2010 FDA Budget Total: $3.18b
From Congressional Budget Authority: $2.35b
From User Fees: $828m
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Outlays in millions of dollars
Foods: 828
Human Drugs: 908
Biologics: 305
Animal Drugs: 171
HQ and Commissioner Office: 205
National Toxicological Research Center: 59
Rent, Facility Maintainence, and Misc.: 313
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Profits from the 8 largest US Pharmaceutical Companies in 2009
Eli Lily: 4.328b
Bristol-Meyers Squibb: 4.420b
Abbott Labs: 5.746b
Astrazeneca: 7.544b
Novartis: 8.454b
Pfizer: 8.635b
Johnson & Johnson: 12.226b
Merck: 13.024b
Now lets grant some very generous assumptions. Lets grant that all the stuff the FDA spends money on is necessary, lets not question the FDA budget at all. Then lets assume that these 8 pharmaceutical companies would have to pay for the entire FDA budget, which is $3.18b, ignoring that $828m already come from companies that are regulated.
These 8 companies would have to spend 4.9% of their profits to cover the expenses of the entire FDA. So in terms of financial burden, regulation on a free market is not a problem. You may say there is more of an incentive problem, and I would disagree, but for now we can agree that food and drug regulation is not an issue in terms of the companies having enough money to do it.
But this is a misleading comparison, because really there are many more companies, including food companies and biotech companies, and these companies are already paying about 1/4 of the FDAs fees. But I’m not going to analyze across all industries affected by the FDA, so I’ll just guess each of these companies would really only be losing about 1% in profit.
“Unlike these companies you mentioned, the comparative amount of money needed to put heir stamp on a drug verses a toaster or dishwasher is an astronomical difference. This ensures that it is a hard to enter market, and one or 2 companies would hold the monopoly. The idea is one I’ve heard of before. Any agency like this, as profit is their only goal would also be just fine with just appearing to be safe as opposed to actually being safe. BP is treating this crisis as a PR problem mostly”
Well we’ve already debunked the first assertion, and the second assertion is just silly. I guess the less than 4.9% reduction in profits is going to knock eli lily, bristol-meyers squibb, Abbott labs, astrazeneca and pfizer out of the market.
But the second statement is really bizarre. Profit. Well first off Underwriter’s laboratory and the American Dairy Association and Council, the companies anubis is referring to, are non-profit companies. I’m not sure what ADA he’s referring to, but the American Dental Association is non-profit, and the American Diabetes Association is a non-profit, so there are plenty of non-profit trade associations, but unfortunately these agencies have lost their teeth once state regulation came to dominate.
But aside from that, all individuals attempt to profit. Agents of the FDA are going to try to get the most out of doing the least, that is FDA officials have just as much an incentive to cut corners than any other agency. Profit and loss don’t disappear just because it’s a state agency, they just manifest in different ways. Fear of profit is just inane.
Moreover, the FDA will not go out of business. So if say FDA agents get bribed, and it is uncovered, maybe some people will get fired in a congressional hearing, but the FDA will still be in business. Now if you’re the owner of a grocery store, and you hear that one of the regulatory agencies you rely on is taking bribes, would you seek out some other regulatory agency? I would. And if my company was a large chain like Albertsons, Wal-Mart, Vons, Costco or whatever, this process would be standardized.
If the FDA is found to take bribes or cut corners somehow, it doesn’t matter. You still have to get approved by them.
Then Anubis brings up the BP spill. Now what actually happened is that Ken Salazar, Obama administration secretary of interior, granted Deepwater Horizons, the oil rig that failed, a categorical exclusion from inspection. I have a video just on that which I’ll link in the description, but no, the BP disaster was a failure of government regulation, and Walter Block outlined a system of private property in oceans and how it would work better, which I’ll link to as well.
“You do realize that UL and the ADA are also government regulated right? Both work so well because there is a government and civilian oversight. 2 layers of coverage is better than one. If the drug companies wanted to they could probably easily set up something of the same but it would be regulated too, they just have not found it financially worth it.”
Well I have no idea what he means by “is government regulated”. All companies are “regulated” somehow.
And if you want two layers of oversight, you can have two different agencies, so it’s more difficult to bribe one or if one cuts corners you’ll still get your product properly inspected by the other company in time for you to find another backup. You don’t need government to have multiple layers of coverage.
And the reason there aren’t third party drug testing companies is because these companies have to comply with the FDA. That is, there already is a third party, and while it may make sense to have one, it doesn’t make sense to form another now that the FDA exists. Though pharmaceutical companies do test their products in their own labs, but they don’t need to make it third party because the public already believes the FDA is the third party.
Now this is actually a very dangerous situation, because the FDA is overestimated by the public as all government agencies are. And this is something close to an analytic truth, because states cannot exist by force alone as proven by revolutions, thus they are sustained by belief - which need not be gung-ho patriotism but could just be resigned acceptance - the belief in either the inevitability or necessity of the state. This means that people believe that agents of the state are for some reason insulated from the problems of human action, which results in them saying absurd things like, “people can’t do X, thus we need people called state to do X.”
If it was just some private rating agency, people would be much more skeptical, which they should be with the FDA because there’s no reason to believe the FDA is any better than a private company.
Let me end this by saying that I don’t support a stateless society because I think products would be safer, I think they would be about as safe as they are today. I support a stateless society for other reasons. This stuff on regulation is purely defensive.
Video On Which the Comments Occurred:
http://www.youtube.com/watch?v=lZLb7L5oFZY
FDA Budget:
http://www.fda.gov/downloads/AboutFDA/ReportsManualsForms/Reports/BudgetReports/UCM153879.pdf
List of Largest Pharmaceuticals:
http://en.wikipedia.org/wiki/List_of_pharmaceutical_companies
Walter Block’s Idea:
http://mises.org/media/5197
The Free Will of British Petroleum:
http://fringeelements.info/post/686234867/the-free-will-of-british-petroleum-something
An example of FDA Fast-Tracking their Favorite Companies:
http://industry.bnet.com/pharma/10003609/amphastars-accusations-v-fdas-woodcock-look-like-maneuvering/