Was Market Failure Responsible for the Creation of the New Rule?

Is Market Failure Responsible for the Creation of the New Rule?
The new rule draft revises the Guidance for Industry (GFI) is meant to regulate the genetically engineered animals’ industry. The current GFI clarifies the requirements and recommendations by the FDA on products for genetically engineered animals to the producers and developers. The proposal describes the animal drug provisions of the Federation Food, Drug, and Cosmetic Act (FD, & C Act) with respect to genetically engineered animals (Food and Drug Administration, 2017). The latest proposed rule expands the scope for the incorporation of animals that are intentionally altered through the use of genome DNA editing techniques. This paper argues that the new rule by the FDA on GFI is due to imperfect information, because the public ultimately does not have enough information about genome edited products to judge their safety. The terms provided are quite technical, making it hard for the public to understand.
Market failure is responsible for the creation of the new rule. The following reasons support how the proposed rule manifests the presence of a market failure. First, customers have very strong opinions on the products. A large number of them have the perception that the products are unsafe and could cause health complications. Failure to provide enough information and educate the customers has caused the narrative to take root within the market. As Lutter and Lewis (2017) indicate, in case the customer is going to pay for something, he or she must have full evidence that the product will be able to sell. The new rule however failed to meet this criteria and customers lacked adequate information to help them make informed decisions.
The market has also failed because the customers already have other preferred products. Selling a new product that they are very strongly opinioned about is a very difficult task. The FDA needs to focus on the practicality of their approach and conduct a feasibility study on consumers’ perception for genome edited animals. The alternative approach is based on the program that oversees the restoration of confidence to the customers. Research shows that a large number of Americans do not support the practice of generating genome edited products. A lot of mistrust exists between the science community and the general public. One of the major errors that the FDA may have committed is failing to create a platform where the public could be engaged and educated on these issues (Lutter, & Lewis, 2017). A large section of the American public feels that the products are unsafe, highly risky, and unfit for consumption. These perceptions have made it very hard for the products to penetrate the market.
For market success, the FDA needs to work closely with other federal agencies and other stakeholders to ensure that they develop the required standards to assure the public that GE products are healthy and environmentally friendly. They also need to show them that the products can be used as alternatives to those that they currently prefer. The alternative approach is less stringent compared to the FDA proposed regulatory principles and other federal policies. It is, therefore, recommended that the FDA establishes the costs and benefits of the mandatory premarket reviews, as required by the existing executive orders. The market works more effectively in a free state (Lutter, & Lewis, 2017). The rules were proposed to ensure that the customers buy freely without any fear that they were risking their health from the GE consumables. With the involvement of the FDA, standards are established to identify and trade new organisms that pose fewer risks and protect the environment and customers from the risks of the organisms.
On the contrary, there is a possibility that the proposed rule on intentionally altered genomic DNA in animals does not present the market failures. This is because the rule is needed for new animal drugs’ approvals for safety demonstrations. The new drug must be examined for the safety reasons for its intended uses. The purposes of the tests are to ensure that the GE animals are safe for consumption and that the drugs are not harmful to the environment. The application of the process is to enable the FDA to increase their transparencies, actions, and deliberations with regards to food and drugs dealings (Food and Drug Administration, 2017). The FDA proposed rule is not a result of a market failure but seeks to fulfill the regulatory requirements for genome editing strategies. The approach is risk-based because potential hazards are examined, that is, the components which are likely to cause adverse outcomes. The GE animals if not examined, are likely to harm the receptor population and other animals that are exposed to the GE organisms. The FDA recommends that the standardization is conducted on a case-by-case basis since the dangers are unique for every form of application. The FDA encourages the producers to consult with them in order to develop the efficiency of healthy use.
Rules and regulations are developed to protect markets from failing and collapsing. Due to market failure, the FDA was compelled to develop new rules that would help prevent a similar occurrence in future. The main role of the agency is to ensure that consumers are provided with products that are healthy and do not put their lives at risk. Lack of enough information among the customers contributed towards market failure and hence the development of the new rules. Most of the customers feared that by consuming GE products, they would be using contaminated products. Customers tend to buy products that they have an assurance about their safety and the FDA failed to provide adequate guidelines for the products to assure the public (Lutter, & Lewis, 2017). When the agency requires product labeling, it means that the products have previously exposed harm to the users. The genetically engineered organisms need to present more positive outcomes than harm. Consumers may widely ignore labels that are significant, and mandatory disclosure of labels is what FDA seeks to promote. Some labels are used to mislead consumers and promote the interests of the powerful private groups. Labels help the consumers to save money by avoiding unnecessary and unapproved products, and avoid the risks, and protect the third party or enable the moral commitment (Food and Drug Administration, 2017). To determine whether market failure existed or not, the market should be able to speak for itself. This means that information should be fully be provided to the consumers without any prejudice. Mandatory disclosure should only be used when the voluntary disclosure fails.
In conclusion, the introduction of a proposed FDA rule means that there is a market failure in the GE animals operations. An account of market failure triggers the agency or executive orders for standardization. Sometimes, the consumers are barred from accessing the information that enables them to make informed decisions when purchasing items. Therefore, the role of FDA in the case above is to counter the market failure regarding the GE animals selling and production for the market to become or work more efficiently. The FDA will function to trigger the market to produce product-related information. Rational ignorance of consumers may hinder them from acquiring the information that they may ultimately benefit from. The consumers who lack necessary knowledge are unlikely to know about the product labels. Therefore, the response from a government-affiliated agency might be appropriate for market efficiency. The product disclosure is to protect both the third party and the environment. The disclosure of products helps to reduce harm to people. It is the government responsibility to intervene in order to protect the third party/consumers. Since the genetically engineered animals can pose risks, the market failure, therefore, seems to be involved. The preferred response to the situation needs the corrective agency intervention, including disclosure. Disclosure is often applied in the cases where taxes unavailable either for reasons such as political causes.
References
Food and Drug Administration. (2017). Guidance for Industry-Regulation of Intentionally Altered Genomic DNA in Animals. More Information.
Lutter, R., & Lewis, L. (2017). How to Regulate Genome Edited Animals? A Comment on FDA’s Proposed Guidance.