4 ms·

Get government out of the way. Why couldn't independent labs certify and insure products, a la Underwriters Laboratories? We could have drugs vetted by these

• jobposter1234 12y ago
  This model sounds a lot like the Moody's/S&P ratings-agency game. The failure of the ratings system is one of the critical components identified as causing the 2008 financial crisis. I strongly dislike the mis-alignment of incentives, where the ratings / approval group is paid by the company seeking approval. It has proven disastrous in high-money systems, and I wouldn't trust it for pharma, which has shown similar ethical outlooks as finance (that is to say, little matters except profits).
  • jgmmo 12y ago
    The financial ratings agencies have government monopolies essentially, they have special status (NSRSO's). Not easy to compete with government monopolies. If more agencies could be ratings agencies maybe some would have thrown the bullshit flag in time to prevent what happen. Not to beat a dead horse, but if you remember the mortgage crisis was due the government incentivizing subprime lending and having fed rate too low for too long; creating a bubble in housing. The ratings agencies themselves were accomplices, but not the sole problem by any stretch.
    • happyscrappy 12y ago
      Yes but an even larger problem was commoditizing mortgage bundles to such an extent that even an honest rating company would not be able to figure the risk.
      • jgmmo 12y ago
        That's what I don't understand. If the auditor couldn't understand the investment then they should absolutely not give it a stamp of approval. When in doubt, throw it out.
        • alexqgb 12y ago
          You really have no idea what went on, do you? Spend some time googling stories about people who operated by the book at the ratings agencies. Their careers...did not go well.
        • jobposter1234 12y ago
          Agreed, they should throw it out, but they're also throwing out a paycheck. FWIW, I was just parroting Nate Silver's section on the financial crisis. He identifies the ratings agencies as one of the several groups responsible for the downfall. In S&N, Silver discusses how the ratings agencies gave their ratings software to the banks, so the banks could "dry-run" their tranches to get the best ratings available. They were more than just complicit -- they actively enabled the financial groups to game the ratings.
        • snowwrestler 12y ago
          If you don't understand it, why are you advocating for the same model in drug regulation?
    • jobposter1234 12y ago
      How would competition prevent ratings agencies from poorly aligned incentives? The "fitness function" of how good an agency is will be determined by the customer, who only wants to receive the highest ratings. AFAIK, to rate a company/tranch/etc., the ratings agencies need access to internal company information. There's no room for an outsider ratings group to call bullshit -- people are only going to listen to the agency given internal info, the one hired by the company getting the rating. More competition wouldn't make the outside groups any more relevant, and without revenue, they would likely quickly dry up.
• psaintla 12y ago
  Kind of like how independent rating agencies were performing due diligence and properly rating securities before the mortgage crisis right?
• matthewmcg 12y ago
  You'd need to be careful about the incentives. UL does a good job of separating compensation for testing and development of standards. In the other direction, paying for ratings is how we got AAA-rated subprime CDOs.
• bdisraeli 12y ago
  Why would private regulators be more efficient? Regulation will always seem inefficient no matter the nature of the regulating agency because it has different goals (ensuring safety and efficacy) vs making a profit for shareholders. Public regulators are always preferable, when a market needs to be regulated as you admit, because the public, through the press and their elected representatives, can hold them accountable for their actions. If someone from the Mayo Clinic is receiving improper benefits from pharmaceutical companies how does the public find that out? There are no laws that would force disclosure of those relationships. In the case of public regulators like the FDA, Congress can force its leaders to testify and the press has tools like FOIA to get at private documents. They're not perfect and can still lead to corruption and regulatory capture, but are preferable to private organizations with no public accountability regulating the pharmaceutical industry.
  • jgmmo 12y ago
    Nobody holds public sector employees responsible. Atleast in the marketplace, if you mess up - you go broke (or you should, don't even get me started on the idiocy of 'too big too fail'). There's some incentives to hustle, but also to not ruin your firm in the long-run. At the FDA you know you are on an Imperial Star Destroyer, and that whatever happens - worse case scenario it takes like 5 years to fire you.
    • jbooth 12y ago
      Declaring that "government is the problem, just privatize it" without bothing to think through or research anything about the actual issue is the political equivalent of "just use node.js and mongodb, it's web scale".
• metaphorm 12y ago
  you should read up about Thalidomide and then be thankful that the U.S. government "got in the way".