305 Economists Called to Smart Questionnaire on the FDA:
Daniel Klein, Jason Briggeman, and Kevin Rollins have designed a questionnaire about the economic rationale for the policy that makes new drugs and devices banned until individually permitted by the FDA. Klein and Briggeman present the questionnaire and the list of economists. Will anyone provide a sensible market-failure rationale for the policy?
The link is here, take a look. I believe Congress should eliminate the "effective" part of the "safe and effective" clause, dating from 1962. If the question is allowing people to experiment with all pharmaceutical products, I see a few possible arguments (I'm not necessarily endorsing them) against doing that:
1. There will be more successes but also a greater number of bad events. This will possibly cause people to lose confidence in pharmaceuticals, just as many crazy theories circulate about vaccines and many people refuse them or refuse them for their children.
2. Our courts are not up to handling a greater number of liability suits, whether in terms of the quality of those courts or their ability to handle the case load. See Andrei Shleifer's recent paper on regulation as a substitute for an imperfect court system.
3. I am a fan of Robin Hanson's paper "Warning Labels as Cheap Talk: Why Regulators Ban Products." This was the piece Robin presented when we hired him, and it later appeared in JPubEc. The main point is that a verbal governmental warning: "We're really not sure this is safe, caveat emptor!" is not usually credible and people will regard the product as safe, thinking the government would not have otherwise let it come to market.
4. Parents cannot be trusted with their children.
Still, I think there is a good case for greater freedom for choice when it comes to pharmaceuticals.