Friday, April 22, 2011

Medical Regulations

As promised, I have finally written my examination of regulation in the medical field, and the reason I think some non-government alternatives will prove, not only every bit as safe, but less costly to consumers, and will also allow for some other beneficial outcomes.

Let me start by saying I know I have an uphill battle here. The practice of medicine, as well as the manufacture and distribution of pharmaceuticals, have been regulated for a very long time. Regulation of medicine (along with food) was one of the very first regulatory endeavors, and the licensing of doctors was one of the earliest regulatory measures adopted by many states (banks may have come first some places, but medicine was almost as early). So, not only have we all grown up with medical regulation, but so did our parents and even our grandparents, it has the advantage of age. And, as most things that have been done for a very long time, most of us have come to see it as natural, to assume that the way things have always been done is the natural way to do them.

While normally I am all for preserving traditions, and agree that things that have worked for a very long time have a good case for not being changed, in this case I have to go against my natural inclinations. The regulation of drugs and doctors is not a natural state of affairs. In fact, both practices arose based upon deceptions, and have continued, in some degree, as they are beneficial to the groups regulated.

Just like any business regulation which restricts entry, the licensing of doctors serves, like the licensing of hairdressers or electricians, to raise the salaries of those licensed. Of course, as any group benefiting from restrictions on entry, the doctors (and electricians and hair dressers, too) say the barriers are needed to preserve quality, and some may even think that is true, but that is not the primary outcome. Now it is impossible to make any generalizations, as regulation is done at the state level, meaning we have 50 different histories, but some of the earliest medical licensing rules were passed not so much to protect patients as to protect doctors from unlicensed competition. At a time when doctors prescribed often lethal purgatives, calling a licensed doctor more safe than an herbalist or an apothecary is a bit of stretch. The laws were not intended to make patients safe but to prevent amateurs from competing with the doctors. It was intended to keep the world safe for purgatives.

Nor does the regulation of pharmaceutical (and food) have any better pedigree. Yes, the Pure Food and Drug Act was passed after a series of very public problems*, and it was passed with the best of intentions, but one of the main forces pushing it was the muckraking writing of Upton Sinclair. As anyone who has read The Jungle with an appreciation for history can tell you, Upton Sinclair was far from an honest journalist. Allowing laws to be passed based on the word of Sinclair is akin to passing laws based on the films of Michael Moore. The man was a first rate agitator with only a passing acquaintance with the truth. Had the food and drug industry been as bad as he depicted I would still argue federal intervention was not the best approach, but as he simply fabricated many of the abuses he "reported", it was even less necessary. (Of course, Sinclair was clever enough to call his work fiction, then only hint that it was based on truths, all the while adding his won fabrications. It gave him a nice out if anyone ever called him on his excesses. Sadly none ever did, he was taken at his word by most readers at the time, and even now. I still recall classes where The Jungle was presented as an accurate historical document.)

Of course, just because they were born from deception does not mean that the regulation of drugs and the practice of medicine should be eliminated. Yes, medical licensing may have been intended to prevent competition and drug regulation may have been brought about by false muck raking journalists, but that does not mean they serve no purpose now. So, next, I will try to show you how they manage to stifle innovation, raise costs for consumers, insulate practitioners (which may be one of the reasons that the tort crisis began),  and generally act against the interest of consumers. Even in the area of safety, the one area in which most accept that they are reasonably successful, I will try to show you that there are viable alternatives which do far less harm.

Let us look at the harm done by regulation step by step:

1. Limiting Choice

A. Drugs

In the area of drugs, the way that the FDA limits choices has been well documented, as well as being obvious to anyone who examines the subject. Before a drug can be legally sold it must undergo a lengthy, costly review process. Leaving aside whether or not this review process actually adds to the safety of the drug, and ignoring for the moment the way arbitrary factors can derail this process and keep safe and effective drugs off the market, let us look at the effect that just the costs of the process, in terms of time and money, has.

We often hear of "orphan drugs" which have too low a profit margin to make it worthwhile to go through the approval process, and, yes, that is one cost of this process, but ti is not the only one. Think about this hypothetical situation: A drug has been developed which will cure a fatal, highly contagious disease, but, before a consumer can buy it, it must go through the multi-year process to show it is safe and effective. Now, let us look at that and think. Obviously, if the developer thinks it is worth going through the process, the researcher has conducted his own tests to show that it cures this condition. In addition, as it cures a fatal disease, I doubt those who would take it would care if there are side effects or not, as the alternative is certain death. So, why on earth should we allow people to continue dying for years before this drug can be put into the hands of those who need it?

I know that some of these complaints have been addressed by the government. There is a lessening of requirements for "orphan drugs" and there are "compassionate" exemptions for those with certain diseases allowing them to get experimental drugs, but that just raises other questions. For example, if the process can be safely ignored for these specific drugs, why do we need it for others? If we admit that someone dying can get experimental drugs, why not someone who is in chronic pain? Most pain sufferers would happily accept side effects to be relieved of chronic pain. In short, by waiving the testing requirements for certain drugs, and allowing certain patients to get certain drugs without FDA approval, the FDA actually makes me question what use there is in the process at all.

Of course, the long and costly process is not the only problem. There are many more.

For example, there are the perverse incentives inherent in all bureaucratic work. While profit seeking enterprises have inherent systems which reward profit and encourage successful risk taking, bureaucracy tends to encourage excessive caution and inertia, neither of which is conducive to improving our health. Let us think of the bureaucrat who has final say over a drug. If he approves a drug which later kills people, or has some other unforeseen but headline grabbing side effect his career is over. On the other hand, as no one has ever heard of this drug, if he prevents it from being approved, no one will care except the manufacturer. Of course, it may be the drug that would have prevented thousands of deaths, but no one knows about that, the potential benefit is unseen, so he gets no blame for those deaths, the way he would be blamed for any mishap should he approve the drug. In other words, it is far safer for him to deny even safe and effective drugs than it is for him to approve anything with even the most remote possibility of a problem.

Nor does the harm done by the conservative nature of bureaucracy stop there. Think of the endless mandated warning labels, overstating greatly even the most remote risk. Yes, some are placed by drug companies hoping to dodge the tort lawyers, but many more are mandated by the FDA. Supposedly warning of every conceivable harm will make people better informed and keep them safe. What we do not see, and which is probably more harmful, are those who are prescribed a drug, yet, afetr reading the warning labels and their lurid exaggeration of the risks, refuse to take a needed medication. Again, if a label were missing, the FDA would shoulder the blame, but they get no blame for those who die due to being scared off by excessive labels. So it is in the interest of the FDA bureaucrats to place as many warnings as possible, in the most excessive language possible, as that is the easiest way for them to avoid any blame.

And so, you may be asking, how does this limit choice? The answer should be obvious. Faced with all of these hurdles and difficulties, the possibility of a drug earning too little to cover the costs of approval, the likelihood of a drug being rejected, and the possibility even an effective drug will be burdened with so many warnings no doctor will prescribe it and no patient will take it**, many drug companies simply ignore certain types of research which they otherwise would pursue. And even where they do conduct research, they often ignore certain discoveries as they simply are not worth the trouble of shepherding through the FDA approval process. And, finally, even when the drug company does take the risk, the FDA often simply rejects drugs which the companies would happily sell, and consumer happily buy, despite the risks.

In other words, the FDA makes unavailable many, many drugs which both the manufacturer and the consumer would prefer to be on the market.

B. Doctors

In the case of medical licensing, the limiting of choice is much more obvious. By limiting medical practice to those approved by the state boards, it is obvious that the law is intended to limit choice. Of course most think that this is a good thing, but I would argue otherwise.

For example, let us suppose that someone who has worked as a medic in the military or an EMT in civilian life wants to set up a small clinic. He could easily treat small scrapes, bruises, even splint sprains and immobilize broken bones, perhaps even set clean breaks, given the equipment to identify which breaks require more intervention. Obviously, not being burdened with the costs of medical school, and with a more modest practice, his services would cost less than a traditional doctor, making such a minor first aid clinic an ideal low cost alternative for poorer areas. But, as you can imagine, such an alternative could never exist, as the man would be arrested for practicing medicine without a license.

Another way in which the current system limits choice is in its internal discipline system. Now, I know that it takes quite a bit to have a license pulled, but the fact that a license can be pulled does, in itself, introduce an incentive not to go too far from medical orthodoxy. Doctors are far from a uniform lot, but there still are certain common assumptions, and those who stray too far from the accepted beliefs do risk losing their license.

Please, do not read into this the idea that I think there is any conspiracy to hush up fantastic discoveries. By and large, what the medical establishment considers standard practice is backed up by the best scientific knowledge of the present time, and almost all of those who deviate far enough to lose their licenses are quacks with absurd theories. My point is that even practices based on the best scientific findings can be wrong, and that at times even scientists can be blinded by personal bias, and be unwilling to listen to proofs which overturn what they have always believed, so it is possible, even if unlikely, that a true revolutionary discovery could be dismissed, and its proponent could lose his license, being dismissed along with the army of quacks. This would not be an issue if licensing were not mandatory, as they could continue fighting without the approval of the medical establishment, but, with mandatory licensing there always exists the possibility that a true novel discovery may be lost.

Again, I do not want to say this is likely or is happening now. As I said, quacks outnumber geniuses many thousands, or hundreds of thousands, to one. But to lose even one genius can be a significant loss. Yes, it is unlikely. Yes, we would have to have a discovery that overturns accepted medical practice and a medical establishment unwilling to listen. Yes this is likely to happen very rarely. But even then, do we want to risk that? Would we like to have laws that let us ignore our next Newton, Flemming, or Einstein? Even if it is highly unlikely, why adopt a system which raises that possibility, unless the system has huge benefits? As I hope to show, I do not think the current system has benefits great enough to justify such a risk, even if the risk is remote***.

2. Stifling Innovation

The section above actually touched on this. The stifling FDA process obviously reduces the willingness of drug companies to put money into innovation. Also, as I stated above, there is the possibility that the licensing system for doctors may stifle those innovations which are sufficiently unusual.

As I described above, licensing and regulation is inherently conservative, and the area of medicine is especially prone to conservative positions, as regulators' primary task is to prevent harm. If we are concerned first with not allowing any changes which may cause harm, we will end up preventing a number of beneficial changes as well. As there are few things which give benefit without any harm, if we prevent all harm, we also end up preventing a lot of good, and we tend to move toward stagnation.

3. Raising Costs

Obviously, if the pool of people providing a service is artificially restricted, they will able to charge more for their service. This is the primary reason why people already practicing a profession lobby for restrictions on entry. It was behind the medieval guilds, it is behind the professional licenses of today, and it is behind medical licensing. Of course, it is always justified as helping public safety, rather than as allowing members to charge more, as no one would support restrictions on entry if the true motives were stated, but the primary purpose of any bar to entry is always to raise salaries. I cannot prove it in the case of doctors, but centuries of examples show that bars to entry were always based on self-interest, even the early medical licensing laws were often patently written to elevate salaries, so I find it hard to believe the doctors of today are the one group motivated solely by public good, without a single ounce of self interest.

Oh, of course, many doctors never think about licensing, and buy into the PR about the public good. When I say support for licensing is motivated by self-interest, I am speaking of those who lobby actively to maintain licenses, the politically active doctors who strongly and actively support the medical licensing laws. In their case, they are well aware of the benefits licensing confers on income and I have no reason to think that the fact that licensing inevitably elevates salaries has no impact on their thinking.

In respect to drugs, the laws are not as obviously self-serving, but they are every bit as costly to consumers. Clearly, the expensive drug approval process, as well as the costs of the thousands of drugs which get rejected, serve to elevate the costs of medicines, but that is not all. The prescription laws serve to reduce the demand for drugs by limiting access. As any economist can tell you, mass production tends to reduce costs, so by artificially reducing the pool of those who have the legal right to purchase drugs we force the drug companies to forgo some of the benefits provided by economies of scale, as well as some of the innovations that usually arise from increased demand.

4. Insulating  the Practitioner

There is a problem inherent in allowing any profession to police itself, whether we talk about the police, lawyers, or doctors, and that is the public perception that the profession will stand together. It may be true in some cases, it may not, but the public perception is that members will look out for the interests of the profession rather than the public.

This is particularly bad in the case of medical grievance procedures, as the state board is usually a monolithic entity. The licensing board and the grievance board (whatever their local names) are both made up entirely of doctors, sometimes even with overlapping membership, giving the public a perception that there is little use in pursuing any official grievance procedures.

In some ways, the fact that many states actually leave it up to doctors to police themselves, many even leaving it up to panels of doctors to decide whether a grievance should be investigated, may be one of the reasons for the growth in civil malpractice claims against the medical profession. If the normal processes for addressing complaints are closed, it is often easier to take the complaint outside of that profession to a jury made up of laymen. Of course, once the suits began, the lawyers smelled money and many of the least admirable sort descended on the doctors and caused the current explosion of medical torts, but I think, to a degree, the shortcomings of self-policing may have fed into the early malpractice claims.

Having shown, or so I hope, that the system we have now does cause harm to the consumer, I will try to show that the supposed safety benefits that justify those costs are not as great as we believe, and, even if they were, the same benefits could be gained through alternate means, without any of the associated costs.

One of the most common claims for our current licensing scheme is that patients do not know enough to judge doctors on their own. We also hear that the licensing process keeps out completely unqualified doctors. I cannot attest to the "completely unqualified", but I do have to say the second claim seems pretty dubious, as I have met many quite incompetent doctors who had obtained and kept a license for many years. So I think we can safely assume that our present system, like any system, cannot, on its own, ensure that any given doctor will not be incompetent, lazy, disagreeable, or otherwise unpleasant or dangerous. No matter how difficult the test, no matter how frequently the licenses are renewed, no matter how often a doctor is retested, humans are changeable beings, and between one renewal and the next, a formerly brilliant doctor can turn into a dangerous loon. There is just no way licensing can protect us against those who, voluntarily or involuntarily, offer us substandard services At best, his license can be swiftly revoked once the problems become clear, but that still does not help to protect those first few patients. No system can do that.

Since licensing cannot protect us from incompetence, let us instead look at the first claim, that patients know too little to effectively choose a doctor without licensing.

On the face of it, this argument is silly. Most people do not know enough to repair a car or select a computer on their own either. Few diners know the intricacies of being a chef. Every day we make hundreds of choices in areas in which we possess incomplete knowledge at best. How do we do it? Maybe we ask friends for advice, or we read reviews, or check Consumer Reports. Perhaps we ask the salesman, or we look at a private ratings or certifying body. If nothing else, sometimes we ask the person offering the service for his certification or for references and testimonials. In some way or another, we manage to figure out, despite our lack of knowledge, which person provides us with the best service for the price.

Why should medicine be any different?

Why would we be any less safe if, rather than a single government licensing body, we had a number of private competing certifying bodies? A doctor could be licensed by one or more of these bodies, and patients could choose their physician based upon which, if any, certifications he has. In that way, should a doctor disagree with the philosophy of one group, he would not be barred form practicing altogether, but could apply to an alternate group for certification. Likewise, if a patient truly believes some quack cure will work, that patient is not legally barred from doing what he thinks best, he can legally throw his money away on quackery if he so desires. Lastly, those who have some medical knowledge, but failing to meet the requirements of any certifying body, can still practice, they simply need to inform patients that they are not certified. If a patient still thinks a skilled amateur can provide the service he needs, the patient is free to use this amateur.

Obviously, private certification will help to resolve the first three issues listed above. With multiple certifying bodies, there will be no group stifling innovation or limiting choices. With greater freedom of access, costs will surely decline as well****. Of course, the number of medical practitioners will probably not increase immediately, but some very simple care, which probably should not require a medical degree anyway, will probably be taken over by uncertified amateurs, reducing costs for the consumers. Likewise, some of those who are skilled enough to practice but, for whatever reason chose not to obtain traditional licensing may enter the market, reducing costs farther. It is hard to predict what will follow that, as the market tends to react to needs in unexpected ways. All I can say is that I am sure that whatever follows will be less costly than what we have now.

But what about the problem of self policing and the flight into torts which I claim was a result? Obviously, this is one of the few areas where private certification is not a panacea. Without a single licensing body, we also lack a single grievance board. In fact, private certification may actually lead to an increase in suits. On the other hand, with competing certifying bodies, those bodies are also interested in consumer confidence. While a state licensing board will always have their job by force of law, a private certifier only matters as long as people have confidence in the certification. So, revoking certification of those who do not live up to standards will be a high priority. Over time, this may lead to consumers placing more trust in the grievance processes within the various certifying bodies. So, in the end, private certification may be of benefit here as well.

Having dealt with doctors, what about drugs?

Well, the answer there comes in two parts.

First, I would simply eliminate the FDA. Perhaps in an age of "caveat emptor" and law suits weighted to favor the seller some could make a case for the need to  regulate food and drugs. (I still think it is useless, but the case would have been better then.) In our present age of rampant tort abuse and vehemently anti-corporate juries, is there any company which would knowingly sell dangerous food or drugs? I am certain that the internal reviews of most companies provide for better testing than the FDA requires, if only to provide a defense against the inevitable lawsuit. Given that, why do we need to government to defend us? Against what? The companies themselves have no motive to sell substandard products. We are a rich country, and we appreciate quality, a company will do better selling top notch viagra rather than trying to make a quick buck selling mislabeled sugar pills. So against what is the FDA defending us?

Besides removing the FDA approval process, or perhaps doing away with the FDA entirely, I would also eliminate prescriptions and the laws relating to them. I know this sounds drastic, and I may end up having to write an essay on that alone, as it also would mean ending our war on drugs (when you can buy morphine OTC, why keep heroin illegal?), but I can see no reason for preventing people from buying any and all drugs over the counter.

The first argument for denying access to drugs is that they are dangerous, but that holds little water. Many, many dangerous chemicals can be had without going to prescription drugs. If it is a fear of drug abuse, illegal drugs are so readily available that eliminating prescription requirements would not really increase the supply significantly. If it is a worry about accidental overdose, that is possible with OTC drugs as well, so I don't see why some are prescription and some are not. And if it is a worry about intentional harm, there are more than enough poisons available in auto shops and garden centers to make prescription drugs irrelevant.

Another argument is that laymen would abuse drugs and do harm, such as creating antibiotic resistant diseases. My response is MRSA. Antibiotics have been tightly controlled for several decades, yet with only doctors dispensing them we still have created a resistant strain of staph. Which means that doctors can misuse prescription drugs as well as any layman, making this argument a lot weaker in my mind.

Lastly people will argue that individuals have bad reactions to prescription drugs so they should be doled out by a doctor. Two arguments go against this. First, people can have fatal reactions to things other medicine, such as peanuts and shrimp, yet we do not restrict access to those. Second, in most cases doctors do not test before prescribing a drug, so they know nothing about your potential reaction until you actually take the drug. In other words, they prescribe, then, if you have a reaction, you go back to the doctor. If there were no prescription involved, you would simply buy the medicine, and, if you had a bad reaction, would go see the doctor. I don't see how the initial prescription improves this situation.

So, if there are no good arguments for prescriptions, what arguments are there to eliminate them? Rather than rehash what I have said before, I will ask you follow this link and read the update at the bottom, it tells my own story of how prescription drug laws (along with DEA audits and frightened doctors) made my life miserable. It is just one anecdotal tale, but it illustrates well how putting artificial restrictions in place gives some people powers they should not have and prevents others from receiving medications they need.

Well, I have said a lot, yet I don't know if I have really made my case or not. I feel that I have probably ended up over emphasizing parts I should have left alone and have left out, or spent too little time on, points I should have dwelt upon. Still, I did promise that I would explain my thoughts on medical deregulation sometime this week. Unfortunately, work kept interrupting and so I am not sure if it came out the way I had hoped.

But rather than become obsessed with it, spending hours reading over this and rewriting it, I will just publish this as is, and leave it up to my readers to pick it apart. I am sure I left enough holes to inspire a few comments. Perhaps in replying to the comments I will find out where the weak points are, and I can finally turn this into the essay I hoped to write.

In any case, that is it. I hope I have convinced someone that our present system is not a logical outcome, but simply a historical accident, but if not, I at least hope I entertained my readers for a few minutes.

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* Then again, the most famous of drug-related cases, the Massengill ethylene glycol poisoning took place in the 1930's, long after regulation had been established, making me question if regulation truly provides that much of a safety advantage over an unregulated market.

** If you think my emphasis on warnings is excessive consider this story I heard in college. A friend's father was a chemist who developed a new non-toxic bug repellent. The FDA found it (mostly) safe and effective, but in tests a small percentage developed a harmless, short-lived rash. It was then mandated that this must be clearly stated on the label. As my friend obviously favored her father's side, I think she left out some details, perhaps some heated words between her father and the regulators, as the requested label sounds a bit excessively prominent, almost as if, after an argument, the regulators decided to make the requirements a bit more onerous for a difficult man, but I can't be sure. Whatever the case, the company which was to manufacture the repellent thought the warning, at the required size and wording, would make marketing impossible and refused to proceed. It is not exactly the cure for cancer, but still, we were denied a possibly superior bug repellent because of FDA labeling requirements.

*** Should anyone think I worry excessively about a remote risk, I would argue that people get worked up even more over the possibility that one innocent man might be executed for every million murderers, and blocking the work of a genius has far more widespread harm than killing of a single innocent man. We are lucky if we get one genius per generation in a given field. As a true genius tends to cause massive changes that take decades to be appreciated, or even longer, to lose one is to lose years of progress. And, without the work of this genius upon which to build, the next has to start that much behind. Yes, it is rare, but the cost is very high. By stifling truly innovative changes, even if it encourages incremental changes, central, mandatory licensing and regulation tends to slow progress drastically. (Notice how much of our progress in medicine is not in medical theories, but in pharmaceutical and electronic imaging, where progress in other fields has bled over into medicine. In terms of changing approaches, new models of disease, new theories of the human body, medicine has not progressed as swiftly as other fields have.)

*** All of this assumes some kind of tort reform is enacted. We are currently burdened with rather absurd assumptions about standards of care and other elements of malpractice. Even were we not to eliminate medical licensing, I would be all for tort reform. However, if we eliminate mandatory licensing, reform becomes even more important. Then again, as the traditional lines dividing doctors, nurses and lay people break down under my proposals, it is likely that malpractice laws could be applied to far more people. If enough average people are subject to malpractice suits, tort reform may be enacted by popular demand. So perhaps the changes I propose would actually drive tort reform, rather than having to follow it.

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UPDATED 02/29/2008

I must correct myself, there has been one rather large innovation in medicine. The discovery of prions, self-replicating proteins (according to one hypothesis) which are not alive but still capable of self-replication, is an innovation in medical thought which occurred in recent times. And, perhaps if I were to think about it more, I would discover one or two other purely medical innovations. Still, I stand by my original statement that regulation is the enemy of innovation, and most innovation in medicine in recent times has come from other fields such as imaging and pharmaceuticals.

Pharmaceuticals, on the other hand, while regulated, remain profitable enough for research to continue. On the other hand, as we are still heavily regulated, I am sure that the pace of pharmaceutical research has been reduced from what it would be without the FDA. Unfortunately, as our heavily regulated industry is still the most free in the world, I have no other system against which to test that belief. So, I can only argue by analogy, and say that in every other industry, when regulation increases innovation decreases.

Leading me to wonder what marvels of chemistry we would now have if the FDA would just get out of the way.

Originally Posted in Random Notes on 2008/02/29.

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