Most governments ban all new medical drugs and devices. The ban is lifted only when a government agency grants its approval. Getting government approval is time-consuming and expensive. In the USA, for example, it takes more than ten years and costs more than $800 million to bring a new drug to market (DiMasi et al. 2003). Lengthier and more extensive testing of new drugs has benefits and costs. More testing increases the safety and effectiveness of those drugs that reach the market, but more testing means fewer new drugs since many drugs become uneconomic to produce as costs increase. More testing also delays the use of beneficial drugs, drugs that could have reduced mortality and morbidity had they been available earlier. In short, regulation may deter and delay medical progress. We survey the research that compares the benefits and costs of drug regulation.
Find the book at the Institute of Economic Affairs.