The Effects of Product Liability Exemption in the Presence of the FDA
n the United States, drugs are jointly regulated by the US Food and Drug Administration, which oversees premarket clinical trials designed to ensure drug safety and efficacy, and the liability system, which allows patients to sue manufacturers for unsafe drugs. In this paper, the authors examine the potential welfare effects of this dual system to ensure the safety of medical products, and conclude that product liability exemptions for FDA regulated activities could raise economic efficiency.
