How Would Drug Safety be Assured Without the FDA?

by Don Boudreaux on November 19, 2005

in FDA

Several weeks ago I wrote the following letter to the editor of the Washington Times:

Peter Pitts wants Dr. Andrew von Eschenbach, as FDA commissioner, to “empower” patients “through better communications” (“Tough Tasks for New FDA Chief,” Oct. 20).

The only real way to empower patients is to abolish the FDA.  Why in the land of the free must each of us – each with different medical histories, family situations, and risk tolerances – be forced to abide by bureaucratic decisions made by strangers in Washington ?   Dr. von Eschenbach might be, as Mr. Pitts says, a remarkable physician.  But Dr. von Eschenbach has never met me.  He doesn’t know my situation.  He cannot possibly know enough to make trade-offs for me as well as I am likely to make them.

Donald J. Boudreaux

As is my vain and annoying practice, I also sent this letter to a number of people on an e-mail distribution list that I keep; I sent this letter out under the caption “Government is not god (although many people wallow in this particular piece of mysticism).”

Several friends on this list wrote to ask how drug quality can be assured without a regulatory agency.  I promised them an answer; here’s my (tardy!) first stab at fulfilling that promise – although I state up front that there’s too much to say on this issue to fit into a single blog-post.


The summary answer is that markets and traditional common-law institutions provide this assurance.

Abolishing the FDA does not entail abolishing contract, tort, and criminal law.  If a drug maker intentionally, recklessly, or negligently causes someone harm, that drug maker is subject to civil and criminal sanctions.  Likewise, a drug maker who violates terms of a contract with its customers is subject to civil penalties.

Far more importantly, in my view, is the market institution of branding.  Brands enable consumers to identify which firm produces that especially yummy chardonnay, that disappointingly tasteless peanut butter, and that sliced turkey that made the family ill.  Brands give producers incentives to develop a positive reputation among consumers.  Just as the makers of the tasteless peanut butter and the tummy-ache-inducing turkey will lose customers because of their poor performance — consumers know who they are! — so too will a drug maker lose customers and profits if it develops a reputation for providing either ineffective or too-dangerous pharmaceutical products.

But common-law and reputational sanctions aren’t the only forces working to protect consumers in markets left unharassed by bureaucratic proscriptions.  Private quality-evaluation agencies emerge, such as Underwriters’ Laboratories, to test and vouch for the effectiveness and safety of products.  Because consumers aren’t stupid, they will seek out independent and expert opinion on various drugs’ effectiveness and safety.

Similarly, MDs help patients in the same way – by having the expertise to evaluate the appropriateness and risk/effectiveness details of drugs that their patients are considering using.  (And, as with drug companies who supply bad drugs, MDs who give poor advice will lose patients and profits to MDs who give sound advice.)

Robert Higgs, here, is far more articulate on this matter than I can hope to be.


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