Question

The FDA has been in the news a lot during the pandemic because there is a rush to get all types of new drugs, medical devices, and other COVID-19 related products to the market. Some of these products require FDA approval to be sold. Some don’t but companies may still voluntarily seek FDA approval as a way to signal and gain a competitive edge. Some will only see the FDA step in if they are making fraudulent claims (scams).

Here is the FDA’s dilemma; there is a trade-off between speed-to-the-market and efficacy (effectiveness). The FDA can be strict on making sure the products are tested and retested, to make sure they are as effective as possible before they are sold to the public. But that will take longer to get those products to the market and people will die from COVI-19 while waiting for something. Or the FDA could lax its efficacy testing standards, that will allow new products to get to the market faster, but some of those products will be ineffective and people taking the ineffective products will die of COVID-19. So, either option results in people dying.

What do you think the FDA should do in this case? What is the best way to protect the consumers in this situation? Is government intervention still better than other options: seller signaling, customer reviews, new markets for missing information? In addition to the economic argument what about the ethical side of it? What, in your opinion, is the more ethical approach to this asymmetric information problem.

has to be at least 300 words

Answer 1

The only way for the FDA to make sure that items of proper quality reach the customers is to conduct regular checks in the production facilities where these things are being made. It will cost more, but the only way to solve the problem of information asymmetry is to be able to gather that information. It is the FDA's responsibility to make sure that items of the proper quality reach the customers. Private sellers will hardly be so concerned about that. They will be more concerned about their profits and at this time. medical products are the most selling products in the market. Hence, it is the FDA who has to take the step to be able to stop this. They can appoint officials to survey and supervise the production facilities, and make sure that the safety standards and proper production techniques are followed. One more solution could be that the FDA does quality checks at the drugstores where these medical items are being sold. This will enable the FDA to trace back and probably take action against the production facilities that are sending sub-par products to the market. For that, the FDA has to ensure that only licensed drugstores are allowed to sell these goods, as it will be easier for them to be able to monitor them. The police force could be employed to make sure there is no black marketing of these products from people who do not have license to sell them. This way the FDA can carry out proper inspection of these products. Once the guilty producers are found, strict fines or other penalty must be levied that will also send a signal to the rest of the producers to follow the guidelines set by the medical community. This way the FDA can make sure that bad quality products do not reach the customers.