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The GAO has recently issued a report on medical devices.  The thrust of the report is that “high-risk” medical devices do not receive enough scrutiny from the FDA and that recalls are not handled well.  This report and other evidence indicates that the FDA is likely to require more testing of devices.  As of now, most medical devices are approved on a fast track that requires significantly less testing than that required for new drugs.  (As I have discussed in a forthcoming Cato Journal article, medical devices are also subject to more immunity from state produce liability lawsuits.)

The GAO report is remarkable.  The GAO defines its mission as

“Our Mission is to support the Congress in meeting its constitutional responsibilities and to help improve the performance and ensure the accountability of the federal government for the benefit of the American people. We provide Congress with timely information that is objective, fact-based, nonpartisan, nonideological, fair, and balanced.”

But the report on medical devices is entirely unbalanced.  It deals only with procedures for approval and the recall process (both of which are judged inadequate.)  There is no discussion of either costs or benefits.   That is, no evidence is presented that there is any actual harm from the “flawed” approval and recall processes.  Even more importantly, there is no evidence presented about the benefits to consumers from easy and rapid approval of medical devices.

As is well known, virtually all economists who have studied the FDA drug approval process have concluded that it causes serious harm by delaying drugs.  The import of the GAO Report is that we should duplicate that harm with medical devices.  This is an odd and perverse way of providing a “benefit” to the American people.

Filed under: consumer protection, cost-benefit analysis, regulation, torts Tagged: FDA, Medical Devices

The political economy of alcohol regulation has always been fascinating.  But things took an interesting turn of late (HT: Marginal Revolution) when a beer industry trade group took a stand against a proposition that would legalize marijuana in California…

Read the full piece here. 

There are some new developments in the Federal Trade Commission’s consummated merger case brought against Ovation.  Namely, the FTC has lost.  TOTM readers may recall that I spent some time criticizing the Federal Trade Commission’s complaint, back in 2008, in FTC v. Ovation in federal district court in Minnesota.  As I described the stylized facts back then…

Read the full piece here. 

I share Prof. Ribstein’s concerns about the federalization of corporate governance contained in the Dodd bill.  Though Senator Carper wasn’t able, in the end, to get the proxy access provisions out of the Dodd Bill, which I think were the most troubling, we did eliminate another of Senator Schumer’s ideas. (The corporate governance provisions of the Dodd bill were taken from Sen. Schumer’s “Shareholder Bill of Rights.”)  The initial draft of the Dodd Bill included a restriction prohibiting any publicly traded company from having a staggered board.  I suspect we have the good work of Senator Carper and Congressman Castle’s offices to thank for their continued work against that provision.  The option to have a staggered board is part of the Delaware brand’s advantage.  Nearly 80% of Boards and their shareholders used to embrace the staggered election approach, since then some (but not most) companies’ shareholders have pushed, and been successful, in changing to annual elections under existing rules, a development which Delaware’s freedom-of-contract philosophy embraces.  Now roughly 50% of publicly traded firms have staggered boards.  I should add…this, like most corporate governance changes, is not exclusively a Delaware issue…as Delaware is home to only 50% of publicly traded companies and 60% of the Fortune 500.

Read the full piece here. 

I’ve recently finished reading Jonathan Baker’s Preserving a Political Bargain: The Political Economy of the Non-Interventionist Challenge to Monopolization Enforcement, forthcoming in the Antitrust Law Journal.

Baker’s central thesis in Preserving a Political Bargain builds on earlier work concerning competition policy as an implicit political bargain that was reached during the 1940s between the more extreme positions of laissez-faire on the one hand and regulation on the other.  The new piece tries to explain what Baker describes as the “non-interventionist” critique of monopolization enforcement within this framework.

Read the full piece here.

It turns out that the Girl Scouts price discriminate, i.e. they charge different prices for the same product in different parts of the country (HT: Knowledge Problem).   Rumor has it that demand for Thin Mints varies by region.  While the Girl Scouts concede that the introduction of the price discrimination scheme results, when coupled with  Girl Scout marketing efforts,  is tantamount to the evading pricing constraints imposed by current demand conditions.  No word on whether the Girl Scouts have hired antitrust counsel in light of the Commission’s pushing of this definition of actionable antitrust conduct in N-Data and Ovation (amongst other cases).

Read the full piece here.

So, AMD and Intel settled.  Its a case we’ve covered here in significant detail.  Terms haven’t been announced publicly.  AAI has predictably argued that the settlement shouldn’t preclude further enforcement action from NY and the FTC.   The NY Times suggests the same.  They may be right, although Herb Hovenkamp, among others, has suggested that the settlement “has taken a lot of the wind out of the sails” of the FTC case.

Read the full piece here.

In light of the recent political focus on healthcare, several Congressional bills propose to single out a class of contracts between pharmaceutical companies for closer antitrust scrutiny.  Oftentimes, a pharmaceutical company will engineer a functionally identical substitute to a “brand name” drug with specific appeal to consumers.  This substitute – with the chemical properties of the known drug but a different name – is known as a “generic drug,” or simply a “generic.”  In an attempt to preserve the legal monopoly a patented brand-name enjoys, the branded drug’s producer will sometimes offer the generic’s producer a payment to delay entry into the market for a fixed amount of time.  Known as a “reverse payment settlement” – or colloquially as “pay for delay” – these agreements are at the intersection of contemporary fears and debates about healthcare and a debate as old as the law of competition itself.

Read the full piece here.

I was very pleased to thumb through the newest version of Antitrust Magazine and see a TOTM post get some attention.  Its always nice to be cited and have folks take the time to respond to your work — or in this case, blog post.  Its even more tickling when the person doing the responding is a prominent and well respected figure such as former Federal Trade Commissioner Leary.  Commissioner Leary revisits the FTC’s enforcement action in Ovation and takes on the criticism of that enforcement action in this post.  You can see Commissioner Leary’s article here (I believe ABA registration and password required).  I’m grateful for the response and am going to take the opportunity  to argue that, despite the Commissioner’s criticisms, the troublesome implications that I pointed out in the earlier post associated with the enforcement approach in Ovation remain (see also guest blogger Mary Coleman’s related concerns).

Read the full piece here.