A libertarian argument for an FDA

Whoa! Yeah, I’m going to do this, but let me start with some caveats. First, this is an argument, not the argument. Every silver lining has a storm cloud, and acknowledging the silver lining doesn’t mean you’re in favor of tornadoes. Second, I’m being sloppy with the term libertarian; classical liberal is closer to the truth, but doesn’t make for as good a title. Most importantly, I think my argument is swamped by the traditional libertarian arguments against the FDA. All that said, this argument has some interesting implications for how we think about intervention generally. Here goes…

The human body is a complex system that we do not fundamentally understand. Although every complex system is unique, they have similarities. In the case of both the human body and society/markets, interventions lead to unintended consequences which can offset the (ostensible) gains from the intervention. At the end of the day, although the FDA intervenes in the complex system of human society, it also prevents intervention in the complex system of human physiology.

The Hippocratic Oath instructs its speaker to not play God and to avoid over-treatment, and the justification for that is made clear in a recent Econ Talk. The guest was on to promote his book which discusses the problem of medical reversal–the phenomenon of medical practices that are adopted and subsequently abandoned after evidence shows the practice to be ineffective or worse. From this position he argues that the FDA’s mandate to ensure not just safety, but efficacy, is especially important. His argument is that because of the cost of type II error the FDA ought to go further.

Let’s look at two extreme cases. In the “anything-goes” world, we might have a lot of people trying good and bad interventions with a lot of harm being done to the unlucky ones. You and I know that the real problem is one of information and that in a perfect world we would have “anything-goes-that-consumers-with-access-to-good-information-from-Consumer-Reports-®-or-a-competitor” but this world still leaves us with the problem (which we face in today’s FDA-evaluated world) that consumer trial-and-error is a poor substitute for randomized control trials.

At the other extreme we have the “first-do-no-harm-second-do-real-good” world of an ideal FDA. This world has very steep type I errors but instead of two steps forward, one step back, we would have one step forward, then another, and never any steps back…. but of course each step forward would cost a few billion dollars.

Neither extreme is ideal, but the second world is one where standards of evidence are taken very seriously. In that world I’d be a third grade teacher instead of a college professor. The standards of evidence are at the core of the problem of medical reversal, but also the problem of economic intervention (which is far less likely to be reversed, even in the face of good evidence indicating that it should be).

As far as medical intervention is concerned, my position is bullish on better efficacy evaluation of medical procedures but still bearish on the FDA itself. But looking at the FDA from this angle opens up an interesting thought experiment: what might be the effects of an Economic Intervention Standards Authority? In practice it would probably be awful (my guess is a federal bureau that attempts to quash Tiebout competition), but in a libertarian utopia it would be the bureaucracy that libertarian kids with administrative bents would dream of heading.

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9 thoughts on “A libertarian argument for an FDA

  1. I heard Tiebout and came running in.

    So are you making a case for a federal FDA or for a FDA esque department at the city level?

    • Maybe an additional mission for the GAO: writing reports on different state and local policies evaluating the evidence of their success or ridiculousness. Mostly that EconTalk episode just gave me a greater appreciation for the similarity between complex systems and the notion of some authoritative voice telling people to stop messing with such systems. Which is not to say I oppose medicine or support market intervention, but I do support a more nuanced view of both issues.

  2. “The exact assumptions Tiebout made in his first statement of the model were:
    1.Mobile consumers, who are free to choose where they live. There are no costs associated with moving.
    2.Complete information.
    3.Many communities to choose from.
    4.Commuting is not an issue.
    5.Public goods do not spill over in terms of benefits/costs from one community to the next.
    6.An optimal city size exists: economies of scale.
    7.Communities try to achieve “optimal size”.
    8.Communities are rational and try to keep the public “bad” consumers away.”

    #6 is believable. #3 could be depending on how many is many. My world is full of elegant models built on ridiculous assumptions. I’ve concluded that mental masturbation < the real thing. Your mileage may vary.

    • Related to #1 I’d argue that although people aren’t especially mobile due to embeddedness in social networks and other specific human capital accumulation as well as risk aversion… but I think that people are socialized into their environment, and with endowment effects will tend to prefer where they are anyways.

  3. We could have two classes of drugs. One would be “FDA approved”. The other would be classed as “likely safe, but use at your own risk.” This second class is actually what exists now since there is no such thing as an absolutely “safe” drug due to human genetic variation. This is also true of “over the counter” drugs too.

    Then there is the issue of “conflicts” between medications. Along with the fact that certain foods can alter the effectiveness of a drug. So “absolute safety” is like a “square circle”, a logical impossibility.

    Additionally, for everyone’s information, your doctor is very unlikely to know all the effects of medication that he or she prescribes. The reason is that there are too many drugs available for anyone to know what the effects may be for everyone. Say a drug is safe for 99% of those taking it. Then one in a hundred people will experience an adverse side effect or some sort. These may be minor or they can be major. You can however find out for yourself by reading the full list of possible effects for the drugs you take. You can also read “user reviews” (WebMD is one site that offers this) which will allow you to see what is more likely to produce a favorable effect and what might do the opposite.

    You might be surprised to learn that some “over the counter” drugs are actually more “dangerous” than some prescription drugs that are both used to treat the same conditions. So the fact that something is “over the counter” does not mean that it is “safe” for everyone. We also have a lot of drugs that are “prescription” that really don’t need to be. Most likely the only reason they are is because the medical profession wants them to be so for economic reasons. Not because they are “dangerous”, but because doctors can profit from prescribing them. An example of this is the generic drug Meloxicam compared to the OTC drug Aleve. Aleve is more likely to cause stomach bleeding than Meloxicam. Tylenol is also more dangerous as it can cause liver damage if taken for a long time. What this means is that our system of drug classification is all “screwed up” relative to both effectiveness and possible dangerous side effects to the consumer.

  4. What we would have is competing voluntary health boards which would gain trust/reputation as time goes on and they make good recommendations. This would be vastly superior to the current FDA which gives the false impression that dangerous pharmaceuticals are healthy (FDA approved) while healthy foods are not approved by the FDA, often giving the impression that they are ineffective or harmful (which in many cases appears to be false).

    So, I think “both sides” are right here. Certainly there would be a kind of health board like the FDA in a more libertarian society, hopefully multiple ones, and people could make decisions based upon the performance of the competing best ones.

    • Getting rid of prescription laws would be a great benefit. It would also give all of us the “freedom of choice” that was taken away in 1938 by the Roosevelt administration. As for the FDA, I believe it should serve only an “advisory” function similar to what Consumers Union (Consumer Reports) serves. Read the studies and recommendations, make your own decisions. I’m a very “big” believer in “freedom of choice”.for all of us who wish to make these decisions for ourselves. We are not “property” despite whatever some believe! Doctors should not have the right to deny their patients the medicines that the patients would prefer to use!

      I also believe that there is a great deal of political corruption in our health care system which is increasingly driven by corporate profit seeking at our expense. This leads to giving misleading information to the public. For example, doctors simply put diabetics on insulin instead of explaining to them that by reducing their carbohydrate intake to a low enough point, they will no longer need to take insulin as long as they are careful as to what they eat. Also the role of aspirin in preventing heart attacks is now being played down. Additionally, the now common practice of dosing cattle with antibiotics (3/4 th of all antibiotics are used in animal husbandry) is why antibiotics today are less and less effective because they pass through the animals and into the environment. Then the animals are given growth hormones and steroids which may have a relationship with the increase in cancer. We are also genetically modifying fish without knowing what the long term effects will be. Genetically modified foods? What are the long term effects?

  5. […] Rick spent the year at NOL blogging about whatever the hell he wanted, and we were all rewarded for it. Dr Weber is obviously emerging as important conduit for explaining how “politics” works in democratic societies, and perhaps more importantly how to be a better, happier person within the American system. I hope Rick continues to explore federalism though a public choice lens, but I also suspect, given Dr Weber’s topics of choice this year, that Elinor Ostrom would have been interested in what he has to say as well. 2017 awaits! Here is Rick breaking down Trump’s victory over Clinton. You won’t get a finer explanation for why it happened anywhere else. Oh, and how about a libertarian argument for an FDA? […]

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