FDA => Consumer Reports

In Bringing the Consumer Revolution to the FDA, Alex Tabarrok writes:

The FDA currently works on a paternalistic model: One choice to rule them all. But another approach, what I call the Consumer Reports model, would meet the needs of diverse health-care consumers much better. Consumer Reports doesn’t try to replace consumer choice. Instead, by carefully evaluating and testing new products and providing this information to readers, Consumer Reports helps consumers to make better choices. Similarly, a less paternalistic FDA would provide more information to patients and doctors, but it would also leave more choices in their hands because only patients and their doctors have the particular knowledge that allows each patient to be treated as an individual.


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It may seem odd, but if the FDA had fewer powers over the industry it could be more independent. Consumer Reports, for example, has no power over the industries that it monitors and because of that fact it can answer to consumers alone. Consumer Reports, for example, does not accept any advertising. In contrast, a large share of the FDA’s budget comes directly from pharmaceutical firms through the Prescription Drug User Fee Act. (PDUFA is a good law that cuts delay in the approval of new drugs caused by Congress’s perennial under funding of the FDA, but it is not as good as true independence.) Furthermore, Consumer Reports conducts its own testing (or contracts that testing out to independent labs) while the FDA relies on the pharmaceutical manufacturers to test their own products—an inherent conflict of interest.

Letting the FDA make choices has a principal/agent problem - the FDA has less incentive than an individual, or an individual's doctor, to make good decisions. They are likely to be (at least to some degree) "captured" by the industry they regulate. The consumer reports model moves decision-making power towards the principal, which is a better incentive system.

This is a good example of the Hard Heads, Soft Hearts model which I think libertarians should pitch to our non-libertarian world. The government is still playing a substantial role, but so is individual choice.

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> This is a good example of

> This is a good example of the Hard Heads, Soft Hearts model which I think libertarians should pitch to our non-libertarian world.

Such a pitch is the only way any political party or ideology would ever get into power, at least within the system we have in the US. No [successful] party or ideology can ride to success on their principles alone. And you can't be successful if you expect your radical ideas to somehow be warmly received by a jaded and skeptical public.

Libertarians need to let their principles guide their actions without letting their principles control their actions.

It should be noted, however,

It should be noted, however, that Consumer Reports does frequently advocate regulatory action--such as mandatory recalls or FTC prosecution--when it disapproves of a particular product.

There never was a capitalist

There never was a capitalist who favored capitalism.