Who Protects Consumers Now?
By TAN Kee Wee
(MediaCorp 938LIVE’s Money Talks, Monday, 20 September 2010, 7.20 am, 9.20 am, and 7.20 pm)
Last Wednesday, Dr Frances Kelsey, a frail 96 year old lady, was presented with an award bearing her name by the US Food & Drug Administration (or FDA). The FDA, as we know, was set up to protect and promote public health.
Dr Kelsey has received many awards over the years. She did not discover a new drug. Nor did she create a new food. She was awarded for merely doing her job fifty years ago.
Fifty years ago in September 1960, Dr Kelsey was a pharmacologist who had just joined the FDA as a medical officer. Her job was to review applications for drugs before they could be sold. Her first case was for a sedative prescribed to pregnant women for relief from morning sickness.
Even though the drug was already on sale in Canada and over 20 European countries, Dr Kelsey rejected the application, not once, but many times, on grounds that there was no proof that the drug was safe.
Despite pressure from the drug manufacturer, Dr Kelsey kept her stand. As it turned out, the drug was thalidomide. A year later in 1961, it was dramatically revealed to the world the side effects of consuming thalidomide. It caused the births of more than ten thousand babies with deformed arms and legs.
Dr Kelsey’s insistence had averted a similar tragedy in the US. The public outcry was swift and drug testing reforms were quickly passed into law. In the following years, the FDA’s power grew and it went on to put the interests of consumers before the drug firms.
Today, not many share this rosy view of the FDA anymore. There is a story behind this. Between 1960 and 1980, sales of prescription drugs were static as a percentage of US GDP. But after 1980, sales multiplied to hundreds of millions of dollars.
This was due to the pro-business shift in thinking after Ronald Reagan became President in 1980. Beginning from 1980, laws were passed to protect the profits of drug firms, and help them grow into global businesses.
It was in this climate that the influence of the drug firms grew in the FDA. The same story could also be told of the big banks and their influence in the corridors of power today.
Two years ago last week, Lehman Brothers collapsed, almost bringing down the global economy. The man in the street took the brunt of it. Given what has happened, you would imagine that the world should have introduced enough regulations to prevent another crisis.
Indeed, many proposals were advanced. But by the time these proposals emerged in their final forms, the fizz had been removed. It’s like tasting a bottle of sparkling wine after it had been opened and left overnight.
The Bank of International Settlements, or BIS, is the central bank of central banks. It had the opportunity to do something about this when it revealed new international banking rules last week.
Instead, it was not to be. No doubt, the new rules were stricter. But the banks were given eight to thirteen years to comply.
Critics say that before the implementation dates arrive, the world will see another disaster. They also say that the banking lobbies have successfully influenced the regulatory bodies to their advantage, at the expense of the man in the street.
If this is true, then the Dr Kelseys of today, working in various regulatory bodies, have no hope of doing their jobs and protecting us from the next disaster.