Quantifying 21st-Century Opportunity Costs of FDA Regulation

Healthcare Economist May 4, 2023
Jason Shafrin

That is the title of a very interesting paper by Casey Mulligan (2023) [NBER WP version]. The full title includes the phrase “Peltzman revisited”. This refers to a paper by Peltzman (1973).When speaking of the 1962 “Drug Efficacy Amendment” (EA) to the Federal Food, Drug, and Cosmetic Act a key piece of research was Peltzman (1973) who:

…pioneered cost-benefit analysis of the EA by estimating the consumer benefit (if
any) of curtailing the sale of ineffective drugs and comparing it to the opportunity cost of
effective drugs that were not introduced into the U.S. market due to the additional approval costs created by the EA. Peltzman concluded that the EA imposed a net cost on consumers of
magnitude similar to a “5-10...

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