Peltzman Revisited
Casey Mulligan has an excellent new paper, Peltzman Revisited: Quantifying 21st-Century Opportunity Costs of Food and Drug Administration Regulation. What are the costs of delaying a new drug or a vaccine? Longer and bigger clinical trials increase safety but I’ve often made the point that the people who would have lived had a good drug been approved sooner are buried in an invisible graveyard and thus these costs are typically undercounted–the failure to see the invisible graveyard biases decisions in favor of delay. Mulligan makes a different and rarely considered point about substitution effects. If a vaccine isn’t available there are substitutes but these substitutes are themselves potentially unsafe and ineffective. But who is testing the substitures?
Many of these substitute interventions, such as remote work, closing schools, and canceling normal medical appointments, are beyond the jurisdiction of the FDA and can be utilized without any attempt to demonstrate their safety or efficacy.
If the substitutes work, the costs of delay are reduced. The FDA, for example, is right to prioritize drugs for which there are few alternative treatments. But the standards for many vaccine or drug substitutes are completely different than those used to approve a vaccine:
Closing schools to in-person learning is an important example of a prevention activity that was available, was applied to tens of millions of children in the United States, and was outside the FDA’s jurisdiction…Obviously the FDA’s effectiveness standard for vaccines differs from the effectiveness standard (if any) that school districts applied in deciding to close schools.
Where were the randomized controlled trials for closing schools, shutting the parks and beaches, and delaying medical appointments? Thus, it’s quite possible that greater safety of vaccines comes at the expense of greater time under less safe and possibly unsafe substitutes. As Mulligan concludes:
Approval delays for pandemic tests and vaccines pushed tens of millions of individuals and businesses into preventions and treatments that were both outside FDA jurisdiction and hardly safe or effective. The pandemic experience raises the question of whether, on the whole, consumers engage in more unsafe and ineffective practices than they would if FDA approval were not a prerequisite for pharmaceutical sales.
Addendum: Much else of interest in the paper including a calculation of the value of the vaccines in the hundreds of billions and trillions very much in line with work done by the AHT team, including myself ,in the AER PP (especially the appendix) and Science.