Which seems like a more pressing concern at the moment: Ensuring that we get hand sanitizer onto shelves or making sure that children don’t drink it once we do? Getting face masks out to the public quickly, or waiting until they can be manufactured to precise federal regulatory specifications?
These questions are currently being raised by the Food and Drug Administration (FDA). The agency’s rules have been making it hard for distilleries to address the hand sanitizer shortage. Companies looking to supply more face masks to the nation as quickly as possible have been similarly stymied.
Sometimes government regulation is so out of touch with reality and common sense that it should force us to rethink the way business is done in Washington. As our Mercatus Center colleague Scott Sumner concludes, the past month has witnessed “a torrent of governmental incompetence that is breathtaking in scale” and “regulations so bizarre that if put in a novel no one would believe them.” Sadly, he’s right, and the strange world of FDA hand sanitizer and face mask regulation provides us with two teachable moments.
As we write, the FDA has repealed or at least examined many of the immediate barriers to the production of face masks and hand sanitizers. Still, precious time was lost waiting for the agency to clear out unneeded regulations. Going forward, regulators should be sure to review and prune their cache of rules before calamity strikes, perhaps in the form of an independent regulatory review commission or a regulatory budget.
Distilling the meaning of regulation: no innovation without permission
Hand sanitizers have been hard to find for weeks now. Who better to respond to the need for alcohol-based hand sanitizers than the nation’s many distilleries? After all, they have the equipment and means to easily churn out oceans of the stuff. Hearing news of the shortages, hundreds of entrepreneurial distillers rose to the challenge and began cranking out homemade sanitizers, only to learn that their noble efforts were of questionable legality.
That’s because distilleries must navigate a confusing maze of federal, state, and local taxes and regulations. Nominally, these rules are supposed to protect public health. In practice, however, governments often use these rules to extract as much tax revenue as possible.
Setting aside the questions of whether distilleries and their customers should bear these hefty taxes during regular times, these tax rules limited distillers’ efforts to respond to the sanitizer shortage.
The problem is in how these tax rules interact with other rules about how hand sanitizer can be made. The FDA’s rules required that hand sanitizers be made with a bitter-tasting denaturing agent to prevent people from drinking it. But denatured alcohol has become scarce during the pandemic. Yet if distilleries did not use denatured alcohol in their homebrew hand sanitizer, their concoctions would be taxed as an alcoholic beverage!
In theory, taxing undenatured alcohol at a much higher rate also helps the government diminish alcohol use, or keep it out of the hands of minors. That logic is questionable, but it should not even be an issue when we are talking about how to make hand sanitizer. Again, what is the fear here? Are children really going to consume hand sanitizer with drinkable alcohol in it? Seems like there are probably many easier ways to skirt drinking laws than chugging small vials of hand sanitizer.
Moreover, there is an easy fix to all this. The FDA recently issued two guidance documents that temporarily cease actions against pharmacists and firms that produce hand sanitizers with certain non-traditional compositions, so long as they do not intentionally make the mixture more pleasant tasting.
That’s a good start. But the FDA has not updated its guidance to permit distillers to use undenatured alcohol, which is what most of them have on hand. Undenatured alcohol-based hand sanitizers are just as effective as those that are denatured alcohol-based. The FDA should explicitly allow this kind of hand sanitizer to be produced so that more people have access to this needed supply.
Face masks: covered in red tape
And it’s not just hand sanitizer.
Face masks have become essential during this pandemic. Doctors, nurses, and other medical professionals are in desperate need of these important, potentially life-saving, items to limit their risk of infection. In addition, the CDC announced last week that everyone should begin wearing cloth face coverings “fashioned from household items or made at home from common materials” when going out in public or interacting with others to help lower the risk of transmission and slow the spread of the coronavirus.
However, the CDC does not recommend that people use surgical masks or N95 respirators, as these are “critical supplies” that need to be reserved for “healthcare workers and other medical first responders.” So why would the CDC want people to create their own homemade cloth masks? Because there is a massive shortage of the higher quality variety used by medical personnel.
Department of Health and Human Services officials have estimated that the United States will need roughly 3.5 billion medical-grade masks to deal with the COVID-19 pandemic. How many did the United States actually have on hand at the beginning of this crisis? About 35 million. That is just one percent of the overall need. This has led some hospitals to begin reusing disposable masks or creating their own out of everyday office supplies. With such a significant mismatch between the overall demand and the current supply, it is completely understandable that the CDC would want people to make their own masks and refrain from tapping into the limited supply of medical-grade masks.
But the question remains, why is there such a massive shortage to begin with? Why haven’t businesses and entrepreneurs noticed the incredible demand for face masks and flooded the market with new devices? Why haven’t healthcare facilities started importing face masks from trading partners like China to meet their current needs? The answer is fairly simple. Up until recently, they weren’t allowed.
The FDA considers face masks to be medical devices and subjects them to cumbersome red tape and hyper-formalistic procedures. If a business wants to begin producing face masks and distributing them to the public, it must first go through the FDA’s approval process. This process often takes months and requires numerous tests, extensive records, and a detailed application subject to approval.
In addition, until recently, the FDA made it illegal to import certain devices—like China’s KN95 face mask—irrespective of how well they may work. While these burdensome restrictions are often justified based on a desire to promote public safety, it is clear they do the exact opposite during a pandemic. Instead of protecting the public, these controls actively prevent people from getting the life-saving items they need. In fact, the mismatch created by these regulations is so large that a gray market has emerged for imported face masks.
Luckily, policymakers are beginning to recognize the harm these policies cause. On March 26, the FDA announced that it will not enforce these cumbersome manufacturing requirements for the duration of this crisis. Earlier this month, the agency decided to allow the importation of China’s KN95 face masks.
While these decisions are steps in the right direction, quite a bit of harm has resulted from the delay caused by these overly restrictive regulations. It shouldn’t take a crisis of this magnitude for decision-makers to question policies that raise barriers to supplying people with the resources they need.
The death of common sense
What is going on here? As our colleague Martin Gurri notes, agencies like the FDA and the CDC seem to be “mesmerized by proceduralism” and “tied up in bureaucratic knots.” This is by design, however. These agencies tend to be highly risk-averse and rely on strict, centralized, top-down modes of organization and decision-making. Precaution and preservation of the status quo triumph over experimentation and chance. Their rules are heavy-handed, inflexible, and slow to adapt to new circumstances. Rules quickly become ossified, and agencies eventually fall into a “build-and-freeze” model of regulation that sets rules in stone. These rules may address relevant issues at the time but the agencies either fail to eliminate them when they become obsolete or to bring them in line with new social, economic, and technical realities.
What is left is a series of one-size-fits-all mandates, prohibitions, and penalties that are ill-equipped to deal with a crisis and that can actually undermine the very goals they were put in place to achieve. Practical efforts to protect public health get rejected because proceduralism is valued more highly. “Going by the book” becomes a greater virtue than being innovative.
That is how we get to the point that something as simple as hand sanitizers and face masks can become trapped in a surreal regulatory maze that can only be escaped by petitioning bureaucrats for the freedom to innovate.
Cleaning up this mess
How do we clean up this mess? First, we begin by acknowledging that we face a serious problem. The COVID-19 crisis has revealed just how dysfunctional America’s “permission society” has become, which has profound consequences for public welfare. “Society can’t function when stuck in a heap of accumulated mandates of past generations,” notes Philip K. Howard, author of The Death of Common Sense: How Law Is Suffocating America.
While many government rules are put on the books with the best of intentions, regulatory flexibility and humility should guide enforcement efforts. Rote compliance shouldn’t trump common sense. At some point, periodic house-cleaning becomes essential.
Alas, policymakers seem incapable of regularly pruning regulations, and this year’s spring cleaning for the regulatory state only came about because the COVID-19 crisis forced their hand. Governments at the federal, state, and local levels are now temporarily suspending many regulations that have clearly limited innovative responses to the crisis. A better approach is to get ahead of the problem and begin rolling back outdated, overly cumbersome regulations before a situation like this one arises.
One way of doing this would be to establish a BRAC-style commission to periodically review the regulatory code and clear outdated, unnecessary, or overly burdensome restrictions. Independent regulatory reform committees allow legislatures and agencies to focus on their current needs while still ensuring that some entity is assessing the efficacy of previously enacted laws and regulations. In addition, because this would be an independent commission outside of any particular agency or governmental body, it may be more objective in gauging whether past restrictions really are serving a significant interest and more willing to strike down those that are not. The practice of regulatory budgeting could similarly help to beat back our out-of-control regulatory state.
Whatever the path chosen, it is imperative that governments get their regulatory houses in order. COVID-19 has shown some of the social fault lines that rigid regulation has created in healthcare and technology. We should not wait for the next crisis to show us where vulnerabilities lie in other domains.