Wednesday, January 9, 2013

FDA Revokes Drug Approval

The New York Times reports that the FDA has revoked the approval of Avastin for breast cancer.  While this has significant health and economic implications, I want to focus on a different issue:  what is the role of government in health care?  From my perspective, the government (as opposed to the market) should be focused on providing public goods (such as health care information on the effectiveness of pharmaceutical drugs), creating incentives to reduce costs and creating incentives to increase competition - as these are means of increasing economic consumer surplus.  Thus, using the information that is available, the FDA seems to have made a decision that fits with the first (providing a public good - that of examining information about a pharmaceutical drug and stating whether it is beneficial or not).  While many would disagree with this decision, given that there are differences in patients ability to respond to various treatments, the overall conclusion seems valid.

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