Chronicling the high cost of our legal system
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The remarkable recent advances in make-it-yourself technology are opening up all sorts of new possibilities for users, but also have the potential to freak out the CPSC, FDA, trade agencies and intellectual property lawyers, as well as gun-control advocates. When products extruded from local printers are inevitably involved in injuries, which distant parties can be sued? [Bloomberg]
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“The U.S. FDA announced a plan to investigate and potentially regulate caffeine.” [James Hamblin, The Atlantic]
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Is this what Congress intended, or what the public was told, when the FDA was given authority over tobacco in 2009? Jacob Grier at the Atlantic:
As first reported by Michael Felberbaum of the Associated Press, since 2009 the agency has received about 3,500 substantial equivalence reports [i.e., submissions seeking approval for new products on the grounds that they are substantially equivalent to products already on the market]. Approximately 115 employees work on reviewing them. And to date they have issued exactly zero rulings.
Can it really be the case that none of the 3,500 reflect new products that are substantially equivalent to (or for that matter safer than) the cigarettes already on the market? And while we’re asking questions, who benefits when new competition for existing products is cut off? More: Michael Siegel.
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“The FDA has issued two proposed rules to implement the Food Safety Modernization Act enacted in 2011.” [Brian Wolfman, Public Citizen, with details and links; The Packer] “The costs to fruit and vegetable growers for complying with the newly proposed produce safety regulation have been estimated at more than $30,000 annually for large farms and about $13,000 per year for smaller farms.” [The Grower] How much do typical US farm households make in a year, you may wonder? According to U.S. government figures (here and here, for example) a large proportion of smaller family farms make little or no profit, and are instead supported by the off-farm earnings of family members. The 2011 law does provide exemptions for some of the very smallest producers, and the FDA also contemplates delayed implementation of rules for some others.
We followed the issue of small farms/foodmakers and the cost of the new law here, here, here, here, here, here (amendments aimed at lessening some burdens on small producers), and on a predecessor bill, here, here, and here.
The uproar continues, and quite properly so (earlier here and here), over the threats of Boston Mayor Thomas Menino and Chicago alderman Proco (“Joe”) Moreno to exclude the Chick-Fil-A fast-food chain because they disagree (as do I) with some of the views of its owner. Among the latest commentary, the impeccably liberal Boston Globe has sided with the company in an editorial (“which part of the First Amendment does Menino not understand?…A city in which business owners must pass a political litmus test is the antithesis of what the Freedom Trail represents”), as has my libertarian colleague Tom Palmer at Cato (“Mayor Menino is no friend of human rights.”)
The spectacle of a national business being threatened with denial of local licenses because of its views on a national controversy is bad enough. But “don’t offend well-organized groups” is only Rule #2 for a business that regularly needs licenses, approvals and permissions. Rule #1 is “don’t criticize the officials in charge of granting the permissions.” Can you imagine if Mr. Dan Cathy had been quoted in an interview as saying “Boston has a mediocre if not incompetent Mayor, and the Chicago Board of Aldermen is an ethics scandal in continuous session.” How long do you think it would take for his construction permits to get approved then?
Thus it is that relatively few businesses are willing to criticize the agencies that regulate them in any outspoken way (see, e.g.: FDA and pharmaceutical industry, the), or to side with pro-business groups that seriously antagonize many wielders of political power (see, e.g., the recent exodus of corporate members from the American Legislative Exchange Council).
A few weeks ago I noted the case of Maryland’s South Mountain Creamery, which contends through an attorney (though the U.S. Attorney for Maryland denies it) that it was offered less favorable terms in a plea deal because it had talked to the press in statements that wound up garnering bad publicity for the prosecutors. After that item, reader Robert V. wrote in as follows:
Your recent article about the [U.S. Attorney for Maryland] going after the dairy farmers reminded me a case in New York state where the Health Department closed down a nursing home in Rochester. They claim is was because of poor care, the owner claims it was because he spoke out against the DOH.
The state just lost a lawsuit where the jury found the DOH targeted the nursing home operator because he spoke out against them.
According to Democrat and Chronicle reporters Gary Craig and Steve Orr, the jury found state health officials had engaged in a “vendetta” against the nursing home owner:
Beechwood attorneys maintained that an email and document trail showed that Department of Health officials singled out Chambery for retribution because he had sparred with them in the past over regulatory issues. The lawsuit hinged on a Constitutional argument — namely that the state violated Chambery’s First Amendment rights by targeting him for his challenges to their operation.
The Second Circuit panel opinion in 2006 permitting Chambery/ Beechwood’s retaliation claim to go forward is here. It took an extremely long time for the nursing home operators to get their case to a jury; the state closed them down in 1999 and the facility was sold at public auction in 2002.
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[cross-posted at Cato at Liberty]
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As exclusivity is granted based on the staggering costs of clearing the FDA steeplechase, low-cost consumer options have a way of disappearing: “KV priced Makena like so many other branded drugs at $1,500 per injection. Had there been no compounding market at about $15 per injection, virtually no one’s sense of propriety would have been ruffled and perhaps no one would have even noticed.” [Charles Hooper, Medical Progress Today]
“Did the FDA’s former ban on home testing kits result in thousands of avoidable infections?” Persons who learn of their HIV-positive status are less likely to pass the infection on to others. “The scandal is that the approval of a rapid home test for HIV did not occur until last week — about 24 years after the FDA received its first application seeking permission to market one.” [Roger Parloff, Fortune](& welcome Hans Bader/CEI readers)
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Amish raw-milk farmers beware: as Mike Riggs reports at Reason, Senator Rand Paul of Kentucky introduced an amendment that would have curtailed the power of Food and Drug Administration agents to carry firearms and make warrantless arrests — the agency would still have retained many other legal weapons with which to secure compliance with its will — but the amendment failed by a 78-15 vote. The 15 are listed here.
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Alex Tabarrok applies a Straussian reading to a WSJ op-ed by former FDA commissioner Andrew von Eschenbach. [Marginal Revolution]
“Supplies of Critical Child Leukemia Drug Are Almost Gone” [Atlantic Wire] Earlier on the shortage of hospital and community drugs, and Washington’s role in it, here, here, here, here, and here.
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Individual liberty, free markets, and peace: the world's premier libertarian think tank. Publishes Cato at Liberty, where I blog on contemporary policy issues.
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