First of all, don't take advice from people who don't believe in regulation in the first place. Yes I realize that means we have to totally ignore the WSJ editorial page as well as much of the faculty of the University of Chicago (possibly excluding Richard Thaler). But the fact is they're operating on a dangerous and repeatedly rejected economic model of how the market acts. Whether or not you agree with Richard Epstein in specific cases like creating incentives to report adverse events (I don't really see that helping but it won't hurt), we should all be able to see the giant flaw in his concluding paragraph.

But neither Congress nor the FDA has mastered the fundamental lesson of risk analysis. Keeping drugs off the market deprives all informed patients the opportunity to correct FDA errors. Letting new drugs on the market leaves individual patients the option to decline their use. In the long term, Congress must wean the FDA from its misapplied "first, do no harm" principle, which causes far more harm than it prevents.

Umm, wait a minute. First of all, what kind of complete ignorance does one need of pharmacological regulation to not know that this is an impossible expectation for consumers and the market? Even lay readers should remember Vioxx. How would the market or consumers have detected a 1% increase in cardiac side effects? Even if people were given this information, does anyone seriously believe that scientific information provided at high speed or in tiny text will affect consumers more than the irrational advertisements they see of happy old people getting out of their wheelchairs and dancing?

This is called the myth of the omniscient consumer. It has been disproven, again and again, that the market or consumers as a whole make rational decisions. One of the scienceblogs in particular the Frontal Cortex lately has done a good job at reporting on how neuroeconomics has done a lot better job describing why humans, as individuals or as groups, make decisions than this failed rational actor theory. At the risk of stating the libertarian economics position as a false tautology, it seems to me that they are saying because the market provides something it is good, and it is good because the market provides it.

Now in our personal lives I'm sure we've all encountered things that the market has provided that were decidedly awful. Personally, I find battery-operated turning lollipops to be a sign of end times, a better general example would probably be the total failure of energy deregulation to save consumers money (and instead leading to disasters like the California energy crisis and Enron). But in terms of specifics, when people actually study economic decision making in humans we find people are actually terrible at making rational choices(for a great lecture on this listen to this one by Daniel Gilbert). Take for instance something as simple as the bandwagon effect in music purchases - people can't even figure out what music they personally like rationally. Think of all the products that are exceedingly successful that are on the market that are entirely based on irrational consumers. If people made rational economic decisions why does the gambling industry exist? Are people buying altie meds based on rational choices? Do you think that there is a rational and compelling reason for consumers to buy Enzyte? And these are the people you expect to somehow detect problems as subtle as those of Vioxx? Or rationally determine that drugs like Ketek cause idiosyncratic liver failure? How is it, especially given the desire of the market not to lose products that make money despite being worthless or dangerous, do we expect self-regulation or market forces to detect rare adverse events - by far the most common reasons for pulling drugs these days?

I'm afraid that, as I've said before, the invisible hand of the market is attached to a retarded monkey. I reiterate: don't trust people who don't believe in any regulation to give you advice on how to regulate.

Labels: FDA, WSJ