“Why not do away with all the mandatory drug trials and the like, and simply let drug companies purchase approval for new drugs,” asks Tyler Cowen. “Think of the companies as posting bonds, and of course they still can be sued ex post if the drug harms somebody. The companies still will have reason to conduct their own tests.” Color me skeptical, but I’m no expert on the FDA approval process. The larger point, however, is that if you want to know why America is so lawsuit-heavy, you need to blame libertarians like Tyler. You can regulate or you can litigate; the less we have of the former, the more we need of the latter.
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