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The Independent Institute
Commentary

Medical Device Regulations Unneeded


Medical device firms, whose products range from bandages and tongue depressors to CAT scanners and artificial organs, compose one of America’s most innovative and internationally competitive industries. Unfortunately, Congress has subjected the firms to increasingly onerous regulation by the Food and Drug Administration (FDA), causing harm to the industry and the public health.

Under legislation enacted in 1976 and amended in 1990, no company may sell a new or substantially altered medical device without FDA permission. During the past four years, FDA has drastically slowed its premarket approvals. From fiscal 1983 through 1990, the agency approved 45 new devices per year on average. From October 1990 through March 1994, it approved an average of just 21 per year. Approval of improved devices, a process where vastly more applications are processed, also experienced a slowdown. In the two fiscal years 1989-90, FDA approved 19 percent fewer such applications than in the previous two years. Average waiting time for approval and the backlog of unapproved applications increased greatly.

Before David Kessler took over the agency in late 1990, FDA tended to wield its powers with some restraint and some appreciation of the benefits of expediting access to innovative products. In contrast, Kessler has given top priority to aggressive law enforcement, treating all device firms as suspected felons. He added many new enforcement officers and delegated more authority to the district offices, whose personnel were encouraged to “act now, talk later.”

Officials in the field responded by citing firms for many more violations of “good manufacturing practice” regulations, which have much to do with paperwork and little or nothing to do with the actual quality of products. District offices also issued more warning letters and took a variety of other enforcement actions at an increased rat[e] [stet]. Said former FDA chief counsel Peter Barton Hutt, “The more enforcement actions, the more FDA employees showed they were protecting the public health.”

The connection was spurious. There is no evidence that products actually became any safer as a result of a stepped-up compliance program. But the effort did generate favorable publicity for Kessler.

Recent legal and regulatory changes, requiring far more paperwork, have increased the device firms’ costs of research and development, product approval, manufacturing and surveillance of product performance. According to venture capitalist Robert Daly, “The new regulations and delays mean adding $10 million to $20 million to a company’s budget, and several years until the device gets to market. At that rate, most (venture capital) deals don’t make sense.” The increased costs and heightened regulatory uncertainties mean that some investments will not be made, some innovations will not be developed, and therefore some people will suffer and die needlessly.

Although FDA actions are subject to judicial review, firms rarely mount court challenges. Doing so makes sense only for a desperate firm that will not survive unless it receives judicial relief. But even if a firm wins in court, it cannot expect to survive in the long run, because FDA, which is notorious for its vindictiveness, has many ways to strike back and will try to destroy a firm that has the effrontery to defend itself in the courts.

The only effective escape is to flee the country. Says analyst Daniel Lemaitre, “There isn’t a company that isn’t thinking of moving its research and development, and its manufacturing overseas.” Recent surveys of the Minneapolis Star Tribune, the Health Industry Manufacturers Association and attorney Jeffrey Gibbs confirm that increasing numbers of device firms are moving or considering moving operations offshore.

The medical device laws reflect a naïve faith in central planning by empowering FDA to act as a politburo for an industry in which 13,000 firms produce more than 6,000 heterogeneous products. Little wonder if the simple legal categories and one-science-fits-all regulations only create bewilderment for those subject to them.

Thanks to Congress and the FDA, Americans have suffered great harm, they have paid higher prices caused by the higher costs that manufacturers and others must bear to comply with ever-expanding FDA regulations. More importantly they’ve had to wait for extended periods to gain access to new or improved products, and as a result they have experienced much needless suffering.

FDA can and sometimes does directly cause many deaths by its regulatory action. For example, Dr. Richard Cummins, a leading authority on defibrillation, has stated that FDA’s shutdown of a maker of the heart rhythm-restoration device from 1992 to ’94 might have caused 1,000 deaths.

Most of all, people have suffered and will continue to suffer—from an invisible effect of FDA’s costly and unsettling regulation, namely the loss of innovation that, under hostile conditions, would have brought forth new products of great benefit to mankind.

Unfortunately, there are no substantial benefits. Independent authorities, including most of the user-facility risk managers sampled in a recent three-state study, affirm that the medical-device legislation “has not made devices safer” and “does not save lives.” FDA’s claim that its regulations protect the public is self-serving, presumptuous and indefensible. There is no evidence that Europeans, who enjoy much quicker access to new products, have experienced substantial harm as a result, but ample evidence that they have enjoyed substantial benefits.

The lack of demonstrable net benefits is hardly surprising. Even if the laws did not exist, normal market incentives, along with the terrors of product-liability litigation, motivate manufacturers to produce reasonably safe and effective products. The emergency care providers, hospital administrators and medical practitioners who purchase the bulk of the devices have experience, knowledge and access to ample information from many reliable private sources. They fervently desire to help, not hurt, the patients they serve. In short, neither device purchasers nor patients need to be rescued by FDA—and even if they did, FDA’s phony protection would be cold comfort.

Medical device regulations cannot be justified. In reality, the only interests they serve are those of politicians and bureaucrats. To protect the public health, the medical device laws should be repealed.


Robert Higgs is Senior Fellow in Political Economy at The Independent Institute and Editor at Large of the Institute’s quarterly journal The Independent Review. He received his Ph.D. in economics from Johns Hopkins University, and he has taught at the University of Washington, Lafayette College, Seattle University, and the University of Economics, Prague. He has been a visiting scholar at Oxford University and Stanford University, and a fellow for the Hoover Institution and the National Science Foundation. He is the author of many books, including Depression, War, and Cold War.

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