No one wants to be killed via a bad drug, right? Safety is important! But is there such a thing as too much safety? Perhaps there is. Let’s examine this question though the lens of economics: though a cost-benefit analysis. But, let’s look at this in terms, not of money, but in lives.
Let’s say, hypothetically, that it takes the FDA 10 years to approve a drug for sale in the US market. Those 10 years come with a cost in life: people who, if taking the drug, would survive but die instead.* Let’s say that number is 100 lives (10 per year). The benefit comes from those who, once the drug is approved, survive given a certain success rate. Let’s say that number is 5/yr. It would take 20 years for the drug on the market for it to “break even” in terms of lives saved vs lives lost during testing. That’s a long time (a generation). However, if the testing period were shortened , say to 5 years, it would take only a decade to “break even.” The cost, in terms of lives lost, would be lower. There is a benefit, in this example, to reducing the FDA’s regulatory ability.
“Well, that’s all well and good,” you might say, “but this is a hypothetical example. In the real world, we don’t know what the outcome of drug trials may be!” This is quite true: the FDA could rush through an approval that turns out to be unwarranted and costs more lives. However, this is only tangential to my point, which is the cost-benefit analysis economists do can provide some insight into the “right” regulatory process: if the process is too long and doesn’t provide any additional benefits but incurs further costs, we may wish to reduce the regulatory burden.**
Cost-benefit analysis (which, as we have seen, needn’t be limited to just monetary costs/benefits) is a useful tool for assessing claims by those who lament deregulation and/or call for more regulation. It could be such regulation would cause more harm than good! (Likewise the opposite is also true: it could be the deregulation causes more harm than good)
*This is an extreme example. We could easily have said “people who suffer instead” and the point would remain the same. But allow me some dramatic flair.