Working Paper No . 218 “ IS THE FOOD AND DRUG ADMINISTRATION SAFE AND EFFECTIVE ? ” TOMAS PHILIPSON

Their e-mail addresses Are and , respectively. 2 In virtually all developed countries and many undeveloped ones as well, regulatory authorities provide public oversight of the safety and efficacy of many medical products and foods. In the United States, such oversight is conducted by the Food and Drug Administration (FDA), which regulates drugs, medical devices, biologics (products made from living organisms, like vaccines and blood products), cosmetics, radiation-emitting electronic products, veterinary products, and foods. The FDA regulates all food products except meat and poultry, which are regulated by the United States Department of Agriculture, although the FDA regulates game meats. According to the FDA, the products it regulates account for more than one-fifth of U.S. consumer spending. In the area of medical products, the agency is responsible for determining whether marketed products are both safe and effective before and after they have been marketed. Compared to many other regulatory agencies, relatively little research has been done by economists on the efficiency tradeoffs involved with the FDA, although existing analyses Schwartzman (1976). It is somewhat ironic to conjecture that if a product application was supplied to the FDA with the scant amount of analysis or evidence that currently exists on the efficiency or performance of the policies of the agency itself, such an application would clearly be rejected on the basis of insufficient analysis or evidence. In this paper we discuss and summarize in a non-technical manner recent research on the FDA that sheds new light on whether the policies of the agency itself are safe and effective. Although the discussion is specific to the FDA, some of this research could potentially apply to other areas of regulation as well, such as e.g. transportation. 3 We begin with some background on the statutes and regulations that govern the Food and Drug Administration. We then stress two static and dynamic issues that seem fundamental to the efficiency of the FDA. The static issue concerns the potential inefficiency of the duality of product safety laws when such functions are performed not only by the FDA but also by the private sector in a complimentary way through product liability law. Put another way, what is the rationale for using product liability and the FDA to regulate drug safety? While intuitively it may seem that two systems must be better than one in ensuring drug safety, it is important to remember that each …