By Daniel B. Klein

“Absolutely,” answered Dr. Scott Gottlieb, President Donald Trump’s pick for Food and Drug Administration (FDA) commissioner, when asked, “Is this a cover-your-backside thing?” Gottlieb was participating in a debate concerning the degree of caution shown by the FDA and whether that caution is actually hazardous to Americans’ health. Administrators at the FDA “cover their backsides” by imposing excessive demands on those developing new drugs and applying for FDA permission.

Of the candidates that had been floated, Gottlieb is perhaps the least radical and has a tremendous degree of expertise in medicine, science, the pharmaceutical industry, and the relevant policy apparatus. But Gottlieb’s debate response of “absolutely” emblematizes the change of attitude needed at the FDA. How many counterparts within President Barack Obama’s administration would ever have responded to a cover-your-backside problem in the agency with an immediate “absolutely”?

The debate Gottlieb participated in is well worth watching, and Gottlieb’s side won handily, as measured by audience polling.

The law governing drugs is extreme: New drugs are banned until individually permitted by the FDA. The FDA also regulates the food we ingest each day, but that control is entirely different. A new food product is allowed until banned. It should comply with general standards, but it does not receive individual permission.

In a free society, people are generally free to act and torts are addressed as they arise. But when you turn it around so that every innovation is banned until permitted, as the federal government has done in the past, you create a government bottleneck that imposes costs, delays, and uncertainties—if not worse.

Just as water runs downhill, bureaucrats cover their backsides, corporate players specialize in regulatory affairs expertise, innovation is suppressed, product monopolies are created, health care costs rise, and mortality and morbidity are worse than they would have otherwise been.

The bottleneck originates in legislation that designates the FDA as the sole gatekeeper of new drugs and their labels. FDA does not ban new drugs, but it does withhold permission. Even within the bounds of the legislation, however, there is considerable room for the FDA to ease the bottleneck and permissions.

How much easing should there be? I confess to being one of those classical liberal economists who doubt that the existing banned-until-permitted policy was ever justified in the first place. Voluntary institutions and traditional legal incentives work well to make it self-damaging to take, buy, produce, sell, or prescribe drugs that are ineffective and/or unsafe. There is a natural demand for the assurance of quality and safety, and that motivates the supplying of such assurance, by means purely voluntary and through the civil court system. Drug regulation should look more like food regulation. If it did, we’d all be a lot healthier.

Most sensitive drugs are by prescription only, so even if drug development were freed up, doctors would still be gatekeepers so long as prescription requirements remain unchanged. In my assessment, the disadvantages of the banned-until-permitted policy are enormous and unredeemed.

George Mason University economist Alex Tabarrok calls the total effect of suppressed drug development the invisible graveyard. From the status quo 50-yard line, I would defend moving the ball far downfield in the liberalization direction, if not all the way to the end zone, which, in this case, represents abolition. I know, it’s good to be an academic, but the FDA question needs some William Lloyd Garrisons who take up the issue at its roots.

Scott Gottlieb is not a William Lloyd Garrison, but he motions consistently in the liberalization direction, toward reforms that would move the ball to the 45-yard line. Regarding the permission process, he has favored extending accelerated review to wider categories of drugs, simplifying permitting of generics, and depending more on surrogate-measure evidence, existing data, approval in other nations, and post-market follow-up. For patients, he has favored expanding “the right to try” or compassionate use. He has favored liberalizing manufacturer speech regarding off-label uses. He would, therefore, make the FDA less stingy with the permissions it issues. Also, he has favored making the FDA explain its decision when declining to permit a drug.

Though not a radical, Gottlieb appears ready to fight not only the cover-your-backside culture within the FDA, but also the control-freak culture. Gottlieb emphasizes that cultural change within the agency requires changes in protocols. If Gottlieb can move the FDA ball to the 45-yard line, that will be an important victory for human health, healthcare economy, and human freedom—three things that normally go together.

Daniel B. Klein ([email protected]) is professor of economics and JIN Chair at the Mercatus Center at George Mason University, coauthor of FDAReview.org, and chief editor of Econ Journal Watch.