September 1, 2008

Colleagues, Where is the Market Failure? Economists on the FDA

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Klein, Daniel. "Colleagues, Where is the Market Failure? Economists on the FDA." Econ Journal Watch 5, no. 3 (2008): 316-348.

According to the Food and Drug Administration (FDA), some 20 cents of every consumer dollar purchases products that come under the purview of the FDA. It regulates the safety of America's food supply and cosmetics, the safety and effectiveness of pharmaceuticals and medical devices, and the claims that can be made about these and other products.

This article treats three FDA-administered restrictions:

  • The permitting of new drugs and devices
  • The control of manufacturer speech
  • The imposition of prescription requirements.

This article works from a point of view holding that there is no market-failure rationale for these three interventions. The implications of that view are very much at odds with the common and official cultural attitudes about the matter. This article is a cultural analysis of the economic discourse on the issues. It explores how economists approach and discuss an enormous, entrenched apparatus that basic economic reasoning properly condemns as a bane to humanity.