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News // February 11, 2013 MAAC Staff

Company Profits Versus Consumer and Worker Protection

Last week, Massachusetts shut down eleven specialty drug labs that failed to pass safety inspection. The drug labs, called “compounding pharmacies,” came under scrutiny after contaminated steroid injections caused an outbreak of meningitis that killed at least 35 people.

Compounding labs are supposed to compound drugs for individual patients, at a doctor’s request. But because they are lightly regulated, the pharmaceutical industry has been using them to make mass-produced drugs on the cheap. And sometimes, those drugs kill people.

According to the Boston Globe, surprise state inspections of 37 of these specialty labs in Massachusetts found only four in complete compliance with state law. Of the remainder, eleven were shut down temporarily, and twenty-one received citations.

The Washington Post reported that “Compounding pharmacies have been linked to deaths, illnesses and safety failures for years.”

“A Washington Post analysis found that state and federal authorities did little to systematically inspect and correct hazards posed by specialty pharmacies, which custom-mix medications for individual patients, hospitals and clinics. In the lightly regulated industry, pharmacies were rarely punished even when their mistakes had lethal consequences.”

The “lethal consequences” included deaths by drugs contaminated with bacteria and mold as well as drugs that were mixed incorrectly, giving patients a deadly overdose.

It’s not surprising that business hates regulation, because regulations often add to the cost of doing business. And nobody is claiming that all regulations are wise and effective. But what this shows us that at least some regulations are necessary. Because, time and time again, we see that when businesses finds a way around outside oversight and regulation, either their customers or their employees get hurt.

When mine owners are allowed to skirt regulations, miners die. Asbestos manufacturers continued to expose workers to asbestos, putting them at risk for mesothelioma, until most such manufacturing was shut down. And lax regulation of drug manufacturers kills patients.

There’s a common libertarian argument that companies don’t need to be regulated, because a good businessman wouldn’t do anything reckless or careless that would ruin his company’s reputation or make customers wary of his products. And that makes a lot of sense. But in the real world, businesses take chances all the time. It’s too tempting to cut a corner here or there to squeeze more profit out of the products.

You might ask, is the problem the regulation or the regulators? The answer is, probably a little of both. In the case of the Massachusetts pharmacy that caused the meningitis outbreak, federal and state officials said they lacked clear authority to take action. The regulatory laws are archaic and don’t fit the realities of the modern pharmaceutical industry, they said.

Another common problem is that the people appointed to head regulatory agencies often are from the industries they are supposed to be regulating. This creates a phenomenon called “regulatory capture.” Through capture, regulatory agencies come to be dominated by the industries they are regulating. Then the agencies tend to work on behalf of the industries rather than the public. The result is that the agencies tend to look the other way as the industry takes chances with peoples’ lives and health.