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National Institute for Health Insurance Reform

One little guy - one big goal - fix a broken system. mailto:rereason@hotmail.com

Wednesday, August 24, 2005

Tort Litigation as Regulation

Vioxx – Merck Gets Bloody Nose

The Vioxx story, old news as I write this, yields insight into the way our "system" of healthcare delivery works and ought to work.

Milton Friedman, in his excellent Freedom to Choose explained in great detail how the healthcare system works as a state-sponsored monopoly. I would call it more of a cartel than monopoly, but that's a fine point not worthy of debate.

Friedman presents a classic libertarian solution: do away with all direct government regulations in healthcare. Tort litigation is seen as the way to maintain quality and protect society, which is also classic libertarian philosophy.

In thinking about how and why we regulate medicine and how we might change it, understanding history is critical. With the Vioxx debacle, we witness history in the making. As it unfolds, we see a future text-book case on display. With time, our understanding will increase, but some instructive points are already clear.

The jury decided the case, not on scientific merit, but on the perception of corporate dishonesty. In exit interviews, jurors remarked that the science was over their heads; but the company concealed critical data and deceived patients and doctors.

What lesson did Merck learn from this decisive defeat? It's too early to say for sure. But in the years between the first marketing of Vioxx through to the verdict, Merck denied that there was any problem, aggressively marketed Vioxx directly to consumers, and reaped billions of dollars in profits. The jury determined the company knew of safety issues before the drug went to market. Driven by greed, the company engaged in a conscious denial of reality.

Incidentally, a deliberate denial of reality neatly fits the definition of evil posited by libertarian thinker Ayn Rand.

Merck and Vioxx reveal to us a glimpse of a world in which torts become the prime defense against corporate wrong-doing.

Suppose the FDA were abolished; the AMA prohibited from deciding who can practice medicine; pharmacists, doctors, dentists, hospitals would all be allowed to practice without the onerous burden of state licensing or regulation. Suppose anyone, and by "anyone" I mean sociopaths as well as medical school graduates, could hang up a shingle. Suppose the nation embraced this libertarian medical paradise.

In such a world, the greed of lawyers would be the only protection against the greed of giant companies.

A reasonable person might conclude such a system will work. Fear of litigation and the potential for bankruptcy would keep corporate giants like Merck in check.

But history shows us that such a system does not work. Merck, a huge, incredibly successful enterprise with the best lawyers and the brightest executive talent that money can buy - Merck, the beneficiary of public trust and faith in their products - Merck, who's motto is "We put patients first" - lied.

The jury decided they stonewalled. They delivered a trailer truckload of documents to the FDA when required to show the safety of their product. The winning lawyer had assistants bring before the jury box after box of documents until the opposing bench objected they could no longer see the jury. The boxes showed how Merck swamped the FDA so as to render a consideredjudgmentt on the safety issues impossible. The jury looked at e-mail internal to Merck, e-mail expressing doubts about the safety of Vioxx before the drug went to market. The jury concluded Merck lies.

So, fear of lawsuits and potential ruin caused the company to try to bury their misdeeds deeper. To push the ugly truth out of sight. To deny it.

How much worse would the case be without an FDA? Without careful gathering of statistics, without state regulation? Without an AMA forcing our doctors through rigorous education? In a mass society, with medical services delivered on a scale that dwarfs what has come before, how many lives would be lost before legal retaliation put an end to it?

I don't expect any libertarians to change their minds about "free market" health care simply because of a post on an obscure blog devoted to an unpopular cause.

But I do hope to provoke thought in the minds of people who stumble across this.