Reciprocal Regulatory Approval To Reduce Drug Prices

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prescription-drug-shortageSenators Ted Cruz (R-TX) and Mike Lee (R-UT) recently introduced the RESULT Act, which would allow drugs and medical devices approved in certain other countries to be allowed in the U.S. as well. The countries included are European Union members, Israel, Canada, Japan, and Australia.

The benefits of this act would be significant. Professor Daniel Klein of the Mercatus Institute at George Mason University and Professor William L. Davis of the University of Tennessee at Martin have surveyed economists on this policy, and a majority agree it would improve patients’ access to safe and effective drugs.

The problem with the status quo is that that the Food and Drug Administration’s processes are heavily biased against one type of error and in favor of another type of error. It has been often noted that no FDA employee has ever been hauled in front of a Congressional committee to explain why he is preventing patients from using a new medicine. The media and politicians insist that one serious side effect or death from taking a drug is too much. This sentiment leads to bad policy.

If a drug has a side effect that would kill one patient of every hundred who took it, but cured 99, the FDA would deny the drug. This use of power clearly does not optimize people’s welfare.

As long as risks and benefits are clearly stated, patients should be free to make their own choices. The RESULT Act is hardly a purely libertarian solution, because it still gives government agencies power over patients’ choices. Nevertheless, it expands our choices in a way that no reasonably moderate person could oppose.

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