What is the proper role of government when a product harms customers?

The New England Compounding Center (NECC), a Massachusetts compounding pharmacy, reportedly produced a pain-killing steroid medication that sickened at least 338 people in 18 states, resulting in 25 deaths.

A compounding pharmacy produces customized, mixed-drug products for individual patients. The industry has been around for a long time but has experienced strong growth in recent years, supplying drugs to “nearly every place medical care occurs,” reports David Brown. Compounding companies, which are less regulated than other parts of the pharmaceutical industry, serve the needs of patients with diseases such as macular degeneration and multiple sclerosis, providing them with medications not otherwise available and/or at a fraction of the cost of standard dosages.

Lena H. Sun reports that, in the case of NECC, an FDA investigation revealed that the company “knew it had extensive contamination by mold and bacteria throughout its operations for making sterile drugs but failed to take corrective action.”

It would be wrong to pre-judge the company, but, if there is evidence that the company has been negligent or has knowingly sold contaminated drugs, it should be prosecuted for violating the rights of both the patients it harmed and the health care providers who administered its medications. Government’s proper role is to protect individual rights, and, if evidence suggests that the company has violated rights, then government should pursue legal justice.

What would not be proper is for the government to punish the entire compounding industry—which is exactly what Democratic U.S. Rep. Ed Markey seeks to do. His proposed legislation would “increase federal oversight of specialty pharmacies” and make all compounding pharmacies that produce quantities of customized drugs for “general distribution” “FDA-regulated,” which they currently are not.

If someone seriously proposed putting all Italian-Americans under government probation because a few became Mafia gangsters, everyone would see the absurdity and injustice of the idea. Yet, that is precisely the widely accepted premise—instead directed at businessmen—that underpins Markey’s bill and, more broadly, helps feed the incessant growth of the regulatory state.

There is a profound moral issue involved here. Markey’s bill amounts to declaring that all compounding pharmacies are guilty until proven innocent, a violation of a core American principle as well as basic, common-sense fairness.

It would be wrong to downplay the pain this defective medication caused the victims and their families. They deserve civil restitution and, if appropriate, prosecutorial justice. But it is also wrong to punish the innocent members of an entire industry because of the wrongdoing of a single company.

If opponents of “big government” are ever to take a principled stand against government regulation of business, this case is a good place to start.

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