The good people at the Mercatus Center have been helping me get my academic work on regulation by market forces into policy discussions. Here is a slice of the most recent effort, posted April 5 to coincide with hearings on the nomination of Scott Gottlieb to head the FDA:
While safety and efficacy are important, a properly functioning system of pharmaceutical regulation would strike an appropriate balance between confidence of drug safety and efficacy on the one hand, and rapid innovation and low cost of testing on the other.
Market regulation could be the solution.
Consider the case of Underwriters’ Laboratory (UL). UL is a nonprofit enterprise initially created by insurance companies that wanted to gain information about the safety of the products sold by the companies they insured. No government regulation was necessary. Now manufacturers of all kinds of potentially dangerous products voluntarily pay UL to certify the safety of their products. In 2016 alone, UL evaluated 96,000 different products, resulting in approximately 22 billion UL marks on individual goods. UL certification makes these products more desirable to consumers.
So what would it look like if the FDA’s legal monopoly on certifying drugs were to be eliminated?