The Deadly Incompetence of the FDA

I routinely grouse about the heavy economic cost of red tape.

The FDA routinely does really foolish things that undermine public health.

I’ve also highlighted agencies (such as the EEOC) that seem especially prone to senseless regulations.

And I’ve explained why private regulation actually is a very effective way of promoting health and safety.

Today, let’s get specific and look at the Food and Drug Administration. This bureaucracy ostensibly is supposed to protect us by making sure drugs and medical devices are safe and effective before getting approval, which seems like it might be a reasonable role for government.

But the FDA routinely does really foolish things that undermine public health. The likely reason is that the bureaucracy has a bad incentive structure. As Professor Alex Tabarrok has explained.
…the FDA has an incentive to delay the introduction of new drugs because approving a bad drug (Type I error) has more severe consequences for the FDA than does failing to approve a good drug (Type II error). In the former case at least some victims are identifiable and the New York Times writes stories about them and how they died because the FDA failed. In the latter case, when the FDA fails to approve a good drug, people die but the bodies are buried in an invisible graveyard.
This video from Learn Liberty looks at some data on how the FDA’s Type II errors have led to thousands of deaths, but mostly focuses on whether people and medical professionals should have the freedom to makes choices different from what the FDA has officially blessed.

It’s also worth mentioning that the process of drug approval is jaw-droppingly expensive, as Professor Tabarrok noted in another column.
It costs well over a billion dollars to get the average new drug approved and much of that cost comes from FDA required clinical trials. Longer and larger clinical trials mean that the drugs that are eventually approved are safer. But longer trials also mean that good drugs are delayed. And the more expensive it is to produce new drugs the fewer new drugs will be produced. In short, longer and larger trials mean drug delay and drug loss.
The FDA bureaucracy can’t even approve things it already has approved. There was a big controversy a few months ago about the EpiPen, which is a very expensive device that auto-injects medication to people suffering severe allergic reactions.

But the device is only costly because the FDA is hindering competition, as noted by the Wall Street Journal.
Epinephrine is a basic and super-cheap medicine, and the EpiPen auto-injector device has been around since the 1970s. Thus EpiPen should be open to generic competition, which cuts prices dramatically for most other old medicines. Competitors have been trying for years to challenge Mylan’s EpiPen franchise with low-cost alternatives—only to become entangled in the Food and Drug Administration’s regulatory afflatus. …the FDA maintains no clear and consistent principles for generic drug-delivery devices like auto injectors or asthma inhalers. …injecting a kid in anaphylactic shock with epinephrine…is not complex medical engineering. But no company has been able to do so to the FDA’s satisfaction.
Research from the Mercatus Center reveals that the FDA imposes ever-higher costs and gets ever-higher budgets, but also how the bureaucracy fails to deliver on its obligation to facilitate innovation.
The expense of putting drugs and devices through this system is almost unimaginable. The cost of bringing low- to medium-risk 510(k) medical devices to market averages $31 million, $24 million (75 percent) of which is dedicated solely to attaining FDA approval within an average of about six months. Any significant improvement to the device requires reapplication. For higher-risk medical devices where there may be significant health gains, the costs are about $94 million, $75 million (80 percent) of which is dedicated to attaining FDA approval. For drugs, the situation is much worse. It costs an average of $2.6 billion simply to get a drug through the FDA process and onto the market. This does not include postmarket monitoring, the terms of which are laid out by FDA upon approval. These costs have increased from about $1 billion between 1983 and 1994. …we continue to increase the funding and authority for FDA and assume that we will somehow boost innovation in medical products (drugs and devices) despite the growing obstacles. This has not happened. …Congress continues to increase funding for FDA through both the general fund and industry user fees…with the hope that performance goals and additional funding would increase FDA’s performance and lead to an increase in innovations. …but FDA finds strategic ways to narrowly meet each goal while frustrating the original goal of improving health outcomes through innovation.
By the way, the FDA also does really bone-headed things. I’ve previously written about the bureaucracy’s war against unpasteurized milk (including military-style raids on dairies!). Now the bureaucrats think soldiers shouldn’t be allowed to get cigars.
The Wall Street Journal has the details of this silly nanny-state intervention.
You might think GIs in Iraq and Afghanistan have enough to worry about with Islamic State and the Taliban. But it turns out they’ve also got a problem called the Food and Drug Administration. In August a new FDA rule went into effect that forbids tobacco makers and distributors from handing out free samples. Some companies that have been donating cigars to service members for decades have now stopped for fear that this is now illegal. The FDA nuttiness has attracted the attention of Rep. Kathy Castor, a Democrat who represents Florida’s 14th district, which includes “Cigar City,” or Tampa. She has introduced a bill to “reinstate the tradition of donating cigars to our military members to provide them with a taste of home while deployed.” Her press release notes that cigars are the “second-most requested item” from troops overseas. …cigars for service members is in question because it’s a proxy for the political war on tobacco, but the first casualty is common sense. The FDA’s bureaucrats are happy to have U.S. soldiers, sailors, airmen and Marines dodge bullets overseas but they’re horrified they might relax by lighting up a stogie.
But the nanny-state war against soldiers enjoying cigars is downright trivial compared to the deadly impact of the FDA’s attack on vaping.

Jacob Sullum of Reason outlines some of the horrifying details.
The Food and Drug Administration’s e-cigarette regulations, which took effect last week, immediately struck two blows against public health. As of Monday, companies that sell vaping equipment and the fluids that fill them are forbidden to share potentially lifesaving information about those products with their customers. They are also forbidden to make their products safer, more convenient, or more pleasant to use. The FDA’s censorship and its ban on innovation will discourage smokers from switching to vaping, even though that switch would dramatically reduce the health risks they face. That effect will be compounded by the FDA’s requirement that manufacturers obtain its approval for any vaping products they want to keep on the market for longer than two years. The cost of meeting that requirement will force many companies out of business… All of this is unambiguously bad for consumers and bad for public health. Yet the FDA took none of it into account…the Family Smoking Prevention and Tobacco Control Act…gave the FDA authority over tobacco products, a category to which it has arbitrarily assigned tobacco-free e-cigarettes, even when they contain nicotine that is not derived from tobacco or no nicotine at all. …A brief that 16 advocates of tobacco harm reduction filed last week in support of Nicopure’s lawsuit notes that the cost of the FDA’s regulations will far outweigh their benefit if they cause even a small percentage of vapers to start smoking again or deter even a small percentage of current smokers from switching. That’s because of the huge difference in risk between e-cigarettes and the conventional kind (at least 95 percent, according to the Royal College of Physicians)… The FDA acknowledges that its regulations might also harm public health by retarding the substitution of vaping for smoking. But it does not include that cost in its analysis, deeming it too speculative. The FDA literally assigns zero value to the lives of smokers who would have quit were it not for the agency’s heavy-handed meddling.
Oh, I suppose I also should mention that FDA red tape is responsible for the fact that Americans have a much more limited selection of condoms than Europeans.

I’m sure there’s a good joke to be made about the bureaucrats screwing us in ways that interfere with us…um…well, you know.

Let’s wrap up with some tiny bits of good news. First, Arizona’s Goldwater Institute has been remarkably successful in getting states to adopt “Right to Try” laws that give seriously ill people the right to try investigational medications.

Sadly, those laws will have limited use until there’s also reform in Washington. Fortunately, there’s some movement. Here’s a video from a congressional hearing organized by Senator Johnson of Wisconsin.

Here’s a second item that sort of counts as good news.

If there is one silver lining to the dark cloud of FDA incompetence, it’s that the bureaucrats haven’t figured out how to criminalize those who use drugs for “off-label” purposes (i.e., for reasons other than what was approved by the government). A good example, as reported by the New York Times, is a tooth desnsitizer that’s only been recently approved by the FDA (after being available for decades in nations such as Japan), and already dentists are using it to fight cavities.
Nobody looks forward to having a cavity drilled and filled by a dentist. Now there’s an alternative: an antimicrobial liquid that can be brushed on cavities to stop tooth decay — painlessly. The liquid is called silver diamine fluoride, or S.D.F. It’s been used for decades in Japan, but it’s been available in the United States, under the brand name Advantage Arrest, for just about a year. The Food and Drug Administration cleared silver diamine fluoride for use as a tooth desensitizer for adults 21 and older. But studies show it can halt the progression of cavities and prevent them, and dentists are increasingly using it off-label for those purposes. …Silver diamine fluoride is already used in hundreds of dental offices. Medicaid patients in Oregon are receiving the treatment…it’s relatively inexpensive. …The noninvasive treatment may be ideal for the indigent, nursing home residents and others who have trouble finding care. …But the liquid may be especially useful for children. Nearly a quarter of 2- to 5-year-olds have cavities
Since I’m not familiar with the history of the FDA, I wonder whether the bureaucrats have ever tried to block medical professionals from using drugs and devices for “off-label” purposes.
Let me close with one final point. Our leftist friends aren’t very interested in reforming the FDA.
Instead, they argue that the big problem is greedy pharmaceutical companies and suggest European-style price controls.

That could save consumers money in the short run, I’m sure, but it would gut the incentive to develop new medications.

One expert looked at the Rand Corporation estimates that such policies would lead to a decline in life expectancy of 0.7 years by 2016. He then crunched the numbers and concluded that the aggregate impact would be worst thing to ever happen. Even worse than the brutality of Mao’s China.
…let me put this in context. In 2060 there will probably be 420 million Americans and 523 million Europeans. And suppose that whatever changes we make in drug regulations today last for one human lifespan, so that everybody has a chance to be 55-60. So about a billion people each losing about 0.7 years of their life equals 700 million life-years. Since some people live in countries outside the US and Europe [citation needed] and they also benefit from First-World-invented medications, let’s round this up to about a billion life-years lost. What was the worst thing that ever happened? One strong contender is Mao’s Great Leap Forward, in which ineffective agricultural reforms and very effective purges killed 45 million people. Most of these people were probably already adults, and lifespan in Mao’s China wasn’t too high, so let’s say that each death from the Great Leap Forward cost what would otherwise be twenty healthy life years. In that case, the worst thing that has ever happened until now cost 45 million * 20 = 900 million life-years. Once again, RAND’s calculations plus my own Fermi estimate suggest that prescription drug price regulation would cost one billion life-years, which would very slightly edge out Communist China for the title of Worst Thing Ever.
I guess the bottom line is that the FDA is a typical regulatory agency, both incompetent and expensive. But if the statists have their way, things could get a lot worse.

Republished from Dan Mitchell's blog.
Daniel J. Mitchell
Daniel J. Mitchell
Daniel J. Mitchell is a senior fellow at the Cato Institute who specializes in fiscal policy, particularly tax reform, international tax competition, and the economic burden of government spending. He also serves on the editorial board of the Cayman Financial Review.
This article was originally published on Read the original article.

Abolish the EPA? Absolutely!

“Capitalism pollutes!” or so goes the charge.

To be clear, the term "capitalism" was most likely coined by its greatest and most notable enemy, Karl Marx. The free-market is a better description. Free markets are what happen when you leave people alone.

For centuries, common law provided a frame-work within which the victims of pollution could seek compensation.

To survive, people must produce. In the process of making things, waste byproducts inevitably result. There is nothing wrong in generating waste.

A "command and control” government agency, such as the Environmental Protection Agency, is often hailed as the only practical mechanism to save us from our polluting, self-destructive ways.

Except that it's not. Let's dig a little deeper.

Pollution and Property Rights

Free markets mean defense of private property, and require that pollution be punishable as a legal offense that violates individual rights.

For centuries, common law provided a frame-work within which the victims of pollution could seek compensation.  For example, the tort of nuisance could be used when widespread pollution in the form of smoke occurred in the "Industrial Revolution."

Progressive Era courts weakened the English common law tradition in America by ruling that economic progress was in the public interest ... and should take precedence over individual rights. Private entitlements to clean air, for instance, were transferred by governments to the “public domain."

Pollution horror stories generally revolve around what people are doing to the air, waterways, and oceans--all of them are “unowned" resources assigned to the “public domain."

People litter public streets, vandalize parks, and restrooms, routinely over-fish waters, and heedlessly over-log national forests:  government property is treated as a common good without an owner.

When everyone owns a resource in common, the incentive to conserve is removed. Get yours now, before the next guy does.

But if a person is allowed to own something, she has incentive to think twice before she wastes or abuses it. As
FEE's Lawrence W. Reed puts it, "What’s yours you tend to take care of. What belongs to everybody or nobody tends to fall into disrepair.”

A businesswoman's profit increases by minimizing inputs and maximizing the value of output. That sounds like conservation to me.

Can it be that free enterprise is not at odds with environmental protection after all?

Wild animals are over-exploited, while the value of cows, chickens, or pigs is thoroughly considered by owners who can profit from sustaining them.

The Failure of Bureaucracy

So, the free market process applies a kind of discipline over people and companies. Plus, nobody has to wait for some faceless commissar to figure it out.

The best way to attend to a pollution problem is to recognize and enforce property rights.

It is no coincidence that in socialist areas of the world--where profit is illegal--people suffer from the worst pollution on earth.

The EPA is a part of the "Deep State," that is, individuals acting in their roles as “members of the government," in an apparatus that thrives entirely outside the democratic system.

As a libertarian, I advocate the separation of church and state, school and state, economy and state, and environment and state, indeed the separation of nearly everything and the state, followed immediately by relegation of the state to history's eternal trash bin.

A better world can be created.

"Catch Shares," is a program adopted by many of today's fisheries that gives fishermen ownership in the resource.

The Property and Environment Research Center, PERC, has long shown that property rights empower us to conserve natural resources by making the environment an asset by giving owners an incentive for stewardship.

The best way to attend to a pollution problem is to recognize and enforce property rights.

The wrong way is to give bully bureaucrats full authority to stifle business. Who possibly could be more disinterested than an employee of a federal bureaucracy?

Pollution happens where the free market has not been allowed to operate.

The bottom line is simple. Anthropogenic natural resources are no exception to the maxim: That government is best that governs least.

Kent Lalley
Kent Lalley
Kent Lalley, together with family and career, is interested in gaining a better understanding of economics:  the philosophy of human life and action that concerns everybody and everything.
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If You Want to Help Veterans, Abolish the VA

With Christmas approaching, people are putting together their lists for Santa Claus.

  • Get rid of the Department of Housing and Urban Development.
  • Shut down the Department of Agriculture.
  • Eliminate the Department of Transportation.
  • Abolish the Department of Education.
  • Pull the plug on the Department of Energy.

  • In the joyous spirit of the season, now let’s add to this collection by targeting the Department of Veterans Affairs.

    The is the agency that put veterans on secret waiting lists, leading to needless and tragic deaths. And then the bureaucrats awarded themselves big bonuses (nice work if you can get it!).
    I’m not sure I’ll find any of these things under my tree, but here’s what I want.
      And the shoddy treatment of America’s former warriors continues. Here are some excerpts from a story in the Daily Caller.
      …almost 600 veterans who received dental care may have been infected with HIV or hepatitis. …the VA is notifying 592 veterans who had dental procedures from a particular dental provider… If any veterans test positive for HIV or hepatitis, they can receive free treatment.

      Gee, that’s a great deal. You may get a life-altering illness, but the bureaucracy that enabled the illness will give you additional treatments.

      Oh, and you’ll be glad to know that the VA dentist who potentially exposed the veterans is continuing to draw a government paycheck.

      Instead of being fired, that dentist has been reassigned to an administrative role, despite potentially exposing almost 600 veterans to HIV or hepatitis.

      Like I said, nice work if you can get it.

      The VA’s penchant for secrecy wasn’t limited to waiting lists. The bureaucracy also has tried to cover up poor performance at dozens of local medical facilities.
      Stars and Stripes has revealed the unseemly details.
      A veterans group has blasted the Department of Veterans Affairs over leaked internal documents showing dozens of medical facilities performing at below-average levels. USA Today obtained the documents and published them Wednesday, revealing the secret system. The VA had previously refused to make the ratings public, claiming the system is for internal use only. It rates each of the VA’s medical centers on a scale of one to five, with one being the worst. …The worst performing centers are in Dallas and El Paso, Texas, and in Nashville, Memphis and Murfreesboro, Tenn. The documents also show that some medical centers have not improved despite scandals and scrutiny from Congress. The Phoenix VA still sits at a one-star rating despite a 2014 scandal revealing veterans died while waiting for care and that staff manipulated wait-time data there and at other VA hospitals across the country.

      You’ll be happy to learn, however, that there were some consequences for the Phoenix division.

      In response to the malfeasance, neglect, and mistreatment of veterans, the leaders of the VA in Washington decided to punish the local bureaucracy by…well, take a wild guess.

      The VA announced last October it plans to allocate $28 million to the Phoenix center in addition to its annual budget.

      While these scandals are maddening, they are a distraction from the bigger problem. Simply stated, the core structure of the VA is misguided and the entire bureaucracy should be shut down.

      Two of my colleagues, Michael Cannon and Chris Preble, explained the problem in a column for the New York Times.

      Even when the department works exactly as intended, it helps inflict great harm on veterans, active-duty military personnel and civilians. Here’s how. Veterans’ health and disability benefits are some of the largest costs involved in any military conflict, but they are delayed costs, typically reaching their peak 40 or 50 years after the conflict ends. …when Congress debates whether to authorize and fund military action, it can act as if those costs don’t exist. But concealing those costs makes military conflicts appear less burdensome and therefore increases their likelihood. It’s as if Congress deliberately structured veterans’ benefits to make it easier to start wars. …The scandal isn’t at the Department of Veterans Affairs. The scandal is the Department of Veterans Affairs.

      They proposed an idea which would lead to honest budgeting and make the Department of Veterans Affairs superfluous.

      We propose a system of veterans’ benefits that would be funded by Congress in advance. It would allow veterans to purchase life, disability and health insurance from private insurers. Those policies would cover losses related to their term of service, and would pay benefits when they left active duty through the remainder of their lives. To cover the cost, military personnel would receive additional pay sufficient to purchase a statutorily defined package of benefits at actuarially fair rates. …Insurers and providers would be more responsive because veterans could fire them — something they cannot do to the Department of Veterans Affairs. Veterans’ insurance premiums would also reveal, and enable recruits and active-duty personnel to compare, the risks posed by various military jobs and career paths. Most important, under this system, when a military conflict increases the risk to life and limb, insurers would adjust veterans’ insurance premiums upward, and Congress would have to increase military pay immediately to enable military personnel to cover those added costs.

      Jonah Goldberg of National Review takes a different approach, but reaches the same conclusion.
      He starts by pointing out more bad behavior by the VA.

      There is only one guaranteed way to get fired from the Department of Veterans’ Affairs. Falsifying records won’t do it. Prescribing obsolete drugs won’t do it. Cutting all manner of corners on health and safety is, at worst, going to get you a reprimand. No, the only sure-fire way to get canned at the VA is to report any of these matters to authorities who might do something about it. …“Our concern is really about the pattern that we’re seeing, where whistleblowers who disclose wrongdoing are facing trumped-up punishment, but the employees who put veterans’ health at risk are going unpunished,” Special Counsel Carolyn Lerner recently told National Public Radio.

      And he then says the only real solution is to eliminate the bureaucracy.

      The real fix is to get rid of the VA entirely. The United States has an absolute obligation to do right by veterans. It does not have an absolute obligation to run a lousy, wasteful, unaccountable, corrupt, and inefficient bureaucracy out of Washington. …Imagine that the federal government simply gave all of the VA hospitals to the states they’re in. Instead of the VA budget, Congress just cut checks to states to spend on their veterans. You’d still have problems, of course. But what you would also have are local elected officials — city councilmen, state legislators, mayors, governors, etc. — whom voters could hold directly accountable. …this process would allow everyone to learn from both mistakes and successes in a way that a centralized bureaucracy cannot or will not. Personally, I’d rather see the money spent on veterans go straight to the veterans themselves, in the form of cash payments or vouchers to be used for health care in the private sector.


      National defense is a legitimate function of the federal government, so that means fairly compensating the people who give service to the country. Especially if they suffer wounds that require short-run or long-run care.

      But as both my colleagues and Jonah Goldberg have explained, none of that means we need a cumbersome and blundering (and sometimes venal) bureaucracy.

      Donald Trump shouldn’t be figuring out who to pick to head the VA, he should be putting together a plan to get rid of it.

      To conclude, I found a nice chart that shows when various departments were created, which I have helpfully augmented by crossing out the ones that I’ve explained should be abolished. As you can see, there is still some low-hanging fruit to go after.

      By the way, the White House website says the Small Business Administration has “the status of Cabinet-rank,” whatever that means. I guess it’s sort of like a participation trophy for the SBA.
      In any event, I’ve also explained why that useless bureaucracy should be wiped out.

      And I guess it’s good news that the Postal Service is no longer part of the cabinet, though that’s secondary to the more important issue of getting the government out of the business of delivering mail.

      P.S. The VA also is capable of wasting money in ways that don’t involve premature deaths for veterans, so it’s a full-service bureaucracy!

      Republished from Dan Mitchell's blog.

      Daniel J. Mitchell

      Daniel J. Mitchell

      Daniel J. Mitchell is a senior fellow at the Cato Institute who specializes in fiscal policy, particularly tax reform, international tax competition, and the economic burden of government spending. He also serves on the editorial board of the Cayman Financial Review.

      This article was originally published on Read the original article.