November 11, 1999

by Peter J.M. Orvetti

The Right Prescription?
Remedial Constitution Studies
Starting To Click

The Right Prescription?

Vice President Al Gore has offered several new proposals to get generic versions of costly prescription drugs on the market with greater haste, AP reports. Gore wants legislation that would make it harder for drug companies to get extensions on drug patents and said he wants Congress to enact legislation that would require independent analyses of the impacts patent extensions would have on government health costs as well as the implications for consumers. "Today, when unfair patent extensions are granted, consumers pay the difference in higher drug prices. Before gaining such exceptions, Congress should assess the real costs to the American taxpayer," Gore said.

"The Food and Drug Administration regulates drug approvals to increase public health by keeping unsafe and ineffective drugs off the market while allowing pharmaceutical firms to market safe and effective drugs. Thus, the public can think of an approved drug as one that has been demonstrated to meet a standard for safety and efficacy. There is, however, evidence to suggest that U.S. drug approval standards have become more stringent than is socially optimal. Industry studies show not only a dramatic increase in the stringency of the FDA's drug regulation but also a net effect that harms consumers. Those results are consistent with a more general theory of regulation that implies that drug approval stringency will exceed what is socially optimal because the FDA is more adversely affected by approving harmful drugs than by denying approval of beneficial drugs," writes Michael R. Ward in the Regulation article "Drug Approval Overregulation".

The Cato Policy Analysis "Wrecking Ball: FDA Regulation of Medical Devices" offers a new strategy for medical approval: "The FDA could issue to products that meet its standards a seal of approval. Consumers would then know that a certified product had passed whatever tests the FDA considered appropriate to demonstrate its safety and efficacy. Consumers would be free, however, to disregard that information if they did not value it. They would be free to purchase products lacking FDA certification, and sellers would be free to sell uncertified products without government obstruction or penalty. Note that no one would be forced to use products lacking FDA certification. People who value FDA testing would be able to enjoy its benefits, while those who do not value it would not be coerced to act in accordance with the choices made by a handful of bureaucrats in Rockville.

"If the government really believes it has something of value to provide consumers, then it should be content just to give it to them. If they reject it, their rejection will be a sure sign that they do not value it. There is absolutely no defensible justification for forcing people at gunpoint to do 'what's best for them.' Doing so is sheer paternalism. Treating responsible adult citizens as if they were children is tyrannical. Citizens who value liberty should have no trouble rejecting a system that simultaneously harms the public health and deprives people of their ability to make vital choices about their own health."

Remedial Constitution Studies

President Clinton's call for $1.4 billion to hire more school teachers led to a standoff in the budget negotiations last week, AP reported. "It looks as though the Republicans have dug in their heels on class size reduction and hiring new teachers, and quite frankly that's an untenable position," said Sen. Tom Harkin (D-Iowa). White House Budget Director Jacob Lew expressed disappointment as well. "I was hoping that we would make more progress than we did," he said.

But these arguments miss the point, according to the Cato Handbook for Congress: "Education is a perfect example of one major theme of this Handbook: that even many vitally important things in American society are not the province of the federal government. No one questions the importance of education in a complex modern society. Education is the process by which we impart moral values to our children, make them part of our particular culture, develop their ability to think, and give them specific kinds of information that they will need to be productive adults, good citizens, and civilized human beings. Today there is great concern about the quality of American education. Every month brings another study on how poorly American students fare in international competition. The Third International Mathematics and Science Study, released in November 1996, found that U.S. eighth-graders scored below the average of students from 40 nations on math and just above average on science. U.S. students scored lower than students from Singapore, Korea, Japan, the Czech Republic, and Hungary. But neither the importance of education nor its poor quality means that education is an important function of the federal government. In fact, education is not mentioned in the Constitution of the United States, and for good reason. The Founders wanted most aspects of life managed by those who were closest to them, either by state or local government or by families, businesses, and other elements of civil society. Certainly they saw no role for the federal government in education."

Starting To Click

Digital signature legislation is once again on the agenda of the House. A Republican measure introduced by Rep. Tom Bliley (R-Va.) is slated, with Democrats pushing a competing electronic signatures bill that eliminates the provisions in Bliley's bill dealing with validation of electronic records. A compromise on that sticking point has already been reached on the Senate side.

The Cato Policy Analysis "Encryption Policy for the 21st Century: A Future without Government-Prescribed Key Recovery" examines the issue. "Public key cryptography provides a way for the recipient of a message to identify the sender, a 'digital signature.' The sender encrypts part of the message, the signature, with his or her private key. The recipient decrypts this part with the sender's public key, confirming the sender's identity. Digital signatures will be important to the successful growth of Internet commerce; for example, banks will want to be certain that they are actually communicating with their customers, and the customers will want to be certain that they are communicating with their banks. When both the recipient and the sender are using public key technology, encryption can provide privacy and identity authentication. The sender signs a message with his private key and enciphers the message with the recipient's public key. The recipient deciphers the message with her private key and checks the sender's signature with his public key… Public key cryptography amounts to a revolution in security because it enables computer users to secure and authenticate their communications without revealing their own secret keys. The general cryptographic system can be exposed to public scrutiny, allowing weaknesses to be ferreted out, as long as the key remains secret."