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The Lighthouse is the weekly email newsletter of the Independent Institute.
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Volume 6, Issue 51: December 20, 2004

  1. Reforming Pharmaceutical Regulation
  2. The Missile Defense Boondoggle
  3. RICO Law Undermines Due-Process Protections

1) Reforming Pharmaceutical Regulation

Will Merck's recall of Vioxx scare policymakers into adopting more dangerous pharmaceutical regulations?

"If the response to the Vioxx episode leads to increased delays and costs in approval of new drugs, then this real problem in the industry will become worse," writes Paul Rubin, a research fellow at the Independent Institute and economics professor at Emory University, in a new op-ed.

To get safe drugs to consumers more quickly, policymakers must recognize first that the efficacy requirement that has been in place for more than 40 years has been disastrous. "Every scientist who has studied the FDA carefully has found that delays in approval, mostly since the FDA policy change in 1962, which required approval for effectiveness as well as safety, have led to increased numbers of deaths. That is, more people have died waiting for drug approval than have been saved by having 'safer' drugs available," continues Rubin.

"One estimate is that the benefits of FDA safety regulation are between 500 and 1,000 injuries (not deaths) avoided per year, while the cost of FDA delay is between 2,100 and 12,000 lives lost per year because of the unavailability of useful drugs during the approval process."

Rubin, a former Chief Economist of the Consumer Product Safety Commission, recommends that a new board or agency be created to test drugs after they have been approved. Such an agency, which he calls a "Post Approval Drug Safety Agency" (PADSA), would deliver three great benefits:

1. A PADSA would speed the detection and recall of drugs discovered to be harmful.

2. A PADSA would reduce the cost and delay of introducing new drugs. Because a PADSA would reduce the pressure for pre-approval testing -- which costs about $800 million per approved drug -- drugs would be brought to the market more quickly and cheaply.

3. A PADSA would reduce price differentials (e.g., between U.S. and Canadian drug prices) caused by litigation. "Because the PDSA would remove harmful drugs from the market, we would not need to rely on tort lawyers to discover unsafe drugs."

"This set of coordinated policies, adopted together could go a long way towards improving the functioning of our pharmaceutical market and could provide more drugs at lower prices and reduced risk for consumers," Rubin writes. "If handled properly, the Vioxx incident could lead to reforms that will provide great benefits for consumers; if handled poorly, it may lead to great harms."

See "An Opportunity Or a Threat: How to Have Safer, Less Expensive Drugs," by Paul H. Rubin (12/7/04) http://www.independent.org/newsroom/article.asp?id=1433

Paul Rubin is a contributor author of AMERICAN HEALTH CARE: Government, Market Processes, and the Public Interest. To order this book, see http://www.independent.org/store/book_detail.asp?bookID=33.

FDAReview.org -- The most comprehensive online critique of the FDA
http://www.FDAReview.org

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2) The Missile Defense Boondoggle

The U.S. national missile defense system under construction has been a costly mistake and should be scrapped, argues Ivan Eland, director and senior fellow of the Independent Institute's Center on Peace & Liberty, in his latest op-ed.

"The Missile Defense Agency has spent $80 billion since 1985 and has very little to show for it. Over the next five years, the U.S. government will dump another $50 billion into missile defense programs. Yet rogue states probably will be able to come up with cheap countermeasures to foil costly defensive systems."

The greatest foreign threat to Americans comes from terrorists, who are unlikely to employ missiles, not from identifiable countries, argues Eland. As for developing an anti-missile shield to defend against hostile countries, true patriots should take note of Gorbachev's response to Reagan's Star Wars initiative in the 1980s, when he said the Soviet Union could build missiles faster than the U.S. could build a missile defense. Unfortunately, although missile defense is not the best way to defend against another nuclear foe, conservatives continue to favor it, according to Eland, mainly because Reagan backed it.

"Winning one for the Gipper is no longer needed to fire up conservatives. The Bush administration should take advantage of that to reduce the yawning budget deficit by killing the grotesquely wasteful missile defense programs," Eland concludes.

See "Kill Missile Defense Now," by Ivan Eland (12/20/04)
http://www.independent.org/newsroom/article.asp?id=1440

To purchase THE EMPIRE HAS NO CLOTHES: U.S. Foreign Policy Exposed, by Ivan Eland, see
http://www.independent.org/store/book_detail.asp?bookID=54

Center on Peace & Liberty
http://www.independent.org/research/copal/

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3) RICO Law Undermines Due-Process Protections

Until a few decades ago, there were only three named federal criminal acts -- treason, piracy, and counterfeiting -- and the business of criminal law enforcement was left primarily to the states. Today the number of federal criminal statutes has climbed to more than 3000, largely due to the passage of RICO, the Racketeer Influenced and Corrupt Organization of 1970.

Despite its name and original intent, RICO has done little to reduce organized crime. Its impact on law enforcement nevertheless has been enormous -- and enormously harmful to the rule of law. According to William L. Anderson and Candice E. Jackson, RICO has blurred the lines between state and federal law enforcement and overturned the protections inherent in the due-process guarantees of the U.S. Constitution. RICO has also criminalized offenses that once were considered merely civil matters and has given prosecutors a powerful bargaining tool.

"Because RICO cases are tried in federal courts, U.S. attorneys do not have to prove to juries and judges that the accused engaged in the aforementioned crimes (which as a rule are violations of state criminal law); they must show only that it appears the defendants carried on those activities," write Anderson and Jackson in the summer 2004 issue of THE INDEPENDENT REVIEW. "Moreover, for a RICO conviction, the prosecutor must meet only the civil standard of 'preponderance of the evidence,' not the higher standard of 'guilty beyond a reasonable doubt' that historically has been required for criminal conviction."

RICO abuses did not end with former federal prosecutor Rudolph Guiliani's well-publicized convictions in the 1980s (several of which were later overturned on appeal). Federal prosecutors used RICO against the Interbank Group in the 1990s, for example, claiming that the firm's alleged regulatory violations made it a "criminal enterprise," which allowed the feds to freeze its assets and prevent it from mounting a capable legal defense.

"RICO represents the worst the criminal justice system has to offer any citizen: the arbitrarily wielding of the government's awesome power to impose criminal sanctions," write Anderson and Jackson. "This outrageous law should be repealed at once."

See "Law as a Weapon: How RICO Subverts Liberty and the True Purpose of Law," by William L. Anderson and Candice E. Jackson (THE INDEPENDENT REVIEW, Summer 2004) http://www.independent.org/publications/tir/article.asp?issueID=38&articleID=215

For more on constitutional law, see http://www.independent.org/issues/search.asp?subID=9.

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