We’re All De-regulators Now

President Richard Nixon is famously quoted as having declared in 1971 that, “we are all Keynesians now.” While the response to the COVID-19 crisis from federal agencies and state governments has involved many things, the one thing that has become incredibly clear is that we’re all de-regulators now.

A March 10 piece in the New York Times tells the remarkable story of an infectious disease expert in Washington State who – in January – proposed testing the nasal swabs she was collecting for a flu-related project for coronavirus. According to the Times, the FDA refused on the ground that her lab “was not certified as a clinical laboratory under regulations established by the Centers for Medicare & Medicaid Services, a process that could take months.” On February 25, they began performing coronavirus tests, without government approval.

Unfortunately, the experience of the Washington researchers is neither unique nor unintended. In the healthcare field in particular, regulatory compliance has proven to be incredibly costly. According to a 2017 report from the American Hospital Association, “the total cost of healthcare regulatory compliance for the average-sized hospital is about $47,000 per bed, or $1,200 per patient.”

Burdensome government regulation is by no means limited to healthcare and medical research though. A March 17 CNN article titled From truckers to testing labs: How the federal government is cutting red tape in response to coronavirus begins with the following sentence; “The federal government regulates and monitors practically every activity that takes place in the U.S. economy, from where and when truck drivers drop off their deliveries, to what tests hospitals and labs can use on patients.” The piece goes on to highlight some for the areas where the government is rolling back regulations in order to help get goods to market faster, to expand telehealth, and to ensure greater flexibility in food assistance.

The good news is that state and local governments are acting to suspend many burdensome regulations to respond more quickly to the threat of COVID-19. Americans for Tax Reform has compiled a list of 171 regulations that have been already been suspended to help in the coronavirus fight. The suspended regulations range from those that govern hospital beds to noise regulations that govern when trucks can deliver food and pharmaceuticals. Many states have paused or waived occupational licensing requirements for doctors and nurses to address the need for medical professionals. And two University of Chicago professors Richard Thaler and Sendhil Mullainathan have set up a new website, PauseRegulations.com, that allows anyone to recommend regulations and other restrictions that could be paused to allow a more effective response to the outbreak.

The news isn’t all good though. Although the public applauded when distillers stepped up to fill the need for hand sanitizer, FDA regulations threaten to derail the effort.

Why, you might ask, would the FDA stand in the way of distillers producing much needed hand sanitizers? It turns out the alcohol that the distillers make tastes too good. FDA guidelines currently require that hand sanitizer made from “undenatured” or drinkable alcohol have a bitterant added. The problem is, there is a shortage of the bitterants that meet the FDA guidelines. Absent changes to this policy, distillers will not be able to produce much-needed hand sanitizer.

The FDA ought to step aside and let distillers step up. After all, we’re all de-regulators now.

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