Posts Tagged ‘FDA’


July 12, 2010


Our resources are limited. We have to make choices, to get the things we want most with our limited resources. That is rationing. Individually, we must make these choices within our individual resources.

With insurance, we pool our risks with others to provide for occasional extreme expenses. We pay regular premiums, spreading out the cost of major calamities over time and among a group of people within the same insurance program.

Back in the 1930s, medical insurance was rare, if it existed at all. When a medical emergency arose, we went to the County Hospital, supported by local taxes. The quality of care was not the best. I have a stiff elbow to show for it.

I take a dim view of any involvement of government in medical insurance. At the very least, it will add a level of bureaucratic inefficiency to the costs of medical care. At the worst, it will just reduce even more of whatever freedom is left in the medical care market. Say what they may, government involvement means medical care rationing driven by political considerations.

I believe the greatest problem with our medical care is the monopoly (granted by government) which enables the AMA to limit the supply of doctors, and to set rules by which doctors must treat patients. The result is not health care but rather medical care, suppressing symptoms by prescribing drugs. Prevention and cure are not part of the system.

A secondary problem is the close relationship of the AMA, the drug companies, and the FDA, which results in millions of routine prescriptions for expensive, ineffective, unsafe drugs. Prime examples are bisphosphonates, statins, and coumadin.

Providing by law for universal health care insurance will automatically assure that only AMA approved procedures will be covered by insurance. All existing health insurance already does that, but universal health insurance will even eliminate the option to pay as you go for your own health care. Of course, the automatic result of any socialist scheme like universal medical care is to reduce our freedom.

Insurance is an obvious solution to protect yourself from huge occasional unforeseen medical bills. On the other hand, insuring to cover routine office visits and checkups simply adds bookkeeping costs and red tape to your medical expense.

Pay as you go for health care forces you to make economic choices. The result is that you would spend less than you do under full medical insurance. You do your own rationing, according to your own priorities. Doctors and insurance companies prefer the full medical coverage; they earn more that way, and you and I pay for it.

Britain has its own version of universal health care. Through the years the government has tried many ways to limit the ballooning cost. Ultimately, as in Canada, the most effective rationing is the waiting list. When I lived in Britain, in 1999, I needed a knee replacement. The waiting list for that was 20 months. Fortunately, I had private health insurance and had it done immediately.

I feel that total medical insurance coverage, plus the conviction that “doctor knows best”, plus the conviction that the USA has the best health care system in the world, relieves us of responsibility for our own health. We fall in with the medical notion that sickness just happens, regardless of nutrition and lifestyle, and only an M.D. can fix it.

Take charge of your health. Invest some time and effort to learn about, and get, good nutrition. Get up from your couch and TV long enough to get some healthy exercise. Find one of those rare doctors who offer real health care and can see beyond their prescription pad. If you take out medical insurance, take the plan with the maximum deductible and co-pay to keep the incentive to look after your own health.

Incentives and Bureaucracy

April 11, 2010

Incentives and Bureaucracy

Bureaucrats have very different incentives from politicians. They have no need to get elected, but once hired, they have a secure job, good pay, early retirement with a good pension, and power to interfere with the hapless taxpayers.

In fact, harassing us is the object of their job, as they must be seen to be doing something in order to advance in the bureaucracy.

The usual route to promotion in bureaucracy is empire building. Expand your activities beyond your capacity to handle, and build a department to take over the job. If the people in your department do the same, you become a manager of several departments. The only limit to expansion is your ability to justify your expanding activities. The incentives throughout bureaucracy are heavily tilted to activism and expansion.

Most bureaus were created to regulate some specific industry or activity. The Food And Drug Administration (FDA) was created to regulate the production, quality, and safety of foods and drugs, as well as medical equipment and procedures.

Even before the bill was passed to create the FDA, the food and drug industries had an incentive to try to control the shape of the bill to suit their interests. They succeeded. The FDA has been controlled from the start, especially by the biggest drug companies.

The FDA hires experts from the drug companies. After serving their real masters, the drug companies for years while employed by the FDA, they “retire” to a cushy position back in the drug company they originally came from. The FDA foolishly assumes that loyalties of their employees to their former and future employers will not prejudice their performance while employed by the FDA.

In recent years, most of the funding of the FDA has come from fees paid by the drug companies, but only if their drugs are approved. This leaves little incentive for the FDA to reject an application for approval.

Acceptance or rejection is based on research funded by the drug companies. There is no requirement to reveal any research which might cause a rejection.

The rules governing application and acceptance make it very expensive to apply for approval. This effectively prevents new or small companies, unless backed by lots of money, to get started and compete with the entrenched big boys in the business.

In practice, drugs are not seriously tested (on people) for safety before approval. After approval, we become the guinea pigs for testing the safety of the newly approved drug. A very ineffective system for reporting adverse reactions means that thousands must die before enough “adverse events” are reported and a drug is withdrawn from the market.

The patent system (another government bureau), when applied to drugs, creates a perverse incentive for the drug companies to push ineffectual, dangerous drugs. There are many substances which occur in nature which have proven safe and effective remedies for a thousand years. They are not patentable. To get a patent, drug companies must create chemicals which don’t occur in nature. Mostly, they imitate the natural remedies, almost always with inferior results and safety.

However, with approval by the FDA, and lots of hype to sell their product to the AMA, to the doctors who prescribe them, and to the public, they make literally billions of dollars out of the patent monopoly on their overpriced synthetic drugs.

Apparently, this is what happens in all government regulatory bodies. The people they are supposed to regulate gain control and use the regulator to suit their own purposes. This is simply human action, people reacting to their situation to achieve their wants. The fundamental cause is the power of government and the incentives this creates.