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Download Examples from Hairdresser Licensing and the FDA
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The Problematic Incentives of Government Regulation: Examples from Hairdresser Licensing and the FDA Presentation by Prof. Howard Baetjer Econ 640, April 23, 2007 Hairdresser licensing • What is its avowed purpose? • How does it work -- what are the institutions? • What groups are most affected by it? • Sharissa’s story • What are the incentives for licensed hairdressers under this institution? Hairdresser licensing • What appears to be the actual purpose of hairdresser licensing? • Some detail on Maryland’s licensing law • The capture theory of regulation Are there civil society alternatives to hairdresser licensing? • Legal institutions • Informal institutions • Market (for profit) institutions Civil society alternatives to hairdresser licensing • Legal institutions – tort liability • Informal institutions – reputation – word of mouth • “Time wounds all heels” • Market institutions – intermediaries that provide information • salons • beauty schools (certification) – information vendors • like Consumer Reports – insurance companies Are there civil society alternatives to pharmaceutical regulation? • Legal institutions • Informal institutions • Market institutions Civil society alternatives to pharmaceutical regulation • Legal institutions – tort liability • Informal institutions – reputation • for all parties • (connected directly to stock price) – word of mouth • “Time wounds all heels” • Market institutions – intermediaries that provide information • hospitals • pharmacists • doctors – information vendors • e.g. Consumer Reports • Underwriters’ Laboratory equivalent – insurance companies • for intermediaries • for drug companies Examples of Type II errors by FDA Drug or device Length of approval delay Thrombolytic therapy dissolves blood clots Interleukin-2* treats kidney cancer Misoprotol prevents bleeding ulcers AmbuCardioPump** Emergency room CPR device Home HIV test * Already available in Europe ** Available in most industrialized nations Estimated consequences Examples of Type II errors by FDA Drug or device Thrombolytic therapy dissolves blood clots Interleukin-2* treats kidney cancer Length of approval delay 2 years Misoprotol prevents bleeding ulcers AmbuCardioPump** Emergency room CPR device Home HIV test * Already available in Europe ** Available in most industrialized nations Estimated consequences Examples of Type II errors by FDA Drug or device Thrombolytic therapy dissolves blood clots Interleukin-2* treats kidney cancer Length of approval delay Estimated consequences 2 years up to 22,000 deaths Misoprotol prevents bleeding ulcers AmbuCardioPump** Emergency room CPR device Home HIV test * Already available in Europe ** Available in most industrialized nations Examples of Type II errors by FDA Drug or device Thrombolytic therapy dissolves blood clots Interleukin-2* treats kidney cancer Length of approval delay Estimated consequences 2 years up to 22,000 deaths Nov. 1988 – May 1992 Misoprotol prevents bleeding ulcers AmbuCardioPump** Emergency room CPR device Home HIV test * Already available in Europe ** Available in most industrialized nations Examples of Type II errors by FDA Drug or device Thrombolytic therapy dissolves blood clots Interleukin-2* treats kidney cancer Length of approval delay Estimated consequences 2 years up to 22,000 deaths Nov. 1988 – May 1992 3500 deaths Misoprotol prevents bleeding ulcers AmbuCardioPump** Emergency room CPR device Home HIV test * Already available in Europe ** Available in most industrialized nations Examples of Type II errors by FDA Drug or device Thrombolytic therapy dissolves blood clots Interleukin-2* treats kidney cancer Misoprotol prevents bleeding ulcers AmbuCardioPump** Emergency room CPR device Length of approval delay Estimated consequences 2 years up to 22,000 deaths Nov. 1988 – May 1992 3500 deaths 9 ½ months Home HIV test * Already available in Europe ** Available in most industrialized nations Examples of Type II errors by FDA Drug or device Thrombolytic therapy dissolves blood clots Interleukin-2* treats kidney cancer Misoprotol prevents bleeding ulcers AmbuCardioPump** Emergency room CPR device Length of approval delay Estimated consequences 2 years up to 22,000 deaths Nov. 1988 – May 1992 3500 deaths 9 ½ months 8000 – 15000 deaths Home HIV test * Already available in Europe ** Available in most industrialized nations Examples of Type II errors by FDA Drug or device Thrombolytic therapy dissolves blood clots Interleukin-2* treats kidney cancer Misoprotol prevents bleeding ulcers AmbuCardioPump** Emergency room CPR device Length of approval delay Estimated consequences 2 years up to 22,000 deaths Nov. 1988 – May 1992 3500 deaths 9 ½ months 8000 – 15000 deaths not approved Home HIV test * Already available in Europe ** Available in most industrialized nations Examples of Type II errors by FDA Drug or device Thrombolytic therapy dissolves blood clots Interleukin-2* treats kidney cancer Misoprotol prevents bleeding ulcers AmbuCardioPump** Emergency room CPR device Length of approval delay Estimated consequences 2 years up to 22,000 deaths Nov. 1988 – May 1992 3500 deaths 9 ½ months 8000 – 15000 deaths not approved 7000 deaths annually Home HIV test * Already available in Europe ** Available in most industrialized nations Examples of Type II errors by FDA Drug or device Thrombolytic therapy dissolves blood clots Interleukin-2* treats kidney cancer Misoprotol prevents bleeding ulcers AmbuCardioPump** Emergency room CPR device Home HIV test Length of approval delay Estimated consequences 2 years up to 22,000 deaths Nov. 1988 – May 1992 3500 deaths 9 ½ months 8000 – 15000 deaths not approved 7000 deaths annually 5 years * Already available in Europe ** Available in most industrialized nations Examples of Type II errors by FDA Drug or device Thrombolytic therapy dissolves blood clots Interleukin-2* treats kidney cancer Misoprotol prevents bleeding ulcers AmbuCardioPump** Emergency room CPR device Home HIV test Length of approval delay Estimated consequences 2 years up to 22,000 deaths Nov. 1988 – May 1992 3500 deaths 9 ½ months 8000 – 15000 deaths not approved 7000 deaths annually 5 years 10,000 infections * Already available in Europe ** Available in most industrialized nations
