The Net Yield Of Self-Regulated Business

One of the goals of the GOP in recent years has been less government regulation. The theory goes that businesses wouldn't intentionally market a defective product and that an informed worker or consumer can make his/her own decisions on what's best without a public agency providing verification. Regulation adds costs, slows innovation and stifles growth - all so that people can be lazy and not do their own homework.

As with much of the rest of the Conservative thought, this might have been reasonably accurate a century or so ago, when consumer goods were produced domestically and their raw materials more commonly known. Today, though, most consumer goods are produced far from US shores often using components indecipherable to anyone without an advanced degree in chemistry. The US "consumer" is working harder than ever (assuming in the current environment s/he is still employed) and has ever fewer hours to do the necessary research. What research is possible is often limited to the news outlets (disinterested in product safety investigation unless the public bodies take note first), the local library (not always a good resource for the kind of scientific investigation required) and the Web (which is as full of misinformation as it is of industry-funded - and hence biased toward the products - studies). And businesses continue to cut corners to maximise profits without regard to consumer safety, while the regulators responsible for monitoring them sit idly by.

Two cases in the recent news highlight how difficult it is for anyone to do the requisite homework, and how ineffective public regulation (after years of Conservative neglect) has become. The first is an item from North Carolina about a company that produced and shipped contaminated syringes for health care; the second is about an Indian pharmaceutical giant that sold drugs on the US market after falsifying its testing.

In both instances the companies bypassed responsible production methods and took shortcuts with their products. In one the producer knowingly and deliberately falsified its test data to verify its product was safe. And in both cases the authorities were slow to respond.

These cases, had they been left to the "consumer," would have required many hours of investigation, either on the Internet or poring through company records, scientific studies, infection rates and pharmaceutical production procedures, many of which are written in dense business or medical jargon not common to everyday language. The consumers would have been more often than not unable to make the journey to a library or incapable of Internet research, since many of them would already have been in hospital. And the products would have been dispensed by physicians and medical staff who are by definition the local authorities on such things whom the populace is encouraged to trust.

In each case, the company went to some length to conceal its misdeeds. Ranbaxy Laboratories, the generic drug maker, went to the trouble of producing falsified test results. AM2PAT, the syringe maker, relabeled its product, falsified records and rushed its production. Neither of these examples illustrate responsible production or care for the end user of the product.

The FDA, the regulatory body responsible for the safety of both products, was (at least according to the news items) apparently trusting of the businesses' processes and statements and inattentive to the actual product. The Ranbaxy case is particularly disturbing, as the FDA noted the discrepancies for three years before taking action:

Since 2006, FDA investigators at the Paonta Sahib plant have turned up reams of laboratory tests that were inaccurate or missing information. In some cases, the company refrigerated samples of drugs that were supposed to be tested after being stored at room temperature or higher to demonstrate their shelf life, [FDA compliance director Deborah] Autor said. Other tests that were supposed to be performed over a period of months to measure whether a drug lost potency over time were taken on the same day or within days.

Investigators also discovered laboratory records signed by employees who were not present when testing took place, she said.

FDA inspectors knew as long as three years ago that Ranbaxy's product was not adequately tested, and the lack of product verification was a conscious business practice. Yet for those three years the FDA remained silent: it took no meaningful action until last September, and even that first (partial) sanction appears to have been inadequate.

Phony medicine has been with society for millenia. Only comparatively recently, though, has the state seen it fit to regulate medicinal products. The scandals associated with patent medicine of the late 19th and early 20th centuries awakened society to the risks associated with many such products. The potentially harmful effects of addiction - such as with early cocaine-infused Coca-Cola - also played a part in this concern. The FDA, an end product of these concerns, has long been tasked with ensuring the safety of such products. These two examples are a fair illustration of what can happen when, starved of funds and obstructed in its mission by Conservative hands-off policies and funding decisions, it fails to do that.

It may be true, as Conservatives claim, that testing and regulation are cumbersome to business. The State, however, is not in the business of promoting industry at the expense of its populace: both domestic producer and consumer need to have adequate protections in order to safeguard society as a whole. And it is clear that business, if left unattended, will protect its shareholders and profits ahead of its customers.