The Economics of Snakeoil
One of the common questions (sometimes framed as a claim or justification) about unscientific and implausible treatments that frequently comes up is – if they don’t work, why are they so popular? The assumption (also made by some who oppose regulation of medical products) is that the consumer will perceive the medical value of products and adjust demand accordingly.
I and others who favor more scientific and effective regulation of health products and claims have argued that there are a host of factors distorting the market in favor of health products with appealing claims, even if they lack substance. I am not an economist, however. So it was heartening to read the very same arguments I have been making expressed from an economist’s point of view.
This paper by Werner Troesken, an economist from the University of Pittsburgh, explores the flourishing of the patent medicine industry from 1810 to 1939 in the US (when FDA regulation essentially shut it down).
Troesken explores many factors leading to this success, but what I found most interesting is that when you strip away all the complexity, Troesken shows how ineffective treatments will still flourish in the marketplace.
Inelastic demand with respect to product failures
The core concept of this paper is that the patent medicine industry demonstrated what Troesken calls “inelastic demand with respect to product failures” – in other words, people still wanted to buy patent medicines, even after their previous experience with such products resulted in failure.
He begins with a few reasonable premises. The first is that the patent medicines of the time did not work. We can say with historical hindsight that the products popular at the time were not effective in curing the diseases they were being used to treat – often serious illnesses that were common at the time, like tuberculosis, but which lacked any mainstream medical treatment. Most patent medicines were variations of the same product, in fact – a bit of alcohol, sugar, and some (essentially random) vegetable matter. Often the same products were marketed over and over again with different labels and claims. We can now say with a high degree of confidence that these elixirs did not cure tuberculosis, or seizures, typhoid, or any other ailment that was claimed. Troesken assumes a 100% failure rate for patent medicines.
Troesken also assumes that customers perceived this failure – they knew they were not cured of TB. For a bit more of background on this premise, however, Troesken explains that at the time the empirical model of assessing medicines was dominant. In other words, treatments were assessed purely on whether or not they worked, not on the plausibility of any putative mechanism. This is largely due to the fact that science had not yet progressed sufficiently to think productively about plausibility.
It is a very interesting side note that empiricism resulted in very slow and uneven progress in medicine. Scientific medicine began to improve dramatically, however, when it became increasingly founded upon basic science. I would add, however, that the technology of empiricism also improved – we got better at doing clinical experiments. I would argue that this debate continues today – that between pure empiricism (which functionally is represented by evidence-based medicine) and a more balanced mixture of basic and clinical science, which I and others advocate as science-based medicine.
In any case, Troesken argues that consumers were following an almost pure empirical approach to patent medicines. They did not know enough science, and not enough science was known, to assess the plausibility of the products, so they judged them entirely on whether or not they perceived a benefit.
This is Troesken’s basic model – medicines do not work, consumers judge them solely on whether or not they work, and consumers correctly perceive that they do not.
Interestingly (and I think this is the core insight of this paper) even with this basic model, Troesken argues that the patent medicine market would still flourish – as it in fact did. This is because (here is where the economics perspective comes in) the perceived value of a potential cure is extremely high, compared to the relatively low cost of experimenting with a new treatment. So consumers felt that they had little to lose and the world to gain, leading to repeated experimentation with, and even high demand for, patent medicines.
Troesken acknowledges that repeated failures would decrease the perceived value of patent medicines, but this perceived value would not go to zero – it would decrease asymptotically, and remain substantially high even after multiple failures.
In other words – the allure of a promised cure is so great, people are willing to risk the investment in the treatment even after repeated failures. We therefore cannot rely upon market forces to weed out ineffective treatments from the marketplace.
False positive and other factors
But of course – this is the most basic model. There are many other factors at work, and Troesken hits upon many of the ones I and my colleagues have discussed in the past, but not all of them. For example, he discusses how marketing was designed to produce “false positives” – this led to the testimonial, a fake patient giving a fake testimony about how the patent medicine worked for them. Consumers then incorporate the false positives of testimonials into their calculations, making the product demand even more resistant to personal failures.
Another potential source of false positives was actual active ingredients present in many patent medicines. Products often contained cathartics, purgatives, or even narcotics (and of course alcohol is an active ingredient). These substances may have caused dependence, and in fact some patent medicines may have been little more than a socially acceptable “back door” method of consuming illicit drugs. Or they may have produced physical effects that convinced consumers something biological was happening, such as removing toxins through purgatives.
What Troesken does not discuss much is the false positive of the placebo effect. This is because he is restricting his analysis to claims for cures of real diseases. In his basic model he ignores spontaneous remissions, but he acknowledges this is another source of false positives – sometimes people get better on their own. But the more serious the disease, the more rare this should be.
When we move into the arena of symptomatically treating chronic ailments that are not life-threatening, the placebo effects takes on a larger role. For example, many illnesses are self-limiting – they will get better with only tincture of time, and so any treatment will seem to work. Also, people with a fluctuating illness will tend to seek treatments when their symptoms are at their worst, and so regression to the mean will result in improvement after any treatment they take while symptoms are at their peak. There are also a host of other psychological factors leading people to perceive improvement in the absence of a real biological effect. (See here for more information on placebo effects.)
One factor I think Troesken gets a bit wrong is his conclusion that patent medicines thrived not only despite their lack of effectiveness, but because of it. He argues that if a patent medicine worked, and cured a client, that consumer would be removed from the pool of demand – they would no longer be seeking medicine. This is true (again within the limited model of patent medicines as cures for serious illnesses, rather than symptomatic treatments for chronic illnesses) but he ignores an important factor. If a person survives one illness, they will survive to get another – and when they do, they will likely return to what cured them the first time. Everyone is relentlessly aging, and with age comes increasing illness. Ironically, Troesken does accurately refer to this effect in a different context below.
The rise of science-based medicine
Troesken also argues that improvements in the knowledge base and effectiveness of scientific medicine did not, and would not be expected to, reduce the patent medicine market. The success of snake oil, in other words, should not be interpreted as a failure of or the absence of effective medicine. In fact, Troesken argues, the success of germ theory and increasingly scientific medicine meant that people were surviving the acute illnesses of their youth to become older adults – older adults with chronic ailments. Modern medicine, therefore, increased the pool of demand for patent medicines.
He also points out, and I would amplify, that increasing medical knowledge did not dampen the demand for implausible treatments. This is because the general public, while they may have increased scientific knowledge as scientific knowledge in general increased, would not rise to the point that they would reject patent medicines on the basis of scientific plausibility. They remained empiricists.
This matches our knowledge of belief in pseudoscience even outside the realm of medicine. Acceptance of dubious science actually increases with education, until one gets to the post-graduate level of science education. It takes a very high level of scientific knowledge (and/or, I would argue, an understanding of the principles of scientific skepticism) to feel confident in rejecting a claim based upon plausibility alone. This is true even of health care professionals.
Patent Medicines Today
The classic era of patent medicines may have ended in 1939, but it has had a resurgence in the US since 1994, when DSHEA was passed. DSHEA essentially removed supplements and herbs out from under the yoke of FDA regulation, partly (at least on the right) based upon the claim that market forces were sufficient to regulate such products.
What is amazing to me is how the supplement industry of today is so similar to (and in some cases historically continuous with) the patent medicine industry of the 19th century. All of the same factors are in place – testimonials, cutting supplements with active ingredients (caffeine is now common, and of course some Viagra replacement herbal supplements were found to be cut with actual Viagra), the types of claims that are made for products (combining ancient wisdom with cutting edge science), and more.
I think Troesken makes a compelling argument for the inelasticity of demand for such products, which, in my opinion, undercuts some of the libertarian arguments made against regulation of supplements, and even (by some) pharmaceuticals. Some may still argue that the demands of personal liberty outweigh the goal of protecting the public from worthless products, or that regulations, despite good intentions, either do not work or have negative unintended consequences. I disagree (even while I am sympathetic to these arguments in principle, I disagree with how they are often applied in this context), but these arguments are not addressed by this paper.
What this paper convincingly argues is that we cannot expect market forces to result in better and more effective health products, or even to keep entirely worthless or even harmful health products from the marketplace.
Consider the entire history of the science of medicine from the dawn of history up to about the era of Pasteur. Most diagnoses were flawed, treatments were ineffective when they weren’t downright harmful, and even palliative care didn’t palliate very much. Yet doctors were respected and eagerly sought out by rich and poor, they held degrees, and commanded handsome fees. How come?
Because people fear pain and death. Anything which offers hope of life or easing agony becomes highly desireable. If the patient lives, it’s proof of success; the dead aren’t around to complain about ineffective treatment.
“If the patient lives, it’s proof of success; the dead aren’t around to complain about ineffective treatment.”
Reminds me of a joke.
“Do your parachutes work?”
“No customer ever complained.”
It is not helping that big pharma are taking common annoyances, cleverly branding them as disease and then selling a cure. 20 years ago if you had heartburn, you were told to take an antacid. Nowadays, you have “acid reflux disease” and need a drug for it.
And what, exactly, is wrong with snake oil? I use it every day, freshly squeezed from my snake farm out back, and I am an icon of good health and longevity. Miss Cleo told me I’d live to be 300. You should check out my special brand of snake oil, made from 100% psychic snakes which have been ground transported straight to the farm (we all know the dangers of Snakes on a Plane).
Acid reflux can be a very serious disease. It’s not just a once in a while case of heartburn after eating too much pizza. Some people have chronic cases of acid reflux that can cause damage to their esophagus. “Big Pharma’s” acid reflux medication have greatly improved the lives of many people. Wikipedia explains it all.
Even if you were right, what relevance does it have to what was discussed in the article?
None of that changes the fact that it can be avoided and perhaps even eliminated by good nutrition. But why subject yourself to the discipline of good diet when you can just take a pill and eat all the garbage you want?
And this article is about why the economy of medicine does not correct itself in the same way others do. I pointed out that big pharmaceuticals are re-branding ailments and selling new solutions. How is my post not relevant?
Robo Sapien, I’m disagreeing with you with an anecdote (apologies). I get heartburn & regurge from anything– I can get it after drinking water. I totally avoid most trigger foods and do all the “right” stuff to avoid or eliminate it, but I can’t. Just walking to another room in my house can cause my stomach contents to come up for some fresh air. Taking the pills will eliminate this for a very short period of time, which makes me turn to them for important things were I can’t walk around with breath like rotten meat (like my wedding). What to you may just be a minor issue, to some people is major and nearly uncontrollable. Maybe we are a small portion of the heartburn-experiencing population, but it is serious enough to require pharmaceutical or surgical intervention.
I get it too, but not quite as severe. I regurg swallowed saliva by the ounces, it is pretty gross. Sometimes I’ll choke on a sip of water and have to spit it back up, so I definitely sympathize. I am not belittling the needs of people with real conditions that need treatment, but things have gone so far beyond that. Why would a prescription GERD medication need a TV commercial?
Green peppers often trigger heartburn. Does that make them garbage?
I think the real problem is that there is a spectrum of symptomology for various diseases and disorders. For most people, it’ not bad enough to require a medication. For a few, it is. The people that are on the better end of the spectrum often have a hard time understanding that the people on the other end are truly suffering. They are, and if you give their severe set of symptoms a name, they feel better about it & insurance is more likely to cover it. (But yes, I agree in some cases pharma companies are trying to sell to people who don’t really need the product– a different issue.)
My husband occasionally has heartburn. He takes a tums. I have heartburn if I eat anything acidic, spicy, fatty, or too voluminous. Usually tums does not work. I have regurge (sorry couldn’t think of a better way to say it) if I do any activity or lie down less then 2 hours after a meal. It’s so bad my teeth have erosion similar to the teeth of people with bulimia. I am at risk for the lining of my esophagus turning into stomach lining and for a really nasty esophageal cancer. I think my symptoms are bad enough to be considered a disorder that may require medication. It is definitely something someone would take to their doctor for help.
Robo, you picked a bad example with “acid reflux”. Go do some extensive research on some of the better Medical web sites and get back to us.
I agree.
Also – the pharmaceutical industry does not invent diseases, or get to label new diseases. What they do is more complex. They may develop a drug specifically for a disease market. They may also have a drug with an interesting mechanism of action – and look for a disease that would make an optimal indication. There is plenty of raw material in the medical literature – and they pay experts as advisers and ask them – how could this drug be useful, or what diseases in your specialty really need new drug options. They may also push the limits of indications – suggesting drug treatment for milder cases, or borderline indications.
But they don’t invent diseases.
Acid reflux can cause real harm, even raise the risk of esophageal cancer. And while food choices do modify GERD, and in some people may be a significant cause, there are also many people who have a defective sphincter or some other anatomical of physiological issue that is the true cause – and they simply need treatment.
tmac57 – I’m just going to ignore you from now on, because every reply you make to my posts is immature and slanderous. Quit sucking up to the blog authors and be civil to everyone else.
Steven – perhaps I misstated my point initially, I am often poor at choosing words. My point is, does that really merit a super bowl ad for a medication? People who are legitimately sick typically go to a doctor, and get prescribed exactly what they need. My case is that big pharma is heavily marketing drugs that MOST people don’t need. Enough marketing can convince someone with simple gas pains that they are suffering from a real problem like GERD.
note: I am not a conspiracy buff, I use terms like “big pharma” loosely, but not necessarily derogatory.
You sounded like an “acid reflux denier” there for a minute.
R.S.- Please give an example where I slandered you.
Also, I have recently expressed disagreement with Daniel Loxton, and Dr. Shermer with some of their points, so you fail on your “sucking up” assertion as well.
There are so many parallels, patent medicine, SCAM, and prayer.
“…to 1939 in the US (when FDA regulation essentially shut it down).”
They did? Then why is this still an issue 71 years later?
“In other words – the allure of a promised cure is so great, people are willing to risk the investment in the treatment even after repeated failures. We therefore cannot rely upon market forces to weed out ineffective treatments from the marketplace.”
Don’t forget that the analysis you’re looking at was based on a marketplace in which 100% of the competing products failed to work as advertised. In a marketplace with one product that works and several rivals that don’t, people will flock to the one that works, provided that they have a way of discovering that it works, which in economics terms basically means that there are low transaction costs in the dissemination of data on effectiveness. Personally, I suspect that FDA regulations are a large part of why these transaction costs are sometimes prohibitively high in modern times, which is an ironic tragedy. Unfortunately, bureaucratic organizations like the FDA feed off of the success of others, so it sprung up around the same time that society advanced to the stage where we had the know-how to develop medicines that worked, making it difficult to look at how medicine would work in a freed market.
Yes, but that’s the sticking point, isn’t it? People do not have perfect knowledge, and even the most knowledgeable have extremely limited ability to detect scams. I’ve heard libertarians estimate happily that there are billions of products available for North American consumers. In that context, it is very often impossible for consumers to know what is offered, by whom, with what relative strengths or weaknesses — especially with fraud in the mix, which is a deliberate effort to distort competition.
Moreover, many effective products and service providers simply cannot be evaluated without expert knowledge (“which treatment is best for my cancer?”).
“They did? Then why is this still an issue 71 years later?”
Did you miss the part about DSHEA? Let me quote it for you:
“The classic era of patent medicines may have ended in 1939, but it has had a resurgence in the US since 1994, when DSHEA was passed. DSHEA essentially removed supplements and herbs out from under the yoke of FDA regulation, partly (at least on the right) based upon the claim that market forces were sufficient to regulate such products.”
Yeah, that was a real “win” for the free market and personal liberty wasn’t it?
The hands off, pure market approach assumes absolutely rational consumer behavior in driving market forces, at least over the intermediate to long term. I argue that casinos and lotteries would not be in business if consumers could be counted on to behave in a purely rational manner, and that this blanket assumption can be discarded.
A large part of marketing is based on the assumption that consumers can be persuaded to not act rationally. Store brand canned vegetables typically roll of the same production lines as name brand goods, and people continue to buy name brand stuff, mostly due to perceived value.
So basically a libertarian is a humanitarian who doesn’t understand economics? Or maybe a humanitarian who doesn’t understand people?
I argue that skepticism as a movement should strive to be as free from political leaning, bias, or affiliation as possible — a position Steven and I agree upon, and which I think he exemplifies. Political partisanship poses many serious dangers for skepticism, including the danger of fracturing an already small community.
Alternative medicine is one topic that can test that neutral stance. It’s a major point of divergence between mainstream skepticism and the hybrid science-plus-free-market skepticism of the libertarian or Objectivist branches. What do we do about that? (In my personal view, the existing free market status quo of the supplement industry — and to a considerable degree, the alt med industry in general — is a disaster that skeptics should universally wish to reform.)
By mainstream skepticism, do you mean a hybrid science-plus-regulation of the liberal or Marxist branches?
My concern is when the politics bias the science, but if we all agree on the science, we can still disagree about the politics.
By head count, science-plus-regulation is the mainstream of the skeptical community: the community splits with a majority of liberals, a strong minority of libertarians (let’s suppose 15%) and very few traditional conservatives (perhaps because of the demographic overlap with atheism). That is also my personal position, though as you say, we can disagree on politics and agree on science; thus my default recommendation of strenuous political neutrality.
But, there are sometimes conflicts between libertarian ideals and the reality skeptical activists face on the ground. Alternative medicine reveals some of those: the supplement industry emphatically does not deliver efficacious, safe treatments; people do not in fact select alternative treatments from a position of rational knowledge based upon honest advertising; and so on.
Both regulation AND deregulation can have unintended consequences. I find it impossible to fathom a world that has a TOTAL anything goes mentality, that would result in anything less than a rollback of civilized society, once our human nature is taken into account.
That is why rules and laws were conceived of in the 1st place (as imperfect as they are). If we all were rational and fair “good?” members of our world, then we would have no need for rules,laws, or agencies such as the FDA. That would be the ‘utopian’ libertarian world.
That’s why Shermer’s article last year arguing that the financial sector crashed because of regulations, and it needed to be deregulated further gave me a gut laugh, and a stomach ache at the same time.
I don’t see how anyone could rationally argue that something like the stock market shouldn’t be regulated, but that’s what libertarians argue in favor of.
Political bias has no place in skepticism. Why would you be “biased” in the first place? This would mean you are adopting a position without knowing all the facts. This would be entirely contrary to the skeptic approach.
I think libertarian skeptics exist only like religious scientists do; fueling an internal cognitive dissonance. It is obvious that empirically policies with libertarian tendencies have had disastrous results. Look no further than the object of this article, climate change and the recent economic collapse. Their best defense usually is that policies that fail are not libertarian enough. More likely they are as libertarian as they can be before they are so harmful they must be stopped.
It’s acceptable for me to have partisan politics as a citizen. (It happens that I have nothing kind to say about libertarianism.)
When I speak as a skeptical activist things get more complicated (probably a bit too complicated to address in blog comments). On the one hand, I see conflict between free market fundamentalism and the skeptical project. (For example, disdain for regulation helps the “health freedom” movement shield dangerous pseudoscientific mischief from accountability.) On the other hand, it is clearly damaging when skepticism is perceived as having political affiliation or bias — even if that perception is wrong.
For you, it is obvious that libertarian policies are “disastrous” and “harmful.” Libertarians say the same things about liberal policies. The question then becomes: should skeptics as skeptics ever attempt to shed light on that? Or should we, as I usually argue, carefully avoid that quagmire?
On the one hand, I personally think some political ideas are demonstrably wrong; on the other hand, as soon as politics (or religion) are open for discussion, all traditional skeptical topics seem to vanish (along with much of skepticism’s credibility).
Daniel, I think that I am in your camp philosophically, but I don’t see any avoiding this topic, as much as it seems to cause a schism. I think that the best that we can hope for is a courteous, thoughtful,and fair exchange of ideas, so that all sides can learn from each other, and have as an overall goal to advance the cause of Skepticism in the areas of common ground. The obvious danger, of course, is when ideology, demagoguery, and incivility derail the discussion. Those of course lead to fallacious reasoning, and a breakdown of discourse. It is quandary, but one that I fear that we will have to face.
I think there is a way to deal with this, one consistent with my overall position on the scope of skepticism: stay close to our core mandate and expertise.
Consider it a sliding scale: political questions are in scope to the degree that they’re close to our area. By that standard, the question of licensing psychics is in scope for skeptics; the question of whether taxes are necessary is out of scope.
This is good general practice: the further we drift from our own field, the more cautious we should be — less outspoken, more tentative, and more eager to consult relevant domain experts. (I have a younger brother working on his PhD in politics at Harvard who finds it very strange that skeptics rarely cite the formal literature when discussing his field.)
I agree, to the extent that the expertise that an individual has, or is engaged in educating themselves in, is valid. However, a person who has spent a lifetime studying, and becoming an “expert” in ,say homeopathy, could easily be undone by a 12 year old who makes the simple observation that it “just sounds like water, to me”.
Sometimes, a common sense observation is worth more than a books worth of learning. (not trying to be anti-intellectual here).
“It’s acceptable for me to have partisan politics as a citizen. (It happens that I have nothing kind to say about libertarianism.)”
Actually, Daniel, from a purely skeptical point of view, it is absolutely unacceptable for citizens to be partisan. To be a “partisan” is to evaluate candidates and policies based on their party affiliation rather than their ideas or effects. Critically speaking, it seems clear that this is a lousy way to evaluate candidates and/or policies. If the Republicans are pushing for an idea that would ultimately benefit society, it should be evaluated on that basis, not on whether it is being supported by Republicans. Ditto an idea proposed by a Democrat.
Having nothing kind to say about small ‘l’ libertarianism, as you say, is likewise an absurd position to take, clearly not based in any form or critical analysis or even self interest. For example, libertarianism strongly supports the freedom of religion, conscience, and expression that makes this blog possible.
As skeptical citizens, we should evaluate ideas on merit, not label.
Sure. My point is that while citizens may publicly advocate for parties, policies, or political philosophies based upon their values and conscience, public skeptics should avoid promoting their own personal political views from their skeptical platforms.
Why should skeptics avoid promoting personal political views that are based, not on irrational partisanship, but on the values of critical thinking, evidence based evaluation, and cost-benefit analysis? What is it about being a public skeptic that means you can’t make statements that address political issues?
All personal political views are based, at least in part, upon subjective value judgements. Promoting subjective values is not what science or skepticism are for.
All opinions of any kind whatsoever are based to some extent on subjective value judgements, including the viewpoint that other human beings exist. To another extent, all opinions of any kind are based on objective data points.
If objectively speaking, over regulation of a financial market is a lousy idea, and one political party is advocating this regulation, than there is no reason a skeptic shouldn’t say so.
I wonder if you can appreciate how absurd it appears for a prominent skeptic to claim that all political viewpoints–including, assumedly, his own–are basically evidence free assertions, founded on bias and outside the realm of objective analysis?
Do you really mean to say that, given two candidates, there can be no skeptical reason to choose one over the other, or given two policies or even political theories, there can be no skeptical reason to choose one over the other? I don’t buy it. Policies have outcomes, political theories have hypotheses, and to claim otherwise is simply to assert that since your biases are well represented in the skeptical movement, you’d appreciate it if the minority views would just shut up and stop challenging your irrational beliefs.
And that, my friend, is not what skepticism stands for.
I look for the UL logo on my heater, and the USP logo on my dietary supplements.
http://en.wikipedia.org/wiki/United_States_Pharmacopeia
“USP is a non-governmental, not-for-profit public health organization whose independent, volunteer experts work under strict conflict–of–interest rules to set its scientific standards.”
Drugs must meet USP standards by law.
However, I think that USP only certifies that the supplement contains the ingredients it promises, not that it treats what it promises. Also, I’m not sure where their funding comes from.
The whole supplements thing is one of the biggest money earners. Most people simply do not need any supplements. Some people (more so the elderly) do need some. Vitamin deficiencies and their symptoms are very well known now, but in most places vitamin deficiency is a rarity. If you look at labels you see many true claims, but absolutely no indication of the circumstances in which a particular individual may benefit. “cures scurvy” or “a deficiency results in scurvy”, “is essential for …” and so on – the trick is to get people to believe they are doing their body some good by taking the supplements. For the most part you will do no harm (but there are certain vitamins which can be very harmful to humans when taken in excess of what is needed), so the pharmaceutical industry gets away with selling huge volumes of stuff which most people don’t really need. The only good side I can think of is that people who do need such supplements are likely getting it fairly cheap due to the huge market.
Daniel,
Great article. I wonder if one assumption you are making is that if the government doesn’t regulate supplements, no one will. There is the possibility of private institutions arising that will recommend/not recommend supplements based on their own guidelines. We don’t see these institutions in food or medicine right now, because we depend on the government to advise us on the safety of what we eat. If you are to buy a car, however, there is a wide variety of safety rating reports you can look at before you purchase. I don’t see why these institutions couldn’t emerge for food and/or medicines as well.
Look at the difference between the recommendation quality of say a ‘Consumer Reports’ and ‘Car and Driver’ for autos. I think you would find many people taking the recommendations of ‘Pill and Potion’ as the gospel of medicine if your scenario were to come to pass.
The government can recognize certain organizations.
For example, here’s a list of Nationally Recognized Testing Laboratories
http://en.wikipedia.org/wiki/Nationally_Recognized_Testing_Laboratories
And a list of Nationally Recognized Accrediting Agencies
http://en.wikipedia.org/wiki/Nationally_recognized_accrediting_agencies_in_the_United_States
I take your point, Max. I just see the potential for a situation such as we have with web sources now, where everyone can find a source to be their ‘expert’ for whatever they want. Without some overall watchdog that is answerable to the public,such as the FDA, I think in short order, the reliability of medical information would be even more all over the map than it currently is.
“We don’t see these institutions in food or medicine right now, because we depend on the government to advise us on the safety of what we eat.”
My comment right above yours talks about the United States Pharmacopeia.
In other words – the allure of a promised cure is so great, people are willing to risk the investment in the treatment even after repeated failures. We therefore cannot rely upon market forces to weed out ineffective treatments from the marketplace.
The second sentence does not follow from the first. All this proves is that markets will only be as astute as the people composing them. When you say we “cannot rely” on markets, the assumption is that there is some alternative system which will improve the quality of information. In practice, the assumption that regulation will actually achieve this is dubious. There is a strong likelihood that the regulators will not be the most expert observers (since those people will almost certainly have better things to do). This means that you’ll get a lot of amateurs who will then put an official stamp of approval on a bullshit remedy. Now your market is even worse than it was before.
In fact, exactly that sort of “regulation” is where the term “patent medicine” comes from. Starting in the 18th century, European monarchies would issue letters patent to the producers of remedies that were popular at court. Convincing a noble that you had cured them was a great way to get very rich. The American market had no such mechanism and the remedies were widely regarded as bunk, and usually cheaper. So, people were still suckered in the American market — just not as badly.
To be fair, you do allude to these problems in your second to last paragraph. But it is important to not caricature the pro-market position as magical thinking. If you have a market composed heavily of racist jerks, it will be very hard for blacks to buy quality products at reasonable prices. This isn’t market failure, the market is properly communicating the available information. The argument for regulation often ignores the difficulty of making regulations that improve conditions, any many advocates act as if any regulation is better than none — a conclusion which is not at all supported by the evidence.
The second sentence does not follow from the first. All this proves is that markets will only be as astute as the people composing them.
Actually, it does.
In your own counter-example of a heavily racist market you prove the point. Market forces won’t weed the racists out of the market, nor will they bring the currently ignored/actively excluded market segment in to the public sphere.
The fact is that the market is a completely amoral player in any sort of situation and that its own forces are dependent on the people involved. As such, if the attitude of the people in the market indicate that it’s better to sell snake oil than real cures, snake oil will be sold. If the attitude is that it’s better to sell to people of one color than another, one race will be excluded.
The situation is simple, especially in the latter case: money determines power in a pure market environment. Therefore, someone who has been excluded from the market by the market forces as determined by the players will never be allowed in simply by some perceived self-correcting market force. An external force has to be initiated to get the market to shift: either people who were excluded suddenly find enough money to participate and can no longer be ignored, find some sort of innovation to force the market to pay attention to them, or find a powerful enough outside force to say, “You have to let them in now.”
The patent medicine example is a little less cut and dry, of course. The idea that there is a cure that doesn’t work (snake oil) and a cure that does work (science-based medicine) and the market will, therefore, choose one or the other is powerful. We also have a great deal of evidence to show that it just doesn’t happen. And the market itself doesn’t care, since all the market does is determine buyers, sellers, and exchange rates.
As long as there are buyers and sellers out there willing to engage in a snake oil cure market, there will be a snake oil cure market. We’ve seen plenty of evidence that certain people do not have, do not seek, and often actively avoid the necessary information. As such, snake oil will always be an issue unless an outside agency steps in and says, “This won’t happen.”
The Invisible Hand of the market is both invisible and ineffective. It’s a construct created to try to explain a deeply human activity without acknowledging human nature itself.
An external force has to be initiated to get the market to shift
And my point, which you clearly missed, is that there are no external forces. The people employed in regulatory agencies are usually from the regulated industry, snake oil can be approved by regulators (as homeopathy is in the UK) and a society full of racists will find it hard to block racism.
You are assuming that a regulatory body will be composed of people who are more reasonable and/or more ethical than market participants. Reams of economic studies and widespread experience shows that to be a naive, even utopian, assumption. In many cases, like with European patent medicines, the reverse was true — regulators were less reasonable and less ethical.
I agree that regulatory agencies are tricky and often fail of their own problems. Regulation is not a panacea also.
But regulation can work. As imperfect and maligned as it is, the FDA system actually works. It requires companies to do high quality and closely watched research to prove safety and efficacy prior to going on the market, and allows them a limited time of exclusivity to make back their research investment.
The UK is about to recommend that the NHS no longer pays for homeopathy, because it is bunk – that is a regulatory win. It can happen.
We just need transparency and a regulatory system that minimized conflicts of interest and emphasizes quality evidence.
I would take the FDA regulated pharmaceutical industry over the unregulated supplement industry any day. I actually think they are a good real world comparison of the two systems, existing side by side in the same country. It’s a nice experiment, and the regulatory model has clearly won over the free market model, in my opinion.
My inner libertarian says, why not just let FDA approval be voluntary like the USP Dietary Supplement Verification Program? If you want the “FDA Approved” stamp, you go through the steps to get your product approved.
But then, my inner realist smacks him upside the head and says, why would anyone go through the huge trouble of getting approved for a stamp, when they can get a much better return by designing a prettier label?
Actually, there’d be some big customers who’d care more about the FDA stamp than about a pretty label: the government itself (Medicare, Military), hospitals, and insurers.
Yes, but that would probably not be enough to motivate companies to spend 100 million dollars in drug development, and even risk going bankrupt if a drug fails in stage III trials.
Anything such as “FDA Approval” is antithetical to libertarian philosophy – it disrespects people’s rights to make money by imposing a barrier.
Someone should make sure Shermer reads this article.
Seconded. It’s amazing to compare this piece to an article Shermer wrote in 2008: https://skepticblog.org/2008/12/09/regulation-schmegulation/
It’s an embarrassment that he even posted something like this on this site, IMO.
Ignoring placebos altogether, many illnesses would go away at some stage and the users of the elixirs would undoubtedly tell friends and family how it cured them. Even tuberculosis is not a 100% killer; many people survive it. Where the disease is prevalent many people contract it and never realize it because they don’t develop the more noticeable symptoms such as coughing up blood.
“the perceived value of a potential cure is extremely high, compared to the relatively low cost of experimenting with a new treatment.”
Sounds rational to me.
“not enough science was known, to assess the plausibility of the products, so they judged them entirely on whether or not they perceived a benefit.”
Also rational.
On the other hand, writing off all “patent medicines” after a few failures would be a hasty generalization, no different from writing off all prescription drugs after a few failures.
Max – individually yes, but it resulted in an entire industry that survived for 150 years and was completely worthless – even harmful.
So something was missing.
What was missing was a higher standard of clinical testing prior to allowing health products in the market.
Further – now that we do have a sufficiently advanced basic science to think meaningfully about plausibility, it turns out that plausibility is a very useful guide to clinical claims – mainly where to set the threshold for adequate evidence, and how to guide future research.
I would suggest that the same analysis could be made against the allopathic medicine business, especially in certain areas like cancer treatments. In spite of the fact that modern ‘medicine’ largely cures very few patients, that our drugs today mostly treat symptoms of underlying disease without touching that cause, patients just keep going back to doctors and pharmaceuticals. The medical industry’s own standard – double blind testing – has never been applied to something like 80% of it’s methods, e.g. appendectomies, but that doesn’t stop the business.
I think it’s the same deal. In spite of the failure to cure, we keep going back because of a) the perceived value of a cure IF it happens, and b) a shortage of alternative treatments without loud public criticism from the mainstream medical business, and c) lack of good information available to us about any of the treatments. The result is that many patients feel their doctor is ‘the only game in town’, and keep going there until they die.
perhaps apropos to this: http://clinicalevidence.bmj.com/ceweb/about/knowledge.jsp and the curious finding that says “how big are the gaps in our knowledge? Of around 2500 treatments covered 13% are rated as beneficial, 23% likely to be beneficial, 8% as trade off between benefits and harms, 6% unlikely to be beneficial, 4% likely to be ineffective or harmful, and 46%, the largest proportion, as unknown effectiveness”
The roadside snake oil salesman may be a thing of the past, but the mentality has persisted to this day. The FDA exists to protect us from medicines that don’t do what they claim to do, yet somehow, major pharmaceutical companies find ways to get approval for products that prove to be not only be inneffective, but VERY deadly, or they find loopholes in regulations and market their legal products in VERY illegal ways. So I ask, is it really any better?
JAMA had an article about two years ago that basically stated that roughly 50% of prescribed medications (pharma meds from a doctor) were ineffective.
I agree that supplements need to be monitored but I also know that the big pharma universe is not that much better in terms of efficiency, effectiveness or even necessity for many patients.
They should be held as accountable as the supplement industry needs to be.
John – not sure what study you are referring to, but your conclusion is incorrect. What you are likely referring to is the percentage of off-label prescribing, which is not the same thing as “ineffective.” It’s not even the same thing as lacking evidence, although there is less evidence often for off-label than on-label uses. This is an issue that is is getting attention, and there are proposed fixes.
There is simply no comparison between the pharmaceutical and supplements industries in terms of evidence – to say that the former is not that much better than the latter is simply not reality.
But I do agree that they both need to be held to the same standard – that has been my position from the beginning. While we are tweaking the regulation of pharmaceuticals (which can definitely be improved) the supplement industry has virtually none – a gross double standard.
mrG – The reference you cite is misleading and cherry-picked. Here is a more thorough list of references: http://www.shef.ac.uk/scharr/ir/percent.html
As you can see, estimates of how many interventions are evidence-based (Type I-II evidence) are more like 60-80% depending on specialty.
But this is also misleading – because a minority of interventions represent the vast majority of patient encounters. The most common diseases have the most research. There is a long tail of uncommon and rare diseases for which there is progressively less research, but by definition they represent a minority of patient encounters.
A review of practice at Oxford estimated that 83% of patient encounters were evidence-based.
In any case – we need to make this better. Pointing out deficiencies in mainstream medicine does not justify abandoning evidence entirely.
The practice of off label prescribing is exactly the kind of behavior I was referring to. In some notable cases, this practice was worse than ineffective, it was lethal. How is prescribing a medication for a condition it isn’t approved to treat any different than recommending an herbal concoction? Neither has been PROVEN effective, the fact that one is a legally approved drug and the other is a supplement makes no difference.
Tracie – I wrote about off-label use of drugs here: http://www.sciencebasedmedicine.org/?p=1116
Briefly – off label does not equal not proven or evidence-based. Companies decide which indications to get based upon marketing. Indications are narrow and disease-specific. For example, a drug may be indicated for one type of nerve pain but not another, even when there is no basic-science reason to think that the mechanisms of pain and their treatment should differ.
Also – there are often many studies showing that a drug has off-label effectiveness. But this does not translate into an FDA indication unless the company specifically applies for it – which is expensive. They won’t do this if their drug is about to go off patent, or if they don’t think they will make their money back by expanding the market for the drug.
In other words – FDA indication is as much a marketing as science decision, and there are plenty of off-label uses of drugs which are evidence-based.
You need to analyze each use of a drug to know the evidence base.
Steven – It is true that in a majority of cases, like that of the pain reliever illustration you use, off-label prescribing of medications is done using sound science, and the recommendation for the off-label use is made by someone with a high level knowledge of disease pathways and treatment efficacy. However, if you look closely, you will also find many instances in which off-label prescribing is done for reasons other that those based on sound science. In at least one notable instance, said off-label combination proved lethal.
I guess what I’m really trying to say here is: I agree that
supplements or other homeopathic cures with no evidence base for their claims of efficacy should be used with caution. I would also argue that, off-label use of pharmaceuticals should be treated no differently.
Again – I am advocating one standard of reasonable science and evidence to any medical interventions, and that regulations should be consistently based on sound science. So you are preaching to the choir.
I also strongly advocate for improving the commitment to science-based medicine among physicians – through education, more research, keeping a close eye on industry, etc.
But I reject any suggestion that the evidence base for mainstream medicine is similar to CAM, or that the evidence base for pharmaceuticals is similar to supplements. There is a massive difference.
Im in no way suggesting the evidence base is the same. Indeed, there is a huge difference between the scientific data backing up the claims of prescription medicines and the anecdotal “evidence” of efficacy of homeopathic cures. Im simply advocating we treat Dr. Smith’s suggestion that we use this drug that isn’t for the disease we have but might work on it the same way we would treat our neighbor’s suggestion we try a new herbal concoction that might work as well – with caution.
Fantastic post, Steven: lucid, concise, and rock solid reasoning. I’m new to the site. The conversation is fantastic as well!!
This is related to the well-documented phenomenon that as a society experiences objective improvements in overall health, its members’ perception of how healthy they and their compatriots are tends to decline. The reason is that improvements in health result in increased expectations and an expansion of what “healthy” means. When life expectancy is low and major diseases are running rampant, people don’t think of everyday somatic complaints like feeling run down, occasional headaches, short-lived GI upsets and the like as “ill health.” But when the big stuff is dealt with, the little stuff comes into (hyper)focus.
There’s also the fact that diseases of middle and old age are going to be more common in a population where most causes of young deaths have been eliminated. Also more common will be they physiological sequelae of aging, and “health” starts to take on aspects of “perpetual youth.”
Since sCAM markets itself primarily to the worried well, actual improvements in health will increase, not decrease, its market.