This is the seventh installment of a nine-part series excerpting the chapter on medical care from the new edition of economist Thomas Sowell's "Applied Economics".

IBD Exclusive Series: Thomas Sowell on The Economics of Medical Care

It is illegal for a pharmaceutical company to begin selling a drug without prior approval by the Food and Drug Administration. The drug-approval process tries to reduce the risks of new and untried medicines before they are made available to the general public.

In addition to being reasonably safe for most people, pharmaceutical drugs must also be shown to be effective for whatever medical conditions they are intended to treat.

A medicine that is safe but ineffective is not only a fraud but a danger, as it may be used for diseases and conditions for which there are alternative treatments that are in fact effective, thereby depriving sick people of benefits that are already available, and perhaps costing them their lives.

Yet the question of how safe and how effective, and at what cost, must be considered as regards the years of tests and trials prescribed by the FDA's drug-approval process.

The more years that the trials go on and the larger the number of people in the sample taking the drug, the more reliable the end results as to both safety and effectiveness — and the more sick people will be left to suffer and perhaps die while these processes go on.

A new drug may be tested for effectiveness against a placebo or against the effectiveness of some other drug. The latter may be a better process in terms of the validity of the end results, but one such trial involving more than 30,000 people added another eight years to the testing process. A lot of people can die in eight years — and yet absolute certainty is still not achievable by human beings, no matter how much testing goes on.

Moreover, these deaths during the trial period are not necessarily recouped in lives saved later over the lifetime of the particular drug or treatment, which may be superseded by new drugs or treatments for the same diseases in few or many years, as the case may turn out to be.

The incentives and constraints facing government officials in charge of testing pharmaceutical drugs are asymmetrical. Ideally, these officials could weigh the costs and the benefits equally — for example, stopping the testing process at the point where the estimated number of lives lost while waiting longer for more drug tests to be completed would exceed the estimated number of lives saved by getting more data on the drug's safety.

But neither the public, the media nor the political leaders to whom health officials are ultimately responsible are likely to use that standard.

If a thousand children die from a new drug allowed into the market with less testing and 10,000 children would die while more testing was going on, the public outcry over the deaths of those thousand children would bring the wrath of the whole political system down on the heads of those officials who permitted the drug to be approved with "inadequate" testing.

But if 10 or 100 times as many people die while prolonged testing goes on, there will be few, if any, news stories about those people in the media. For one thing, the thousand deaths attributable to the drug approved by the FDA are far more likely to be provable deaths to identifiable individuals, whose stories can make headlines.

That is not true, however, of the deaths of 10,000 unidentifiable individuals whose inability to get a lifesaving drug shows up only in death-rate statistics comparing what happens where the drug is available and what happens where it is not available.

But statistics are never as dramatic as television interviews with distraught widows or bereaved mothers of those who have died from the side effects of a drug.

These asymmetrical incentives and constraints have led American health officials to ban lifesaving drugs that have been in use for years, if not decades, in Europe — with few, if any, ill effects — because these drugs have not yet gone through the long and costly process necessary to get approval under American laws and policies.

Even if the effectiveness and relative safety of these drugs have been reported in scientific studies published in leading medical journals, that is not accepted as a substitute for the prescribed FDA approval process. Desperately ill people have been known to either have the unapproved medications smuggled into the country or, if they can afford it, go outside the United States themselves to get them.

Sometimes safety precautions can be carried to the point where they are fatal.

A former commissioner of the Food and Drug Administration noted the institutional incentives and constraints:

In all our FDA history, we are unable to find a single instance where congressional committee investigated the failure of FDA to approve a new drug. But the times when hearings have been held to criticize our approval of a new drug have been so frequent that we have not been able to count them. The message to FDA staff could not be clearer.

The United States is by no means unique in either the presence or the degree of delay in approving new pharmaceutical drugs. Both Canada and the countries of the European Union take longer. A more fundamental question is: How much risk is too much — and who should decide?

Vioxx, one of the well-known drugs for treating arthritis, was withdrawn from the market by its producer, Merck & Co., after tests showed that people who took Vioxx for more than 18 months had twice as many heart attacks or strokes as those who had taken a placebo.

While twice as many sounds large, this doubling was from 0.75% who suffered heart attacks or strokes without taking Vioxx to 1.5% of those who took Vioxx for more than 18 months. Meantime, those who took Vioxx for less than 18 months "had no increased cardiovascular risk," according to a report in the Wall Street Journal.

The real issue here is not Vioxx but risk, benefits and alternative medications.

Arthritis can be both painful and crippling, and only doctors and medical scientists are likely to know what alternative treatments are available or how effective they are compared to Vioxx. Moreover, whether arthritis is a minor problem or a severe handicap can vary from patient to patient.

The risk that may matter most to the producer of Vioxx may be the risk of lawsuits. But, as far as the risk to patients is concerned, each patient knows how big a problem that particular patient's arthritis is, and the patient's doctor knows what alternative treatments are available and what their risks are, since nothing is perfectly safe.

But a legal system that makes it easy to sue can deprive patients of a choice to assume a given risk for a given benefit, even if that risk is less than other risks that people are free to take, just for the sake of recreation, such as white-water rafting, sky diving or mountain climbing.

Friday: The most stringent price controls of all — on organ transplants.

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From the book "Applied Economics"  by Thomas Sowell. Excerpted by arrangement with Basic Books, a member of the Perseus Books Group. Copyright © 2009.