Cafe Hayek

Continuing Assaults

At a family gathering this weekend in New Orleans -- as I enjoyed a rich, very yummy, and sodium-laden bowl of okra gumbo -- I complained to a cousin about the recent calls to have the government force food-preparers to use less sodium.  Karol -- sitting nearby and enjoying her own sodium-enriched Cajun dish -- lamented with me the fact that our freedoms are increasingly under assault (pun intended).  But, she pointed out, the alleged justification for such intrusions isn't so much a simple nanny-state itch to treat us as children but, rather, the need to control health-care costs.

Of course Karol is correct.  This "stop each of us from imposing costs on others" justification is typically used to support motorcycle-helmet regulations, smoking bans, and, now, eat-less-salt commands.  And as more and more of Americans' health care is provided collectively, the ring of validity to such justifications increases in volume.  As Russ points out, if you're paying, I'm ordering the expensive menu items.

If you are obliged to subsidize the costs of my behavior, then you clearly have an interest in restricting any of my behaviors that might potentially raise the costs you bear as my subsidizer.

But a question: if the proponents of greater collectivization of health-care provision not only recognize this fact but cite it as a justification for restricting personal freedoms that would otherwise be no one else's business, it seems to follow that these proponents of collectivization of health-care provision would recognize also that the problem is so general that it indicts the very idea of collectivization of health-care provision.

Because such collectivization creates a giant tragedy of the commons – because such collectivization enables each of us at each moment of making health-care choices to impose most of the costs of our choices on others – such collectivization will require not only that government restrict our access to fun but unhealthy life choices (such as eating lots of Cajun food), but also restrict our access to medical-care.

So the idea that a young mother whose child has a runny nose will be able to skip off to the pediatrician pronto for a diagnosis and treatment is chimerical.  Just as collectivization of health-care provision will encourage people to eat too much sodium and too much bacon, it will also encourage people to seek medical treatment too frequently and too frivolously.  And in both cases, these attempts to free-ride on the largess of the collective will oblige the protectors of the collective to restrict personal freedoms and personal choices lest the collective be utterly ruined.

Regressives

Here's my latest column in the Pittsburgh Tribune-Review.  In it, I argue that the so-called "Progressives" in modern America are, in fact, anything but.  A better name for them would be "Regressives."

FDA Turns 100

A couple of weeks ago, the Food and Drug Administration turned 100 years old.  This fact is hardly a cause for celebration.  Mercatus Center intern Satya Thallam has this nice op-ed to commemorate.

Higgs on the FDA

Bob Higgs, author of the paper I recommend at the end of this blog-post, wrote the following to me after he read that post.  I publish Bob's comments with his permission, with emphasis in original:

I think it is very important in discussing this topic not to be diverted in mere speculations about how a market order might deal with quality assurance for health-care products. It is far more telling to insist that the market already supplies this assurance. One can with ease identify, as I have in a few places, any number of currently functioning nongovernmental sources of quality assurance (besides the important tort and reputation factors you noted). Indeed, those who make the bulk of the choices now -- doctors, nurses, pharmacists, insurance companies, composers of hospital and other formularies, hospital and other health-care organizations' administrators -- already rely on these sources, not on the FDA. Overwhelming proof that they do so consists, for example, in the enormous volume of off-label prescriptions, indeed in the fact that the recognized "standard of care" often consists of off-label prescription. On this matter, Alex Tabarrok's 2000 article in The Independent Review is enormously important and powerful, truly irrefutable; the link is here. This is by far the most important article Alex has ever written -- an instant classic in this area of analysis (and among the best things ever to appear in TIR, I might add). Currently functioning quality-assurance sources include scientific organizations and their journals, medical organizations and their journals, and private testing organizations, such as ECRI. If you've never looked into ECRI, go here and check it out; it's amazing, and I know for a fact that it is the gold standard for people who purchase medical devices or encounter problems with them. ECRI is not in the business of throwing people into jail and being rewarded by Congress for doing so; it's in the business of actually helping people make intelligent choices and fix problems that crop up (as they always do).

The FDA is one of the greatest frauds ever perpetrated on the American people. It is a police agency, pure and simple, driven entirely by political motives, yet it constantly harps on, and gains public-relations mileage from, its scientific grounding. We need to keep telling as many people as we can get to listen that the FDA does not do what it claims to do.

How Would Drug Safety be Assured Without the 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.

Sincerely,
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.

Behind the Counter

From USA Today:

Pharmacists, frustrated with being viewed as mere pill-pushers, are clamoring to become more involved in managing their customers' health care. Some professional groups have been pushing for a new category of non-prescription drugs, dubbed "behind-the-counter," that would require customers to talk to a pharmacist before buying them. The United Kingdom and Canada are among a number of other countries that have such a setup.

Pretty radical, huh?  By talking to the pharmacist (who presumably could say no), you might have a chance of getting to buy some of those magic pills behind the counter.  My rewrite of the first sentence in the quote:

Customers, frustrated with being viewed as mere children, are clamoring to become involved in managing their own health care.

I suppose I should be grateful for small favors.  Unfortunately, the possibility of 'behind the counter' doesn't necessarily mean an expansion of consumer choice.  From the same USA Today article:

A growing number of states are moving non-prescription cold remedies such as Sudafed from store shelves to behind the counter. Pseudoephedrine, their active ingredient, can be ground up to make crystal methamphetamine, an illegal stimulant. Placing such drugs behind the counter enables pharmacists to limit the amount sold and keep track of buyers.

The article also chronicles the start of the unfortunate trend I worried about recently—the Vioxx affair will make the FDA more cautious, decreasing returns to innovation:

Facing generic competition when prescription drugs go off patent, drug companies are looking to switch the drugs to OTC for three more years of exclusivity. If an FDA advisory panel's vote last month was any indication, though, drugmakers might face resistance when trying to switch drugs for chronic conditions that have no symptoms, such as high cholesterol.

The panel voted 20-3 against Merck's plan to switch Mevacor, a prescription cholesterol-lowering statin drug, to OTC. But several members said they could see selling the drug without a prescription from behind the counter.

Most committee members weren't convinced that consumers could correctly decide on their own whether they needed medication to lower their cholesterol. After all, non-prescription drugs historically have been used to treat only short-lived ailments, such as a headache.

That's right.  We can't be trusted.  Ah, but pharmacists might know best...

Our Busy Lives

In the recent flurry of posts here at the Cafe on the possibility of reduced role for the FDA and an expanded role for consumers and doctors in deciding what to put in our bodies, the most common complaint I receive is that we're simply too busy to make these decisions for ourselves.  After all, who wants to become an expert on drugs interactions and safety issues?  Surely it's better to rely on the experts at the FDA.

Imagine the same argument being made about cars.

Cars are very complicated.  Few drivers have any idea how they really work.  Few drivers want to master or are able to master the subtleties of engine performance, horsepower and mileage claims.  Surely, it would be reckless and undesirable for drivers to make their own decisions on these complex issues.

Instead, let's establish the FCA, the Federal Car Administration.  The FCA would test new vehicle designs for safety and efficiency.  That way, car shoppers could be assured that they would be getting safe cars and cars that did what they were supposed to do.  A car advertised as a family mini-van would be tested to make sure that families could use these cars comfortably.  An off-road vehicle would be tested off-road.  A performance sedan would be taken on long trips to make sure it could handle winding roads without reduced driver comfort.  The FCA would also make sure that there weren't too many "me-too" cars, cars that simply added another choice to a pre-existing niche.

Such tests would be extremely thorough.  After all, cars are dangerous and a major expenditure for most families.  It would take a decade of test-driving to make sure that cars fulfilled the claims made by their makers.  Of course, this process would make cars very expensive.  You'd have to charge a lot for a car that survived such a  rigorous process to make up for the foregone earnings from tying up all that capital for so long without any return.  And some cars wouldn't be approved.  That would also tend to push up the price of cars that did get approved.

Choices would be few.  Because of the high costs of the approval process, only cars that appealed to large numbers of consumers would receive attention from the manufacturers.  On the plus side, the cars that did survive the process would be very safe and very good cars.  They'd have to be.  Manufacturers would want to reduce the odds of failure to avoid a ten year approval process that resulted in rejection.

Somehow, we survive without an FCA.  We're busy. Most of us don't want to become experts on cars.  We rely on a vast array of private information, voluntarily provided.  We read Consumer Reports and Car and Driver.  We ask our friends.  We read columnists in our local paper.  We listen to radio experts who give advice.  It takes some time.  There's a lot of noise and the information we use is imperfect.  But it works pretty well.  Cars get better and better and cheaper and cheaper.

Could it work for pharmaceuticals?  Buying a car that doesn't work as well as you thought it would isn't as serious a problem as taking a drug that turns out to be a mistake.  So I assume that the incentives for providing quality private information would be even stronger than for cars.  Who would provide that information?  The AMA? Consumer Reports?  The New England Journal of Medicine?  Our doctors?  All of the above?  Who knows.  All I know is that the current dominant role of the FDA means there's little or no incentive for these private solutions to flourish.  I also know that the FDA plays a major role in driving up the costs of pharmaceuticals and reducing innovation.

I'd prefer a world without the FDA.  Not just because I think drugs would be cheaper but because I think we ought to find the time to make such decisions for ourselves.  But even if you personally want to avoid that responsibility, why impose that cost on me?  Leave the FDA in place to test all drugs.  If you like the FDA, abide by their decisions.  But why not let the rest of us make our own choices?

Distorted Case for Intervention

Here’s the fundamental weakness in arguments justifying government power to prevent we adults from taking medications of our own choosing: as flawed as Mr. Doe’s judgment might be, and as uninformed or even misinformed as he might be, there is no plausible case to be made that a stranger can make decisions for Mr. Doe that are generally better for Mr. Doe than those that Mr. Doe would make himself for himself.

Let’s grant the validity of the findings of behavioral economics – biases in perception, cognition, and judgment that cause many human choices and actions to differ from those predicted by standard neoclassical economics. Let’s also grant that these biases cause people to make decisions that they will later genuinely regret – that is, decisions that they would not have made had their perception, cognition, and judgment been bias-free. (In more formal language, let’s grant that many decisions are ‘bias-induced’ rather than ‘preference-induced.’)

What’s the relevance of these facts (assuming, again, that they are indeed facts) for policy? It’s tempting to conclude that because each of us is not as ‘rational’ as we are in economic-textbook models, we would be better served by government regulation and restrictions.

But if I’m biased in making decisions for myself, might I not be at least as biased in making decisions for someone else? In fact, might I be even more biased in making decisions for others – for people whom I don’t know, who reach my purview only as data or as abstractions?

Interviewed last May by FoxNews’s David Asman, Milton Friedman made this important point:

There are four ways in which you can spend money. You can spend your own money on yourself. When you do that, why then you really watch out what you're doing, and you try to get the most for your money.

Then you can spend your own money on somebody else. For example, I buy a birthday present for someone. Well, then I'm not so careful about the content of the present, but I'm very careful about the cost.

Then, I can spend somebody else's money on myself. And if I spend somebody else's money on myself, then I'm sure going to have a good lunch!

Finally, I can spend somebody else's money on somebody else. And if I spend somebody else's money on somebody else, I'm not concerned about how much it is, and I'm not concerned about what I get. And that's government. And that's close to 40% of our national income.

Although focused on the act of spending money, Friedman’s point is more general. Each of us has better ability and stronger incentives to make good decisions for ourselves than we have to make good decisions for others. I know myself better than you know me, and I care about myself more than you care about me. Likewise, you know yourself better than I know you, and you care about yourself more than I care about you.

So uncover all the decision-making biases you can. If they distort decisions Mr. A makes for Mr. A, surely they distort even more any decisions Mr. A makes for Mr. B.

It’s true that Mr. A can often be more emotionally detached than is Mr. B from Mr. B and Mr. B's problems, thereby sometimes giving Mr. A some advantage over Mr. B in making decisions for Mr. B. But this fact doesn’t salvage the case for generally giving Mr. A decision-making power over Mr. B’s life.

First, emotions do not always distort decisions; emotions exist for a reason – often to inspire us to choose actions that are best over the long-run. (Robert Frank’s Passions Within Reason remains my favorite reference for this important point.)

Second, when Mr. A is charged with making decisions for Mr. B, Mr. A’s judgment might be distorted by his own emotional biases – biases that differ from those that distort B’s judgment, but biases nevertheless.

Third, each of us has incentives to try to overcome our own harmful emotional biases when making decisions for ourselves; when others make decisions for us, the incentives for these others to overcome whatever harmful emotional biases that affect their decisions regarding us are unlikely to be as powerful as are our own incentives to overcome our own biases.

Fourth, consistent application of this justification for government intervention would intrude into people’s private lives in ways that almost no one wants. For example, romantic passion is charged with high emotions, emotions famous for distorting sound judgment – and emotions that not infrequently result in unwanted serious consequences, such as pregnancy or killer diseases.  Should we police against romance and lust? Do we give Mr. A the authority to decide whether or not Mr. B may sleep with Ms. C or have sex with Mr. D? After all, the consequences of an emotionally distorted, unwise decision can be very serious, perhaps lethal, for Mr. B.

Eric Crampton and I say more about this issue in this paper.

(Thanks to Jack Wenders for pointing out Asman's interview of Friedman.)

Some FDA stuff

The text of my recent NPR piece is here.

Here is a recent USA Today article on people who are suffering because Vioxx is no longer available.  (Hat tip to Alex over at MR.)

Alex's excellent website, FDAReview.org is here.

And for the avid reader of Cafe Hayek, we've created a category called FDA.  The archives are here.

A Question about the FDA

In response to Russ Roberts's commentary that aired Tuesday on NPR's Morning Edition -- and to my posting it here on Cafe Hayek -- I've gotten a surprising amount of feedback.  Most of it positive, none of it hostile.  But some of it skeptical.

"Can people really be trusted to make such life-and-death decisions?" is the best one-line summary of this skepticism.

Much can said in favor of answering 'yes' to this question -- and perhaps I'll add more in a later post.  (Hint: any such answer begins with its own question: As compared to what?)  But recognizing that 'irrational' behavior does exist -- pretty foolish to deny it -- I here ask you to ponder the following:

Suppose that Mr. Jones is so eager for relief of his arthritis pain that he downs Vioxx before seeking the advice of an MD or searching out other sources of information on it.  Further suppose that had Mr. Jones known of the likely side-effects of Vioxx, he would voluntarily refrain from taking it.  That is, he takes it 'foolishly.'  Mr. Jones is precisely the sort of person that FDA-proponents want to protect.

Suppose also that Ms. Smith has her own 'irrationality' -- her own mistaken knowledge or distorted judgment.  This distorted judgment is such a deep suspicion of profit-seeking pharmaceutical companies that she refuses to take a drug that will save her life even though, in fact, this drug has almost no serious side-effects.  She will die soon simply because she refuses to take this drug.  And, were she 'rationally' better informed about the true state of the world, she would take the drug; she doesn't want to die.  Her irrationality, her mis-information, her distorted judgment will kill her.

If we correct for Mr. Jones's irrationality by preventing him from taking Vioxx, should we also correct for Ms. Smith's irrationality by forcing her to take the drug that will save her life?  If not, why not?

More on the FDA

Suppose we regulated financial investments the same way that we regulate medications.

We’d have a centralized, bureaucratized agency in Washington manned by expert financial analysts with PhDs in finance from Stanford and MBAs from Harvard. This agency might be called the Finance and Investment Administration – the FIA. No financial institution could offer for sale (or gift) any financial instrument unless it first is proven, to the satisfaction of the FIA’s staff, to be both “safe” and “effective.”

If the FIA deems any financial instrument – a bank account, a bond, an IPO, a piece of real-estate, whatever – to be unsafe, no one will be permitted to invest in that instrument. Likewise, if the FIA deems any financial instrument to be ineffective, no one will be permitted to invest in it.

Every financial instrument, every investment opportunity, legally available will have the government’s official imprimatur – Uncle Sam’s assurance of both safety and effectiveness.

If the FIA does its job effectively, what financial instruments will be approved for sale?  Perhaps every instrument that is not marketed or sold fraudulently, regardless of its riskiness?  Or perhaps only grade A corporate bonds and debt issued by Uncle Sam?  Or perhaps no investment instruments – because every investment instrument features some level of risk.

What is Americans’ appropriate level of maximum riskiness of an investment? Note that the FIA will make this determination for every American. Warren Buffett and Peter Lynch might assess some instruments differently; no matter: if the FIA prevents these instruments from being sold, Warren Buffett, Peter Lynch, and every other American would be prohibited from buying them.

Bill Gates and Joe Sixpack might have tolerances for financial risk that exceed the maximum risk-tolerance assumed by the FIA when it decides if an instrument is sufficiently safe. No matter. Gates, Sixpack, and every other American would be prohibited from making these riskier investments.

We don’t – thankfully – regulate personal investment decisions in this way. So why do we regulate personal medication decisions in this centralized, bureaucratized, one-size-fits-all-300-million-Americans manner?

One possible answer to this question is that health care is a matter of life and death, while finances are not. True (at the extreme). But it’s not clear which way this observation cuts. If Ms. Smith faces a 90% chance of dying an excruciating death within the next 12 months, isn't it especially important -- precisely because it's a matter of life and death -- to let Ms. Smith herself choose to pursue whatever life-saving potentials are within her grasp?  If an FIA kept her from buying a junk bond, that would be annoying; if the FDA prevents her from possibly saving her life or avoiding agonizing pain, that is atrocious.

Why Trust Strangers with Your Health?

Man knows so little about his fellows. In his eyes all men or women act upon what he believes would motivate him if he were mad enough to do what that other man or woman is doing.

                             – William Faulkner, Light in August

I continue to receive skeptical responses to my suggestion that the FDA should be abolished. What’s surprising is that almost all of these responses are from friends and acquaintances who are favorably disposed toward markets and liberty.

Of the 16 e-mails (and three comments at the Club for Growth site) that I’ve received, all but three express wariness of the idea of a USA without the FDA.

Central to my case is the fact that no drug or foodstuff is 100% risk-free. (I’ll talk here exclusively of drugs, but all that I say, with some minor modifications, can be applied to foods.) If every drug is somewhat risky, what set of guidelines is the FDA to use in determining if a drug is “safe” enough be approved for sale?

Nearly all popular discussions of the FDA proceed as if identifying the level of riskiness that distinguishes “unsafe” from “safe” drugs is a question of science. It is not. Science’s job here is to give an accurate assessment of the range of riskiness and of effectiveness of each drug. But whether any drug is “safe” or “unsafe” is inescapably a question of human judgment. And making this judgment wisely requires knowledge not only of a drug’s riskiness and effectiveness, but of each user’s likely reaction to a drug – and, importantly, of each user’s subjective demand for the drug.

Each of us differs in our willingness to take risks. There is no “right” level of risk tolerance. A very ill mother of young children can rationally and reasonably choose to take a drug with, say, a 35% chance of serious side effects if this drug is her only hope of surviving, while a less-ill retiree might, with equal rationality and reasonableness, choose to avoid the drug. No team of even the smartest and most altruistic bureaucrats in Washington can have sufficiently detailed knowledge of each American’s risk-tolerance and other relevant circumstances. Yet such knowledge is exactly what is required to determine if a drug’s riskiness, relative to its likely effectiveness, is too great or not.

The answer to the question: “Is drug X too risky?” is inherently individual and subjective. The appropriate question that must be answered is "Is drug X too risky for Ernie (or Sally or Randy or....) given his or her tolerance for risk and other personal circumstances?"  Only Ernie can answer this question for Ernie; only Sally can answer it for Sally.  Only Randy can answer it for Randy.

When this fact is combined with the understanding that each of us differs from the other, it is impossible – not unlikely, but impossible – for a single, centralized decision by third-person bureaucrats to be anything but arbitrary.

I'm Not Joking: Abolish the FDA

While guest-blogging at the Club for Growth, I suggested that the Food and Drug Administration (FDA) cannot possibly serve a valid public service. The reasons are many, but one of the most fundamental is that the standards that the FDA is charged with enforcing are inherently indefinable.

The words "safe" and "effective" sound straightforward and simple, but they’re meaningless as guideposts for person A to use when forcibly substituting his judgment for that of person B in determining if some drug is sufficiently "safe and effective" for person B to use. This problem expands exponentially when there are 300 million person Bs.

The only possible escape from this problem is to define "safe" as meaning absolute and total absence of risk for every potential user of a drug, and by "effective" as meaning 100% assurance of positive results for every potential user – an impossible standard.

Several folks have written me, expressing their skepticism.

One reader thought I was joking. Another reader – a friend who is a prominent market-oriented scholar – wrote that I see the world too starkly, in black-and-white, while in fact, this friend says, the world has many shades of gray.

Here’s my response to this friend.

It’s precisely because I understand that the world is emphatically not black and white that I oppose FDA regulation.

I prefer to let each individual choose his or her preferred level of drug safety. Most folks, of course, will consult physicians, and I have no doubt that private certification services will arise on the market to supply further information about drug risks and effectiveness. In my preferred world, each person chooses his or her own level of drug safety.

There would be no make-believe "objective" dividing line ostensibly distinguishing "safe" from "unsafe" drugs -- and no centralized, politicized decision arbitrarily prohibiting the use of all drugs that fall on the wrong side of that necessarily arbitrarily drawn line. Moreover, because we each differ from each other -- in our likely reaction to drugs, in the extent of our illnesses requiring treatment with drugs, and in our tolerance for risk -- in my world each of us would be better able to satisfy more fully each of our respective demands for drugs.

As I see matters, the true black-and-white world view is the one that perceives an objective and easily definable minimum level of drug safety suitable for every American – an objective and easily definable level that we can trust distant bureaucrats to discover and enforce.

See this superb article by Bob Higgs for a deeper analysis.

FDA as Sacred Institution

My last two posts have questioned the costs of having the Food and Drug Administration oversee the safety of our medical devices and drugs.  Here's another inspiring and depressing story.  From the Stanford University press release:

Five-month-old Miles Coulson, blue-eyed and chubby-cheeked, sits in his bouncy seat in the cardiovascular intensive care unit at Lucile Packard Children’s Hospital, eagerly tracking the plastic fish swimming on a play toy before his eyes. His father, Adrian Coulson, is attentive to the baby’s every movement and expression, for the slightest change could signify some complicating factor. The father periodically suctions fluid from the baby’s mouth, the remains of Miles’ tube-fed lunch.

Miles is a bit of a technological wonder, for he would not be alive today without the benefit of a German heart pump that’s been used only three times before in this country. The pump, a fist-sized piece of polyurethane shaped like a diaphragm, thumps quietly at the baby’s side, collecting the blood from the left side of Miles’ failing heart and directing it back to the body via the aorta.

Alas, that German heart pump is illegal because it has not received FDA approval.  Lucky for Miles, the Stanford doctors were very enterprising:

It became clear that his heart wouldn’t hold up over time and that he would need a transplant, Rosenthal said.

But infant heart transplants are hard to come by and the wait can be a long one. Of the three babies who’ve received transplants at Packard, the wait has ranged from 10 to 200 days, Rosenthal said. So he and his colleagues began looking at options to keep Miles alive until a heart small enough for the 15-pound infant might come through.

None of the heart pumps available in this country is small enough to serve an infant population. So Miles’ doctors looked to a device known as the Berlin Heart, named for its city of origin, which has been used in 50 to 100 children worldwide. Getting it here – and in short order – was something else again.

It required a special evening meeting of the Institutional Review Board, which oversees research involving human subjects at Stanford, and special dispensation from the U.S. Food and Drug Administration to bring it into the country. And it took a massive organizational effort at Packard to ensure everything was in place – from skilled nursing care to customs’ release forms to the proper electrical adaptors for the device, Rosenthal said.

Look at the key sentence again:

It required a special evening meeting of the Institutional Review Board, which oversees research involving human subjects at Stanford, and special dispensation from the U.S. Food and Drug Administration to bring it into the country.

Special dispensation.  The FDA smiled beneficently on the Stanford doctors and allowed them to save the life of a child.  How many others have not been so lucky, either because the doctors didn't make the effort or because the FDA said no?

The picture at the top of the post is Miles playing with his dad.  May he live long and well.

 

Clinical Trials

Lance Armstrong is touring the country encouraging people with cancer to participate in clinical trials of new drugs.

"I consider myself a cancer survivor because of the people before me who participated in clinical trials and paved the way for future cancer survivors," said Armstrong, who--more than seven years after being diagnosed with advanced cancer--is going for his sixth consecutive Tour de France title this July. "The Tour of Hope Team members are incredible and each of them is an inspiration to me. Together we will spread the message that without clinical trials, no new medicines would be available today, or will be available for patients in the future.

"The message of the Tour of Hope is to increase the awareness for clinical trials. What we see in our country now with the difference between clinical trials in children and clinical trials in adults is alarming. Whereas the children have a high success rate and the adults have a much lower success rate. So, we are just trying to create awareness, to spread the message and to let people know that clinical trials are a viable option and in many times the best option," he said.

It's a good idea.  A better idea would be to allow people with cancer to have access to any treatment that might help them.  It's bizarre that to help people who are dying, we have to encourage them to find a clinical trial going on somewhere potentially out of state in order to have a chance at life.  The FDA, as I discussed in the previous post, does more harm than good.

Opulence and Regulation

Heard a fascinating talk from Sam Peltzman tonight over at AEI called "Regulation and the Natural Progress of Opulence."  He began by invoking Book III of the The Wealth of Nations: "Of the Natural Progress of Opulence."  Smith talks about how capital naturally flows to its most profitable use and how this in turn, helps create the slow and steady increase in standard of living.  But in Europe, Smith noted, this progress is partially thwarted by various regulations:

According to the natural course of things, therefore, the greater part of the capital of every growing society is, first, directed to agriculture, afterwards to manufactures, and last of all to foreign commerce. This order of things is so very natural that in every society that had any territory it has always, I believe, been in some degree observed. Some of their lands must have been cultivated before any considerable towns could be established, and some sort of coarse industry of the manufacturing kind must have been carried on in those towns, before they could well think of employing themselves in foreign commerce.

But though this natural order of things must have taken place in some degree in every such society, it has, in all the modern states of Europe, been, in many respects, entirely inverted. The foreign commerce of some of their cities has introduced all their finer manufactures, or such as were fit for distant sale; and manufactures and foreign commerce together have given birth to the principal improvements of agriculture. The manners and customs which the nature of their original government introduced, and which remained after that government was greatly altered, necessarily forced them into this unnatural and retrograde order.

This is often the way economists look at regulations—they have costs and we hope the benefits from the regulation outweigh these costs.

Peltzman's thesis is that there are two other relationships between regulation and progress.  In the first, progress thwarts regulation.  Government's effort to achieve a particular goal is thwarted by the natural response of individuals and market forces to interfere with what they wish to do.  He gave three examples—automoblie safety regulation, the Endangered Species Act and the Americans with Disabilities Act.  In each case, the natural process of resource movement and incentives caused these well-intentioned regulations to either achieve nothing (cars were made safer but people responded by driving more recklessly), next to nothing (the ESA caused people to destroy habitat for fear of losing any property rights in it leading to virtually no improvement in the lot of endangered species) or worse, less than nothing (the ADA reduced employment of the disabled by raising the cost of hiring disabled people).  In each case, natural forces which were improving matters were deemed to be bringing about insufficient progress.  Government regulation was put in place to speed things up.  But the failure to account for changes in behavior caused all of these regulations to go awry.

The second relationship between progress and opulence is that opulence shields regulation.  This was the truly depressing part of the talk.  Here Sam argued that because we steadily grow wealthier as a nation, destructive regulations look much better than they really are.  The best (or perhaps the right word is "worst") example he gave was the FDA.  Ineffective or dangerous drugs get weeded out by the market.  Not immediately and harm can be done.  But impatience with that imperfect process leads to the FDA.  Fewer ineffective or dangerous drugs make it to market.  But as a result of preventing this harm, a different harm is incurred: effective, safe drugs take longer to get to market as a result of the lengthy approval process.  As one summary of this phenomenon noted:

A 1974 study by University of Chicago economist Sam Peltzman concluded that since 1962 the new rules had reduced the rate of introduction of effective new drugs significantly—from an average of forty-three annually in the decade before the amendments to just sixteen annually in the ten years afterward. Peltzman also found that the regulations also made it difficult for companies to introduce drugs that competed with existing drugs, thus reducing competition in the industry.

Peltzman argues that thousands more lives are lost than saved, but that no furor is raised because the natural progress of opulence results in improved overall health.  It's hard to notice the detrimental effect of the FDA.

These views of Peltzman's are of course, sacriligious.  Automobile safety regulations and the FDA, for example, are presumed to do good.  There's no need to actually eaxmine the effectiveness of what they do.  Peltzman's courage in questioning this received wisdom has led to important understandings of the actual effects of regulation.

My takeaway from Peltzman's talk was that the glass is both half-full and half-empty.  Half-full because we continue to enjoy the natural progress of opulence.  Half-empty because it is very hard to uproot destructive regulation when it is shielded by that progress.

For an example of how regulatory regimes take credit for results that would have happened anyway, go here and scroll down to the bottom post about Ralph Nader.