Our Permission-Based Economy

The decline in new business formation in this country shouldn't be a surprise -- in industry after industry, numerous bits of government permission are needed to proceed with a new idea into a new market.  If, like Uber, you plow ahead ignoring these roadblocks, you will likely spend the rest of your life in court (as does Uber).

I thought about all this when reading this article on awesome portable automated systems that can maintain a person's insulin level.  What an amazing advance in safety and life quality for people!  The part that struck me was this line from a woman when she first saw one:

Sarah Howard became interested after she met Ms. Lewis last year. “My first question was: Was it legal?” said the 49-year-old, who has Type 1 diabetes, as does one of her two sons. “I didn’t want to do anything illegal.”

It is pathetic that this is the first reaction of Americans when they see an awesome new innovation.  And it turns out that she is right to worry.  Because if one avails oneself of the normal division of labor, in other words if one lets someone more expert to build the device or program it, then it is illegal.  Only if one downloads all the specs from the Internet and builds and programs it oneself is this fabulous device legal.

The only restriction of the project is users have to put the system together on their own. Ms. Lewis and other users offer advice, but it is each one’s responsibility to know how to troubleshoot. A Bay Area cardiologist is teaching himself software programming to build one for his 1-year-old daughter who was diagnosed in March.

This is roughly the equivalent of having to go fell a tree and mine graphite in order to makes one's own pencils.  It is simply stupid.   All because the government will not let us make our own decisions about the risks we want to take with medical products.  So if you don't have the skills or the time to put one together, you can wait 5 or 10 years for the FDA to get around to approving a professionally-made version.

Hat tip to Tyler Cowen, who by the title of his post obviously also saw the I, Pencil analogy.

Update:  I give it 12 months before someone at the FDA demands that these home-made devices be regulated, and at least registered with the government.  I wonder if in 10 years the government will be demanding registration of 3D printers?  After all, they potentially incredibly empowering to individuals and can let folks work around various product bans like this.   Exactly the kind of empowerment that government hates.

  • brandonberg

    The really perverse thing is how dangerous it is to have amateurs doing this themselves. A programming error in a device that administers insulin could easily be fatal. Even without FDA regulation, it would be much safer for experts to design and manufacture these devices.

  • mx

    It's truly not stupid or pathetic that the first reaction people have to an amateur medical device that can literally kill someone is "is it legal?" It's just common sense. If there are unreasonable barriers to get this kind of technology to market sooner, then those should be improved. But we're talking about a device here that, if it malfunctions, kills children.

    And it turns out, of course, that it is legal to experiment like this, and that's fine and great for innovation. What's not legal is to distribute an unapproved medical device, and there are sound reasons for that.

  • MB

    Do you have no sense of history? We tried it the libertarian way with virtually no regulation of food or drug products - it generally led to a disaster because a certain segment of the population is amoral, greedy, and/or incompetent. That's why we formed the FDA - it may not be the best system, but it certainly seems to be better than what came before.

  • Rick Caird

    And, how many people are killed by FDA delay? I will wager it is larger than risk of "unreviewed" products.

  • obloodyhell

    You seem to be imagining that the shit isn't going to hit the fan inside the next 10 years.

    Given the two choices we have gotten for potus this election, I consider that to be vanishingly small.

    Hillary wins, there IS going to be a revolution the moment she attempts to push through her anti-gun agenda.
    Trump, who knows what the f*** he's going to do... but even if no, whoever follows him will likely be just as f***ed up as Hillary.

    Certainly nothing of the serious financial problems will get fixed.

  • obloodyhell

    Have you no sense of intelligence? It was hardly "a disaster"...

    And I have no idea with making a DISTINCTION, possibly with insurance companies, with regards to "this we agree passes our safety standards" and "this does not" -- and letting the USER decide if there's a difference that matters to them. The user, failing to heed such warning, gets limited assistance from the government and reduced recompensatory options if they utilize something that doesn't pass muster.

  • obloodyhell

    }}} What's not legal is to distribute an unapproved medical device, and there are sound reasons for that.

    No there's not. It's none of your fucking cocksucking business what the hell I CHOOSE TO DO of my own free will.

    GFY if you think otherwise.

    It is fine for the government to ADVISE its citizens as to the safety and efficacy of a remedy. It is not the #$%#$$##$# government's business to TELL me what *I* can and can't do -- even INDIRECTLY BY REGULATION OF THOSE OFFERING IT -- with regards to my own safety and well-being.

  • Not Sure

    What about the disaster that was Prohibition? Certainly not an example of "virtually no regulation of food or drug products", was it?

  • mx

    I'd say Prohibition showed the danger of going too far in the other direction. A lot of dangerous moonshine was consumed and the proceeds went to support criminal enterprises. There needs to be a balance between prohibition and everyone running around selling medical devices with no standards whatsoever.

  • mx

    You seem rather angry. I wonder if there's an unapproved drug out there somewhere for that.

  • mlhouse

    TO me the problem isn't all in the regulation, it is the temporal aspects of most government regulation. It takes them forever. I am currently doing an acquisition in Florida that requires a transfer of license. There were two trivial problems in the application so this requires a hearing. I talked to the person assigned by the state about the hearing. It takes him one month to schedule it (it has been more than a month). Then the hearing will be 60-90 days after the notification. Then he will have to make his ruling and notify everyone.

    The issue could have been readily solved on the phone call. But even that, I get that they have to assume the open issue, but why does it take more than 30 days to just schedule this hearing?

  • TimB

    I know that the focus of your article is about regulatory matters, but the machine they are trying to build is my primary interest. I am a type I diabetic and been using an insulin pump with CGM technology for many years. It's a great tool. BUT, controlling blood sugar is extremely complicated, and I would bore you to tears if I tried to explain why. Except God really had his stuff together when he designed the body, and healthy people should feel blessed that the body does this automatically without any thought. You would be amazed at my thought process during every meal; the number of carbs, the type of carbs, combination with fat/protein, immediate/square/dual insulin delivery time, etc. There is skill involved in using this device, just like in my guitar playing. Bottom line is we will never have a true artificial pancreas until we replicate how the body does it, and sadly, we are not close to this.

  • Matthew Slyfield

    "So if you don't have the skills or the time to put one together, you can
    wait 5 or 10 years for the FDA to get around to approving a
    professionally-made version."

    Assuming that they ever get around to it.

  • Matthew Slyfield

    "I wonder if in 10 years the government will be demanding registration of 3D printers?"

    The gun control crowd is already pushing for regulation of 3D printers.

  • marque2

    The problem is the genius person who came up with the device has to fund all the studies to get it approved. The FDA always gets around to it, they just make you (not them) do 10 years worth of studies, for $300 million before they give you a yay or nay stamp.

  • marque2

    I think the problem is the government sees folks of their own type and liking, the liberal left wing nuts falling for the bizarre new age ideas, that the government itself likes to encourage - anti drug anti-industry groups, good, because they give government more power, Oops, now our new age friends think vaccinations kill, and crystals can cure you - we better regulate more because these folks are so dopey.

  • David Mohler

    The fallacy of this line of thinking is the notion that government agents have the knowledge and incentives to make the safety/benefit trade-off calculation more accurately than those whose actual health is at stake.

  • Matthew Slyfield

    Right, but they can say nay and make you start over from scratch. That's not getting around to approving it.

  • marque2

    Never said guaranteed approval, just that if you spend the money they will give you an opinion.

  • Matthew Slyfield

    An opinion of NO does not qualify as getting around to approving it which is what I was replying to from the article.

  • MB

    > Have you no sense of intelligence? It was hardly "a disaster"...
    I suppose it's subjective. But through quite a few generations, the FDA's power has been expanded - I'd say the American citizens and their representatives certainly felt there was an issue to be addressed. I also think all developed countries regulate their food and medicine markets - perhaps more or less stringently than the FDA - showing that it's a fairly widespread concern. So, you may be fine with going back to fraudulent claims; unlabeled and possibly toxic additives; addictive substances in children's medicine; radiation poisoning; etc. - but it's not anything I'd be clamoring for.

    > And I have no idea [problem?] with making a DISTINCTION, possibly with insurance companies, with regards to "this we agree passes our safety standards" and "this does not" -- and letting the USER decide if there's a difference that matters to them.

    I wish something like that would be workable - I really do. I haven't spent a lot of effort thinking through it, but it seems the biggest issue would be losing the leverage of forcing safety and efficacy studies to begin with. Given the choice of coming on the market without a stamp of approval and relying solely on advertising vs. spending years and hundreds of millions of dollars on studies that may prove my product is poisonous....I think I'd be inclined to go with the former. Enough companies make that choice, and virtually everything is "not tested" - making it a free for all again.

    > The user, failing to heed such warning, gets limited assistance from the government and reduced recompensatory options if they utilize something that doesn't pass muster.

    Wait - reduced recompensatory options? That just tilts the field even further towards not doing any safety testing whatsoever. I don't think that's going to turn out well, but feel free to lobby your local representative for it.

    Personally, I'd focus on getting the FDA to approve things faster and/or be more willing to slap a beta-test label on something that shows significant promise but is not yet deemed safe or effective. But then, that's a tweak - not exactly something to get hot and bothered about, so it won't motivate people like calls of tyranny do.

  • MB

    I should've been more specific - FDA regulates for safety and efficacy (which leads to things like sanitary conditions, labeling, etc.). Prohibition wasn't a regulation on either of those so doesn't really count.