Quick Quote

Reading about the earnings reports coming from Merck, I am reminded about this quote:

I ask myself a question: Suppose I am a physician in the public health service, and somebody presents to me a new drug. I can approve it now, although we do not know its full effects, and commonly we shall not know the full effects of a new drug for five to ten years after it comes out. If I approve it, and a series of tragedies such as [the then recent] thalidomide tragedy comes, what will happen to me? I shall certainly be discharged, and I will be held up to public obloquy. The public at large will demand that heads roll. The penalties on me are very heavy indeed if I approve a drug I should not have. Suppose on the other hand, that it proves to be a fine drug, and in the long run its achievements are wonderful, but we do not know this yet. If I hold up the use of the drug for five years until all the results are in, a large number of people may die becuase it was not available. Their survivors will not write and complain that I did not approve the drug earlier. All the penalties are on me in making the mistake of approving the drug too early and none on the mistake of approving it too late. This combination of rewards and penalties seems undesirable.

George Stigler, "The Formation of Economic Policy" published in Current Problems in Political Economy 1965.

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This page contains a single entry by published on January 25, 2005 5:58 PM.

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