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Cato Policy Analysis No. 288

November 12, 1997

Policy Analysis

REPLACE FDA REGULATION OF MEDICAL DEVICES

WITH THIRD-PARTY CERTIFICATION

by Noel D. Campbell

Executive Summary

No manufacturer can market a medical device, alter

manufacturing processes for a device, or propose a new use

for an existing device without the prior approval of the Food

and Drug Administration (FDA).  The FDA monopoly over market

access is a bottleneck, delaying the introduction of new

medical devices for up to three years and restricting the

flow of information from manufacturer to user about approved

devices.  These actions not only violate the basic rights of

the device manufacturers and consumers who wish to trade with

one another--they have resulted in thousands of deaths.

The solution to the problems caused by the FDA's monopoly

over market access and dissemination of information is to

turn over the certification of medical devices to certifica-

tion agencies competing in a free market.  The best known of

the privately funded institutions that certify safety and

performance in other markets is Underwriters Laboratories,

Inc.  UL's and similar organizations' certification of the

safety of products provides valuable information to consumers

and leaves manufacturers and consumers free to trade with one

another--a basic right in a free society.

Unlike proposed reforms that leave FDA's monopoly intact,

the market solution ensures that consumers will be able to

choose in a market well stocked with safe, effective devices,

guided by qualified experts with superior information.

Certifying organizations, anxious to maintain their

reputation as guardians of safety and efficacy, will protect

consumers from a "race to the bottom" and from "fly-by-night"

manufacturers.  When, as now sometimes happens, unsafe or

ineffective products mistakenly reach the market, the court

system provides a mechanism for legal redress and government

prosecution.  The incentives for certifiers in a free market

are far more effective for generating good results than the

incentives for bureaucrats with monopoly powers.

Noel D. Campbell is in the Department of Economics, Gordon

College, Barnesville, Georgia.