| > As long as the FDA has monopoly we have know way of knowing what there actual effects. Seems to me more people should care about stuff like that. While we may not know exactly the actual effects of the FDA or any other governmental policy, we can have a pretty good idea. We do this via econometric analysis of countries with and without entities like the FDA. Ideally we can get time series data where a country created an FDA. We'd throw in a few control variables as well. Then we see the effects of the stuff like the FDA - and even if this isn't perfect, we'd know in general the likely effects of it. The evidence shows that having an agency regulating drugs and food increases safety. For example, England had a massive issue with a drug which impacted their newborns. We didn't have the issue because the FDA rejected it for use. >Even so, there is no way to prove that these MASSIV externalisiere exist
Well, actually we can prove externalities exist via various quasi-experiments and math. That's kind of what economists do in order to justify intervening in a market. There are measurable externalities in healthcare - which are at least a certain size and probably larger. Healthcare in general is interesting because of stuff like the herd effect. If someone takes a bunch of sub-par antibiotics and the bacteria they have evolve around that pill all of society is negatively impacted. The disease is more resistant (kills more people) and society needs to pay for a new antibiotic to be researched and produced. And we don't know what these potential adverse effects are initially - what if we accidentally expose a bacteria to enough weak anti-bacterial agents that it becomes immune and kills millions of people? What if a sub-par untested drug turns all of it's users into homicidal maniacs? Or, like England, we could have years of birth defects. The companies usually don't know the risks either - because before the FDA medical tests were usually very rushed. So, as a society we have two options to fix these externalities. One was listed above: charge producers/consumers of poor drugs a tax equal to the costs they impose on society. The government would then redistribute the tax to injured parties. The problem here is in pricing the externaities properly. Also, how do we know what a poor drug is without testing them? We can't, so we'd have to tax all drugs the same. As a result, if we tax too high we have fewer drugs produced and society suffers. If we tax too low then bad drugs slip in and possibly we didn't guess the cost of compensating people properly. So we don't have enough to pay the widow of a man who took a pill and then died four minutes later. The second option is to regulate away the possibility of poor drugs as much as is plausible. Here we don't need to guess at how much money the externalities would cost. We also don't need to figure out optimal tax rates to get new drugs produced. In the case of healthcare clearly regulation is the best way to deal with possible negative risks. |