It’s no secret that the United States government often imposes seemingly insurmountable regulations and rules, while also failing to appropriately regulate key areas of industries that serve the public. The FDA is a great example of these two extremes. On the one hand, the FDA is known for doling out life-destroying penalties for relatively innocuous crimes. On the other hand, the same federal agency has created an enormous loophole that allows food manufacturers to use ingredients without government review or approval, provided that the food industry has deemed it “safe.” And we all know how good industries are at self-regulation.
Excessive regulations are taking a toll on the U.S., across the board. The health care system in the United States is no exception; in fact, it is perhaps one of the most poignant examples of what harms over-regulation, and regulation in the wrong areas, can really cause.
There is, of course, a place for common-sense regulations, standards of care and so on. But where does one draw the line between necessity and excess? The system has grown so bloated and out of touch that now, practicing medicine requires more attorneys and paper-pushers than it does healthcare practitioners. In 2012, it was reported that by 2013, only 36 percent of doctors were expected to remain independent, due to the ever-increasing costs imposed by excessive regulation. In 2015, that number declined again to just 33 percent. Many doctors cited reimbursement concerns and overhead costs as their primary issues with remaining independent. More than half of the doctors surveyed cited new electronic medical record requirements or other business operation concerns as reasons for choosing to leave their independent practice for hospital employment.
As one physician explained, physicians are forced to deal with “the federal government’s increasingly crazy and copious rules,” or they will face significant penalties — even in the instance of an innocent mistake. Intentionally fraudulent behavior is no different that accidental oversights or misunderstandings under the heavy-handed rule of the FDA and other governing bodies. Unless, of course, you’re a pharmaceutical company or a food manufacturer; then you might find a nice loophole for yourself.
How FDA regulations can spell profits for Big Pharma
Over-regulation doesn’t just harm physicians; it can harm the public too. Take for example, the EpiPen. The life-saving drug’s manufacturer, Mylan, recently came under fire for raising the price of the drug exponentially. A generic that had been developed by Teva was expected to enter the marketplace, but was inevitably (and unexpectedly) rejected by the FDA.
Following this event, Mylan announced that they themselves would be creating their own generic product, that would be available for half the cost of the now-price-gouged EpiPen. Given that an EpiPen 2-pack was available for just over $100 in 2007, the $300 some-odd price tag that will accompany Mylan’s “cheaper” alternative is still rather contentious.
How does regulation come into play here? Large companies can easily yield political power and influence regulatory bodies such as the FDA by lobbying them to reject generics or prevent other competition from entering the marketplace. And as Real Clear Health explains, “Only government regulations, which can be captured and exploited by politically powerful corporations, can prevent competition from benefiting consumers.”
And in the absence of competition, pharmaceutical companies are free to charge whatever they so choose, and they can raise their prices without consequence. These corporations rake in profits at the expense of consumers — many of whom rely on their medications or life-saving equipment like the EpiPen.
As a 2016 report from US News explains, the stringent and costly requirements imposed by the FDA serve only to reduce competition in the marketplace — which in turn leads to higher costs for consumers. Most of the policies suggested to curb the cost of medications do not acknowledge the FDA’s role in increasing drug and care costs. While it is easy to simply lay the blame at the feet of the pharmaceutical industry, the government’s role in the skyrocketing costs of medical care simply cannot be ignored.