Cato Institute
Policy Analysis
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Page 40
come into the market, the testing burden has not become
easier for manufacturers, and consumers are still confident
about the safety of their products.  The adoption of UL's
standards by other certifying agencies exemplifies this.  UL
has been the dominant certifying agency for decades, and it
has already incurred the development cost of these stan-
dards.  Instead of creating new, easier standards, the new
competitors to UL have adopted the efficient, accepted UL
standards and competed on the basis of cost or personal
service.  The integrity of testing standards and certifica-
tion has been upheld.
Appropriately Assign Liability
Some defenses of the current regulatory scheme are
anchored in liability assignment questions.  The argument
goes: The possibility of suffering irreparable damage from a
liability suit involving medical devices can paralyze re-
search, development, marketing, and distribution, and the
FDA's public approval and some degree of immunity from lia-
bility are necessary.  Such scenarios of market paralysis
are offered to justify government regulation as necessary to
appropriately assign or mitigate liability.  In reality,
there is no reason to expect such disasters to occur in
markets for medical devices, any more than in markets for
fire alarms and fire extinguishers.
Concerning manufacturers' refusal to market devices,
Michael Krauss of the George Mason School of Law writes:
Both economic theory and present-day practice sug-
gest that fear of product liability does not stop
manufacturers from producing goods.  Manufacturers
produce motorcycles and ladders despite the ab-
sence of pre-market government approval.  They are
held liable when their product is defectively
designed or manufactured.66
Krauss goes on to say that except for recent cases
involving Class III devices, "FDA approval does not immunize
manufacturers from product liability."67  Moreover, courts
have ruled that FDA approval does not afford protection from
liability.  Therefore, if it is true that fear of liability
judgments would prevent manufacturers from producing devices
if there were no FDA, it should prevent them from doing so
under the current system as well.
Doctors often prescribe FDA-approved therapies for
unapproved uses; such "off-label" uses may account for up to