A number of liberals are angrily defending liability by arguing that the FDA is underfunded, incompetent, the victim of regulatory capture, and staffed by life bureaucrats more interested in preserving their jobs than protecting the public health. Quite possibly true. Only one question: if it doesn't keep us safe, and the liability system does, then why do we have the regulatory agency in the first place?
« On approval | Main | Inflation: just say no » Libertarians under the skin04 Mar 2008 08:14 am Comments (45)
Since no system or process is ever completely reliable, humans being imperfect as they are, redundancy can be a wise strategy. I know that one of the mottos of those dazzled by the abstractions of economics is "efficiency uber alles", but in cases such as drug safety it is reasonable to err on the side of redundancy. It seems to me that what you really need to do is sign a contract with the pharma companies whose products you use in which you waive your right to sue them if their product harms you. You'll feel better and you can claim the moral high ground from which you can pressure others to follow suit (haha). Or can I take the fact that you haven't done so already as revealing your preference to retain that right? 
Our local police force does not always catch all the criminals -- indeed, maybe they catch less than half the criminals, but no one would argue that that is a case for eliminating law enforcement completely, right? (right?!?!) I have only just read the last post & this one (so I may be repeating comments from the prior post), but you need BOTH. You need government oversight to at least place some outside focus on ensuring the drug is safe -- because there will always be "bad-doers" who are willing to roll the dice, get a drug out there, make a quick buck, and then abscond to the Cayman Islands if/when people start to discover problems with the drug & the lawsuits start to roll in. That's not OK. We need some kind of base-line, outside inspection. That said, you also need the producer of the drug to care -- really care -- that the drug is safe. You don't want drug companies to just game the system for FDA approval & that's it -- then they're scott free. If anything, that will only encourage them to do the minimum amount of initial testing, etc. to get past the FDA's (sometimes inexpert?) gaze. Moreover, after FDA approval is granted, they would have no incentive to do ANY testing after that -- once the drug is actually in use in the market. we know from experience that problems often crop up -- perhaps completely unanticipated problems. Once there is a hint of a problem -- a hint that, say, drug X may cause heart attacks -- they (the drug companies) need to have the fullest incentive to dig in & explore the problem -- or the hint of a problem -- track it down immediately & figure out if the drug is safe or unsafe. In other words, you want drug companies to not just be gaming the system to get by the FDA approval process, you want drug companies to really, really care as to whether the drug is safe or not. (Or if you don't want that, I certainly do.) One way to do that -- the way we've been doing in our current legal/market economy -- is to have the threat of massive product liability lawsuits looming if -- despite all initial testing to the contrary -- the drug turns out to be unsafe. The legal process is sometimes ugly; it's sometimes unfair; sleazy plaintiffs lawyers sometimes get awfully rich, but frankly, I don't see a better way. In my own (limited) studies of corporate responsibility/morality when faced with non-public evidence that their products are harmful, morality/responsibility/ethics has not been enough -- not nearly enough. Nothing is "enough," really -- we still have problems with unsafe drugs -- but we need (in my view) as many safeguards as we can get.
It's clear that regulation is required in a whole list of areas - drugs and medical devices, nuclear power plant operation, capital standards for banks - where market incentives (even including the liability exposure) don't result in a level of safety or reliability that people not unreasonably expect.
Which is a greater tax on innovation--the FDA or the threat of litigation? Which one, if removed, would increase the pace of innovation and, on balance, improve the health of/save the lives of more people? I think the answer to both questions is the FDA.
Liberals also like to preserve government jobs, because those people reliably vote democratic.
From my perspective (pharma researcher for 8 years), drug companies do most of what they do in terms of ensuring drug safety & efficacy in order to please the FDA. Liability lawsuits are considered an inevitable risk no matter how responsible you are--unless you go and do something really irresponsible, in which case the risk goes up considerably. We need considerable tort reform before liability lawsuits could ever be considered a rational alternative to regulation. We need juries made up of people who can grok expert medical testimony, rather than being swayed by a slick plaintiff's lawyer. I understand that in Europe, physicians sued for malpractice are tried by fellow physicians.
Only one question: if it doesn't keep us safe, and the liability system does, then why do we have the regulatory agency in the first place? Megan, c'mon. You've gotta admit this one is kind of silly. I understand that in Europe, physicians sued for malpractice are tried by fellow physicians. Never thought I'd live to see the day! We need tort and malpractice reform so our medical system can be more like Europe! Actually, I kind of agree, but only kind of.
We know what the lack of a regulatory agency does for executives planning to decrease liability: We get the Ford Pinto Memo, where someone calculates the cost of settling a slew of lawsuits against the cost of (in this case) more effective testing. I'm not seeing how this would make us safer.
Only one question: if it doesn't keep us safe, and the liability system does, then why do we have the regulatory agency in the first place?
The real risk in allowing federal regulatory approval to pre-empt lawsuits is that (1) you remove retrospective examination of manufacturer's actions and (2) you create an environment where the only obstacle to marketing rat feces as an antidepressant is the size of your lobbying budget. First, regulations are necessarily prospective. Once a drug is approved, until the FDA gives the order to take it off the shelves, there's really no motivation at all for drug companies to continue tracking and testing the effects of their drugs. Think there might be a few too many heart attacks among patients taking your latest diet pill? So what! They can't sue us! The FDA approved the drug! All of the current lawsuits over drugs arose out of drugs already approved by the FDA. And the drug manufacturers now want FDA approval to be an absolute bar to liabilty. That means that when future drugs turn out to be dangerous, people will just keep dropping dead until some underpaid FDA regulator finally gets around to reviewing all the complaints. Second, since FDA approval is the only hurdle to mass-marketing rat feces to the masses under the claim that it will cure you of everything is the approval of that same underpaid FDA regulator. The drug companies bribe DOCTORS. How hard do you think it will be for them to bribe regulators, who make one tenth of what a doctor makes? Now, there are bad lawsuits. And there are bad regulations. I don't know that I dislike one more than the other. But I do know that if I have to choose between two forms of accountability for big pharma, I'm going to choose the one they don't want, not the one they ask for.
Charlie actually captured it best in the last comment thread, the key issue is that people feel entitled to money if something bad happens to them. The issue at stake isn't "how can we best ensure the system functions effectively", the issue is, as peter states above is: "The difficult problem that these folks are getting at is that there's no good recourse when the regulator screws up" We're not content to say "the FDA is doing its best, but is imperfect, and occasionally something bad will happen." As Rob Lyman explains in the previous thread, legally it's not really about fault. It's about "something bad happened to me, so pay me for it." If you shield the drug company, people would expect to sue the FDA I guess. Not sure that's really a productive solution though...
Can I sue the people who support the FDA, when the FDA slows the speed at which drugs are brought to market that could have saved a loved one's life? If the answer isn't "yes", then I don't want those busybodes telling me that I must have the FDA and a vigorous tort system. Let'em put their money where their mouth is, or let'em just shut up.
I think one missing point here is that putting the liability for lawsuits after FDA regulation on the FDA will have 2 consequences: force the FDA to take responsibility for testing procedures and protocols to ensure they don't miss anything and to slow the release of new drugs. I don't know what these effects are, but right now there isn't a mechanism for the FDA to be accountable for the drugs it approves (if they screw up, Merck foots the bill) and too many people think they are int he pockets of the pharma companies. In that case, slower drug release might be better. I'm in favor of switching both the clinical trial responsibility and product liability to the FDA, charging drug companies a fee per stage and publishing the data publicly.
> Never thought I'd live to see the day! We need tort and malpractice reform so our medical system can be more like Europe! Actually, I kind of agree, but only kind of. Europe actually seems to has a more liberal (i.e. "lenient") medical regulatory policy. Most things are approved in Europe 6 months to a year before getting approved in the US. Interestingly, Japan is way behind (like 3-4 years) the curve.
...the FDA slows the speed at which drugs are brought to market that could have saved a loved one's life. Great, the improbably versatile ticking bomb scenario, on loan from the torture advocates, arrives to justify eliminating the FDA. Because everyone knows that speed to market correlates perfectly with drug efficacy, especially for those people who have loved ones.
There's really no disputing that FDA requirements slow the arrival on the market of drugs which extend and improve patients' lives. After all, they slow the arrival of *all* drugs on the market. The question is, what should be done about it? For a long time, some patient advocacy groups have been pushing for access to experimental drugs for patients in cases where no FDA-approved drug exists or has worked.
I'd like to see some sort of no-fault system established, whereby if a medical device or drug company files regular, complete and publicly auditable reports (not just during the pre-approval process but for the entire product lifetime) with the FDA on what they know about their product's effects, they are not held liable for design (but not manufacturing) defects. Then establish a fund to compensate people harmed by otherwise reasonably safe and effective products with payouts determined by some sort of arbitration payouts. The FDA could still a revoke market authorization for a product that was having too many adverse effects - and it would have better data on which to make that decision - but the financial liability to industry would be capped. And of course, is a company is found to have been fraudulently reporting, they're fully liable.
No, DMonteith, there is nothing hypothetical about it. Please, stop being dishonest. If a new drug saves lives that would otherwise be lost, as many, many, new drugs have done over the last few decades, and it takes x plus y nummber of months or years for the drug to become available to all of those who would benefit from it, instead of x number of months or years, people have undeniably died due to the increased time needed for the drug to become available. Seeing that people like you have driven this process, it is perfectly reasonable that I be able to drag you into court, to force you to compensate me for the harm you have inflicted upon me.
Speaking as someone who has actually worked in an industry subject to FDA oversight, those of you spouting the standard talking points about capture and corruption are not doing your credibility any favors. To make this simple: If you are a healthcare product provider subject to FDA oversight (and this includes a wide range of both pharmaceuticals and healthcare machines), your probability of scraping past an FDA product safety audit via obfuscation or graft are about the same as that of the average citizen getting past an IRS tax audit via the same means. In short, it's not impossible, but your odds are better at a craps table in Vegas, and the latter might actually pay something back to you without a high risk of steep fines and jail time.
If a new drug saves lives that would otherwise be lost, as many, many, new drugs have done over the last few decades, That's not a fair argument, because drugs that save lives are only one possibility. Three other possibilities are drugs that would have offered no effect (thereby allowing the patient's condition to deteriorate unchecked), or caused a detriment to health worse than the disease, or killed outright. To determine whether there is any advantage to fast-tracking the first of the four, you must analyze how many of the other three would slip through the same process. The harm might outweight the benefits.
SG, I generally agree with your idea, but why should there be any fund to compensate people who were harmed by otherwise safe & effective drugs? Every drug has a risk of side effects which is weighed against its expected benefits. If I visit a national park, I am taking a small risk of being attacked by a wild animal. Should I have the right to demand payment from the national park service even if they took all reasonable measures to ensure my safety?
True enough, Anonymouse, but unless someone is forcing me to take something, of misrepresenting what he knows about the drug, those are moot points. I'm all in favor of an extremely vigorous tort system, or an extremely cautious regulatory system, but not both.
I generally agree with your idea, but why should there be any fund to compensate people who were harmed by otherwise safe & effective drugs? Two reasons, one idealistic and one pragmatic. The idealistic reason is that establishing a no-fault system would mean that "We the people" would be taking a currently existing compensation mechanism away from people who've been harmed through no fault of their own. I don't believe the government should be taking things away from us without something in exchange. The pragmatic reason is I don't think a "you pays your money and you takes your chances" approach would politically survive the first sympathetic class of plantiffs. There would be a public outcry to compensate the poor, injured (children, widows, whatever), and the companies would be put back on the hook. Agreed, and I wouldn't compensate for known, documented side-effects. The fund is for the unknown things that don't show up in the small-scale clinical trials but only occur when it gets rolled out to the general population (a la Vioxx). By having regular reporting, additional side-effects can be exposed earlier and the documentation and marketing materials enhanced, enabling not only the regulators, but physicians and patients to be better informed about their options. Right now, a company has some incentive to sit on that information. I'd like the system to incentivize them to release that information. And I'd also like to avoid the situation where truly rare but serious side-effects are discovered and cause a generally useful treatment to be pulled from the market due to liability concerns.
In other words, Anon, if we are going to have both, those people who prevent me from obtaining from a third party what is eventually proven to have been something that would have prevented great harm to me, should owe me significant damages.
Some rare effects won't be seen in even large studies -- they don't appear until the population at large is taking a drug. This underlies my main objection to establishing a "safe harbor" for drugs that pass FDA scrutiny. The people who suffer from such rare effects should be compensated for their bad luck in becoming the accidental test subjects in such a case. I don't think this can deter pharmaceutical companies from marketing drugs with unknown rare side effects, however. The potential for this problem is built into the system, and the compensation is part of the cost of doing business with incomplete information.
Will, you are effectively advocating that drugs be released before anyone actually knows what they will do, how effective they will be, or what the side effects will be. It would be impossible to make an informed decision in that case. There is only a problem if the FDA is doing too much testing and taking too long... but that's a value judgement and hard to define. Those responsible would be whoever decided to underfund the FDA. I would like to see drugs made available early to people who are dying anyway and who have no other treatment options... might as well let them take a chance.
"The people who suffer from such rare effects should be compensated for their bad luck in becoming the accidental test subjects in such a case. " Why? And compensated by whom? What a wonderful example of "people feel entitled to money if something bad happens to them." Bad things happen. If you can trace the bad thing back to a (evil) corporation, it still doesn't mean the corporation did anything wrong.
Should I have the right to demand payment from the national park service even if they took all reasonable measures to ensure my safety? Once again zooming past the normative implications and jumping straight to the positive, we can jiggle the facts a little and make the answer "Yes." Private keepers of wild animals are, like manufacturers of defective products, strictly liable for harm without regard to fault. So if I operate, say, a private zoo, and a tiger mauls you, it doesn't actually matter if my tiger cages were properly designed and maintained or not. Indeed, it could be entirely your fault if, say, you were stupidly trying to balance on a railing and fell into the tiger's enclosure. That's what strict liability means. The only defense is "assumption of the risk," i.e., the victim knowingly and voluntarily decided to take the risk of being attacked by the tiger (or harmed by a drug). That's why known side effects aren't an issue in drug cases: the company points to the package insert, the PDR, etc. and says look, we told you all the risks right here, and you chose to take the drug anyway. I suppose the National Park Service could make the same argument, but of course they aren't really "keepers" of wild animals anyway. And for those of you hoping to sue the FDA for screwups: Congress will have to give you permission first, so good luck with that. I like SG's no fault idea; it works exceedingly well for worker's comp, and is considerably more rational and fair than the tort system. On the other hand, the incentives it offers may be a little bit perverse, so it may take some tweaking.
Good topic...both here the previous post on the FDA. I wrote about it at my blog(s) See here We're always looking for new members.
Rob, I would argue that it's impossible to predict every possible rare side effect of a drug. Therefore, anyone who takes a drug is, in essence, assuming the very small but non-zero risk of undiscovered side effects. If no one knew about this side effect beforehand, then how can anyone be liable for it? Sometimes unfortunate things just happen. That's just life. I reject the idea that there must be liability assigned and compensation paid for every bad thing that ever happens to someone.
I like SG's no fault idea; it works exceedingly well for worker's comp, and is considerably more rational and fair than the tort system. On the other hand, the incentives it offers may be a little bit perverse, so it may take some tweaking. How about tweaking it like this: fund it by having manufacturers opt-in on the condition that they must pay a floating percentage of revenue into the fund, the 'float' being adjusted periodically (e.g. quarterly or biannually) to reflect current participation and claim load. Manufacturers who opt in are indemnified against general liability claims, and aggrieved parties must make their claim against the fund and, upon granting of claim, receive a book-value payout. The fund thus pays for itself, and I imagine many manufacturers would happily take that expense in lieu of lottery. To maintain the incentive against abuse by the manufacturers, however, tort liability would still be available for negligence or fraud. However, claims could not be made both against the fund and in court at the same time -- you take one or the other, unless the manufacturer was expressly found guilty of negligence or fraud at some future date, in which case you would not be barred from the class action award or settlement.
Iconoclast, if people acknowledge that they are making an uninformed decision, and the seller plainly acknowledges that there are a whole universe of possible bad effects that have been inadequately explored, what's the problem? Seems more like a good reason for tightly regulating advertising. The problem with snake-oil salesmen wasn't that they sold snakeoil, it was that they deliberately lied about what was known about snakeoil.
Eric said, "Sometimes unfortunate things just happen. That's just life. I reject the idea that there must be liability assigned and compensation paid for every bad thing that ever happens to someone." Sometimes unfortunate things do "just happen." But sometimes unfortunate things happen because a drug causes them to happen. The general justification for making drug manufacturers pay for the cost of health problems caused by their drug is this: If all of the health problems caused by a drug are paid for by the manufacturer, then the drug will get more expensive, to pay for the costs of the health problems. If, after the cost of the health problems is incorporated into the cost of the drug, people are still willing to buy the drug, then we have a viable product. On the other hand, if the true cost of the drug (including all of the health problems it causes) makes it too expensive, and customers stop buying it, then it goes off the market, because it's not worth manufacturing. Without this assignment of costs to the party who profits from the drug, we have huge medical bills racked up from drug side effects, but the drug manufacturer continues to make a tidy profit, and sell the drug that's causing the problem at a low price. Society thus bears the cost of the drug, and the manufacturer makes an artificial profit. That's not good for anyone but the drug company.
If no one knew about this side effect beforehand, then how can anyone be liable for it? As I have pointed out repeatedly, the manufacturers of any product can be held liable for undiscovered defects in the design of their product, even if they can prove they exercised extraordinary care in the design and testing. What you are proposing is a very far-reaching change in the nature of products liability. This is not a matter of a few whiny people demanding compensation for all harms; it is a matter of the fundamental assumptions of products liability law as they have developed through the past 6-7 decades or so. Change may be a good idea, it may be a bad idea. But it is a very big change you're talking about.
The solution to the problem would be much larger clinical trials and much longer periods for FDA approval. That would also cost money, probably a lot more than compensating people who develop rare side effects only after the drug is released for general use. The worker's comp-type fund makes sense if these things can be predicted statistically so that insurance prices can be set. Industrial accidents can be, so that model works in that setting. I'm not sure if the same is true in the case of pharmaceuticals. Other than that possibility, though, I don't think there's anything fundamentally wrong with the balance between regulatory oversight and tort liability. Each one does something the other can't, and the combination seems to keep the drug supply both reasonably up to date and reasonably safe.
phil, Keep in mind that we're talking about very rare side effects here--things that aren't discovered in clinical trials because they're so rare. Even if you do force drug companies to compensate people for rare side effects, it won't affect the cost of the medication much. This is a question of fairness. In the case of rare side effects, the person who suffers the harm most likely has something unusual about their individual biochemistry which causes them to react in a way that 99.9999% of people do not. It is comparable to (but much rarer than) a person discovering they have a food allergy. Would you force Planter's to compensate everyone who discovered they'd developed a peanut allergy after consuming their product and ending up in the ER? (Granted, people know that peanut allergies exist, but they don't know that they are personally allergic until they have a reaction. In the same way, it is known that rare drug reactions will occur, but not in whom they will occur.)
"...incompetent, the victim of regulatory capture, and staffed by life bureaucrats more interested in preserving their jobs than protecting the public health." Funny, that reads like a conservative's critique of governmental over-reach. At the very least, then, would those angry liberals be willing to defy the federal employees' unions and civil service establishment by fighting for more individual accountablity from (and subsequent terminations of) those lifetime bureaucrats? What's more important: the health and well-being of the American people, or the job security of bureaucrats who liberals admit are putting that health and well-being at risk.
the manufacturers of any product can be held liable for undiscovered defects in the design of their product, even if they can prove they exercised extraordinary care in the design and testing. If that's true, I think it's awfully unfair. But it's not all that surprising, and it explains the laundry list of warnings that come with virtually every consumer product, which very few consumers ever read.
Another question: If the FDA is incompetent, the victim of regulatory capture, and staffed by life bureaucrats more interested in preserving their jobs than doing them properly, of which other agencies is this true? And what should be done about it?
If that's true, I think it's awfully unfair. But it's not all that surprising, and it explains the laundry list of warnings that come with virtually every consumer product, which very few consumers ever read. The warnings are there because "failure to warn" is an alternative theory of liability. In evaluating the fairness of strict product liability, keep in mind that for a design to be "defective," a product must be "unreasonably dangerous for its intended purpose (and foreseeable misuses)." So in principle, if not always in practice, a drug maker could win by arguing that 99.9999% safety is not "unreasonably dangerous" for something that has many benefits. It's not that you have to pay whenever someone gets hurt, its that you pay when you make something unreasonably dangerous, even if you exercise due care in design. That's why peanuts don't count: they aren't unreasonably dangerous for the ordinary purposes to which peanuts are put; they are exactly as dangerous as any other peanuts available. Ditto for obviously dangerous products like chainsaws and guns. In practice, of course, someone getting hurt might be taken as conclusive evidence that something is unreasonably dangerous. And of course the cost of defending a lawsuit can be wildly expensive even if you win.
I can tell that most of you are not aware of the following facts:
I love how people cite the Ford Pinto Memo as an example of how litigation doesn't work, when in fact that particular case resulted in Ford Motors being rocked with punitive damages so severe that every single auto maker updated their safety testing in response. If any thing, the Pinto lawsuit was an example of litigation working as it should. Ford's "cold calculation" turned out to be a very bad bet.
"Another question: If the FDA is incompetent, the victim of regulatory capture, and staffed by life bureaucrats more interested in preserving their jobs than doing them properly, of which other agencies is this true? And what should be done about it?" As a former nuclear regulator, I can tell you that these things go in waves, according to the whims of the political masters. Some years the politicians are pushing the regulators to ease-up, because of complaints by the regulated industry, while other years they go in the other direction (usually in response to loud, horrifying articles from yellow-journalism types and "public-interest" groups). The bureaucrats are generally the force of stability, which some seem to decry. However, consider the alternative - every two years they could all be replaced by a completely new bunch of political hacks with entirely different agendas than the ones they replace. Would you want to work in an industry where the rules could change completely, on such a short timeframe? The regulatory structure actually works reasonably well, but suffers most from the fact that the politicians define "safety" in the vaguest terms, so that there is lots of room for debate and argument (lawyers). In my agency, the rule was "no undue risk to the health and safety of the public", which is about as vague as possible. Everyone wanted to know "how safe was safe enough?", but no one wants to have to live with strict numerical standards. In the first place, those would have to be based on data and models that have large uncertainties, and in any case, you end up with having to accept "a few dead children" as an acceptable risk. No one wants to defend that standard. Being a regulator is not the cushy job that some of you make it out to be, but it can be satisfying and rewarding. Someone has to do it, because there will always be commercial pressures to cut corners, and it is the job of the reguloators to monitor performance, and try to anticipate the creative ways that some people in the regulated industry try to use to gain a competitive edge.
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To waste taxpayer money!
Posted by David Pinto | March 4, 2008 8:34 AM