports itself like a police agency—it actually has armed inspectors—and frequently treats drug companies like adversaries.”
Miller understands that the demand for assurance generates opportunities for entrepreneurs to profit by supplying assurance. He says: “[O]ne might even postulate that in the complete absence of a government drug-regulating agency, market forces would spur the creation of whatever mechanisms would be required to assess and ensure pharmaceuticals’ safety and efficacy. This is, after all, what Consumer Reports, Consumers’ Research, J.D. Power & Associates, and other private-sector organizations do for consumer products and service industries; and Underwriters’ Laboratories actually establishes standards and offers formal certification of products.”
Instead of pressing a laissez-faire line, however, Miller develops a reform proposal that would attempt to institutionalize the cooperative virtues of the European systems. Drug development and application would be overseen by nongovernmental “drug certifying bodies.” They would compete with one another for hire by companies developing a new drug. The hired drug-certifying body would oversee investigation, help develop the new drug application, and then make an initial decision on the application—that is, decide whether to certify the drug. The European agencies would also be permitted to serve as drug-certifying bodies. The company and its certifying body would then go together to the FDA for final approval of the new drug. The FDA, therefore, would retain final authority, but would rely on a set of trusted drug-certifying bodies, which would compete to get it right, do it quickly, and keep fees low. Under such a regime, says Miller, the FDA “becomes primarily a certifier of certifiers, rather than a certifier of products.”
Miller’s plan would vastly improve the situation in the United States, but one should keep in mind that it would give the FDA coercive authority over new drugs and devices, as well as hegemony over the setting of quality and safety standards and the recognition of drug-certifying bodies. There are good reasons to believe that such a system would work less well than laissez faire. Still, To America’s Health is a useful and much-needed book.
Contributing editor Daniel Klein is an associate professor of economics at Santa Clara University.
Daniel B. Klein
Daniel Klein is professor of economics and JIN Chair at the Mercatus Center at George Mason University, and associate fellow at the Ratio Institute (Stockholm). At GMU he leads a program in Adam Smith. He is the author of Knowledge and Coordination: A Liberal Interpretation and editor of Econ Journal Watch.
