The FDA: A case study for Paternalism

Written on February 15, 2009. Written by .

Apothecary Workbench
Should the government protect us?
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In a comment to the last post Dapper Dan raised the question of whether private enterprise could be an adequate substitute for America’s Food and Drug Administration. He presented an argument that threw doubt on the possibility that American citizens would produce demand for a company whose purpose is to review and report on the safety of foods and drugs. I would like to talk about this topic in a little more depth because I think it is an important case study in the analysis of libertarian poltical theory.

First let’s get a little background from Wikipedia’s article on the FDA.

“Up until the 20th century, there were few federal laws regulating the contents and sale of domestically produced food and pharmaceuticals, with one exception being the short-lived Vaccine Act of 1813. A patchwork of state laws provided varying degrees of protection against unethical sales practices, such as misrepresenting the ingredients of food products or therapeutic substances.” [Wikipedia – FDA]

So far so good. It is definitely consistent with my interpretation of libertarianism to make it illegal for companies to lie to their customers on objectively defined issues such as the ingredient list of a food product. Now let’s get back to the question of whether consumers will generate demand for food and drug screening. Apparently demand was not present in the 19th century because no effective business was screening and filtering food and drug products. But notice that when the demand was not there, the government wasn’t doing anything either. Before the mid 19th century, food was not as processed and prepared as today. There was a lot less chemistry going on with foods and drugs back then, probably most of the food people ate would qualify as organic. People generally knew what to expect when they bought food. But that started changing in the late 19th century when canning and processing came about. Some early canning factories used lead solder to seal the cans, which of course is toxic. And there were many other ways that processed food could be manipulated that may or may not be good for the consumer. But it takes time for people to realize these issues, and until that point neither the private sector nor the government could do much about it. One might ask: what if the government had the power to regulate these things to begin with? That could have saved many lives, but if people had the foresight to be willing to pay the taxes for a government agency to begin with, then they would have also had the demand for a private sector solution.

“[The push for federal regulation] came at a time when the public had become aroused to hazards in the marketplace by muckraking journalists like Upton Sinclair, and became part of a general trend for increased federal regulations in matters pertinent to public safety during the Progressive Era. The 1902 Biologics Control Act was put in place after tetanus antitoxin was collected from a horse named Jim who also had diphtheria, resulting in several deaths.” [Wikipedia – FDA]

Basically it takes deaths before people will start to realize the importance of the issue. When there are deaths, people start saying “We have to do something!”. Due to the philosophy of the time, people turned to government. Perhaps this was because of the resentment towards the wealthy business owners due to an exaggerated wealth gap resulting from a lack of geolibertarian policies. So of course no entrepreneurs tried to move in on the opportunity because the market is destroyed when the government jumps in with tax-financed services.

“By the 1930s, muckraking journalists, consumer protection organizations, and federal regulators began mounting a campaign for stronger regulatory authority by publicizing a list of injurious products which had been ruled permissible under the 1906 law, including radioactive beverages, cosmetics which caused blindness, and worthless “cures” for diabetes and tuberculosis. The resulting proposed law was unable to get through the Congress of the United States for five years, but was rapidly enacted into law following the public outcry over the 1937 Elixir Sulfanilamide tragedy, in which over 100 people died after using a drug formulated with a toxic, untested solvent.” [Wikipedia – FDA]

So the critical number of deaths came and the government stepped in when fears reached the necessary level. But what would have happened if the government was based on a strict constitution that forbade government from creating such an agency? The people would still be saying “We have to do something!”, but they wouldn’t be turning to the government because they would already know that wouldn’t go through. For a time, drug companies would start losing money because many people would be too afraid to buy drugs. So drug companies would start pushing for a private certification agency to test their products and reassure their customers that the drugs are safe. Furthermore, the people would still have needs for drugs, but they would be too scared of taking any random drug, so they would be willing to pay more to have independently tested drugs.

The only reason why it is hard to see this effect occurring today is that the fear only lasts while there is no system present. Because we have the FDA, we no longer need to have a general fear of all drugs. Similarly, once a private system is established, fears would subside even in the absence of government intervention.

We can speculate as to what the system would eventually look life. The private certification agencies would be paid by either the drug companies or the pharmacies. It is hard to say which would end up paying as it seems like an arbitrary choice, just like how it is arbitrary whether your employer pays for your health care or you pay for it yourself. Regardless of which side pays for the service, these certification agencies would test the products and give safety ratings. The pharmacies would then stock only products that received adequate ratings. These ratings might also be displayed as color-coded green, yellow, and red bands on pill bottles. People would only want to buy drugs with good ratings by most of the agencies. We take it for granted today that we can trust the FDA to do all this filtering for us, so consumers don’t have to bear this burden of checking the ratings. But really it is an extremely small burden compared to the benefits of keeping a small government and not impinging on individual rights.

If a rogue pharmacy misrepresented a rating, the certification agency could press legal charges based on the fact that their companies trademark was being used in an unauthorized manner.

So what if a certification agency took bribe money from a drug company to get a better rating? This is definitely an issue, but no more so than for the FDA. I would never put complete faith in a certification agency, nor would I put complete faith in the government. No certification agency would want to risk having a bribe exposed to the public because if word got out, nobody would trust their ratings anymore and they would go out of business. Non-profit organizations would monitor the certification agencies by looking into possible bribe situations, such as if two agencies gave a red light while one gave a green light.

Of course a pharmacy could open that completely disregarded the safety ratings of the certification agencies. Such a pharmacy could even make their own certification agency that gave all drugs a good rating and place a green band on every bottle, as long as they didn’t use the trademarks of the real agencies. Would people go to this pharmacy? Yes, the same people who currently buy drugs on the black market that were illegally imported from Mexico. Some people do crazy things, but there is no way you can stop them – the current system doesn’t stop them either.

Now that the feasibility of the private solution has been established, there is one last argument that can be made in favor of paternalism and the FDA: If we force people, then fewer people will buy uncertified products (just like the seatbelt laws that definitely do decrease automobile mortality rates). Sure, you can probably reduce the number of risk-takers somewhat by making risky behavior illegal, but is that really an admirable thing? Let’s take a step back and examine the philosophy of this idea. In the movie “I, Robot”, a super-intelligent computer decides that the best way to fulfill its objective of protecting human lives is to deploy an army of robots to physically force people to stay in their homes. It reasoned that there are too many dangers outdoors and people keep on getting into war. The computer said “My logic is undeniable.” I pretty much agree; if your only mission is to save lives, then you should do all sorts of immoral things to accomplish that goal. The problem is that the goal is wrong. Our society has an over-emphasis on preserving life. I’m not saying its bad to save lives, I’m just saying that there are other things that matter. Another way in which our society is over-emphasizing the preservation of life is with Medicare and Medicaid. If we exaggerate a bit to illuminate the point, these programs effectively enslave the working classes for the sake of artificially extending the lives of the elderly. It all comes back to the spicy lifestyle philosophy: the fundamental metric is not life, but life-quality. If you have to ruin the life quality of 10 people for a year to extend the life of one person by one year, then I think you’ve lost overall. When you see things from this point of view, it is more clear that paternalism is just a reflection of the use of an improper metric for social value.

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