Transparency no substitute for regulation

Summary:Transparency was once hailed as a substitute for effective regulation. If we know what's happening, the public will do the regulating, through whistle-blowing and press reports, the theory went. The theory is nonsense. The theory is nonsense.

The FDA has launched a Web page listing the results of safety tests on newly-approved drugs and vaccines.

The launch is in response to a 2007 law aimed at creating greater transparency for new drugs, which are often those being most heavily marketed. And that's a good thing. (Image from Wikipedia.)

Late in the last decade, as the Bush Administration became the Obama Administration, transparency was hailed as a silver bullet, a substitute for effective regulation. If we know what's happening, the public will do the regulating, through whistle-blowing and press reports, the theory went.

The theory is nonsense.

A Web page that isn't seen provides no value. In any case reports just tell you what did happen. They don't prevent things from happening.

The camera showing the Gulf oil spill is a great example of transparency, but having effective regulators with authority to keep BP from cutting corners would have done a lot more good. McNeil Labs probably wishes it had some regulators watching how it made Tylenol.

Prevention is always cheaper than fixing a problem once it has appeared. That's the idea behind the new health reform law, but it's also true for corporations generally. Regulation assures that the costs of prevention don't give one company a financial advantage over rivals.

Not all such regulation is public, of course. Insurers reduce their risks by imposing safety regulations on the companies they insure, requiring prevention and mitigation measures be in place as the price of getting a policy.

Absent regulation, private groups are taking matters into their own hands.

The Accreditation Council for Continuing Medical Education, which accredits medical education courses. has just pushed through a policy that prohibits drug company representatives from speaking at the American Heart Association's science meetings later this year.

The companies are being accused of using their presentations to hype new drugs, offering descriptions of possible diseases that dovetail directly into new product pipelines.

The pressure group Pharmedout, which works to counter the industry's hype, wants to go further and prohibit the industry from being represented in medical education at all. The group's news page is filled with efforts by companies to influence the field.

Some of the work being done by Pharmedout is  of the kind that a well-funded regulator would be expected to do. But regulation has become so politically toxic over the last few decades that such protections don't exist.

This is starting to hurt the industry, which is facing a wave of distrust from the public that is causing it to cut back on research. Expect more research to move into university-funded labs in the future, and more new compounds to depend for funding on groups like the Gates Foundation.

You can also expect more industry calls for tighter regulation.

This post was originally published on

Topics: Innovation


Dana Blankenhorn has been a business journalist since 1978, and has covered technology since 1982. He launched the Interactive Age Daily, the first daily coverage of the Internet to launch with a magazine, in September 1994.

zdnet_core.socialButton.googleLabel Contact Disclosure

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Related Stories

The best of ZDNet, delivered

You have been successfully signed up. To sign up for more newsletters or to manage your account, visit the Newsletter Subscription Center.
Subscription failed.