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Decentralization and Privatization Haven't Gone Far Enough in Coronavirus Testing

  • covid

Tags Bureaucracy and RegulationDecentralization and SecessionHealth


Expertise is distributed across thousands of different minds in the medical community. The only way to counteract the spread of an infectious illness such as the coronavirus is to take an all-hands-on-deck approach, allowing innovators in the field to advance new solutions as unique challenges emerge.

But instead, under the aegis of the federal government, nationwide medical decisions are made by a centralized slate of technocrats. Everything hinges on their decisions, and because of the many mistakes they made during the month of February—called "the lost month" by the New York Times—the US was set far behind in testing for a virus that was spreading in exponential magnitudes.

The Problem

To save time approving new coronavirus tests, the Food and Drug Administration (FDA) dispensed with its standard review process and began granting emergency use authorizations (EUAs). But for weeks the only test authorized was the one developed by the Centers for Disease Control and Prevention (CDC)—all others were barred from use. Then, problems experienced with the first shipment of these tests kept them from being used, instead requiring almost all labs to centrally send their swabs through the CDC lab in Atlanta. Only on February 26 were they given the ability to test again.

During this time, the CDC maintained a stringent set of qualifications for who could be tested in the first place, causing the virus to quietly spread through American communities. And bureaucrats frequently lost the test forms of those did qualify, leading to a frenzied panic behind the scenes. The crisis was simply unnavigable while left in federal control.

Freedom for Laboratory-Developed Tests

By the last week of February, after a full month of mismanagement, the CDC’s test remained the only one available in the entire country. On February 28, a group of one hundred virologists and lab clinicians sent a letter to a few congressional committees, urging senators and congressmen to begin authorizing tests developed by clinical labs. The same day, the American Society of Microbiologists wrote to the FDA calling for the same:

Clinical laboratories follow a rigorous process for validation and implementation of laboratory-developed tests. If this pathway was considered during an outbreak, it would allow for a more rapid response to implementation of diagnostic testing. Many clinical laboratories have already validated high-complexity [laboratory-developed tests] for SARS-CoV-2 and could begin testing tomorrow, but cannot do so due to the FDA EUA process.

Receiving this, the FDA at last began taking its blunders seriously. On February 29, it loosened its EUA policy, allowing all labs that were certified to perform high-complexity testing under the Clinical Laboratory Improvement Amendments (CLIA) to develop and use their own tests before receiving an EUA. All they were required to do was internally validate their tests, notify the FDA of their intentions, and submit an EUA request within fifteen business days. Otherwise, they were free to test.

A Step in the Right Direction

Toeing the line between appearing too restrictive and too permissive, the FDA chose to defer to the Centers for Medicare and Medicaid Services (CMS)—the agency in charge of CLIA certification. Most labs have to be certified under CLIA. However, a legal exemption allows labs to operate without a certification if the CMS has determined their state licensure laws to be equal to or more strict than CLIA requirements. Many well-qualified labs choose exemption to avoid the onerous, biennial recertification process and the CMS user fees that they would otherwise have to pay.

Unfortunately, the FDA only liberalized its policy for those who were certified, meaning that CLIA-exempt labs still had to wait through the EUA process under the guidelines, though many may have been much better equipped for testing. Worse still, it just so happens that the only two states offering CLIA exemptions are those where tests, at the time, were needed most: Washington—the location of the US's first outbreak—and New York—the epicenter of the crisis in America.

Furthermore, most private companies were left out of the mix. Most of them do not count as "labs" and are outside of the CLIA certification process, leaving them unable to test without EUAs. The North Carolina–based LabCorp was a key exception, making its tests available for order eleven days before an EUA was issued. But aside from this, the market remained completely choked off.

Yet even with these roadblocks, the updated EUA policy was decidedly less burdensome to test production and thus worked as intended—helping to gradually reduce test shortages. FDA commissioner Dr. Stephen Hanh confirmed that by mid-March "more than 40 laboratories have notified us that they are testing or intend to begin testing soon under our new policy for laboratory-developed tests for this emergency." Deregulation worked—to the extent that it existed.

Decentralization in New York

On February 29, the FDA finally authorized the use of a second test, manufactured by the Wadsworth Center, a renowned public health lab in New York. But everyone's hands still remained tied—only the New York City Department of Health and Mental Hygiene and the Wadsworth lab itself were allowed to use the test.

As a result, the CDC remained the only health body capable of sending tests nationwide. Mike Pence announced on March 1 that a new batch of fifteen thousand CDC kits had just been distributed, but the actual number was a lot smaller—about one hundred—which was nowhere near enough. Widespread testing remained elusive.

Then on March 10, after pleas from the New York Department of Public Health, the FDA amended the Wadsworth EUA, giving state health officials the power to approve other labs for use of the test. From then on, any CLIA-certified lab from across the country could use the Wadsworth test just with New York’s say-so—an unprecedented localization of regulatory authority. But it didn't end there.

Private Manufacturers Save the Day

On March 12, a third EUA was granted—this time to a test by Roche Molecular Systems, which could be used by all CLIA-certified labs countrywide. This was even a step forward from the Wadsworth episode—no one had to be bestowed special authority by anybody any longer. The very next day, Roche began preparing four hundred thousand tests for shipment to labs across the country—the first shipments of many.

After that, the FDA began granting additional EUAs on a near daily basis—authorizing an additional nineteen tests by the end of March—each also available for use by all qualified, CLIA-certified labs. Diagnostics manufacturer Thermo Fisher began distributing 1.5 million of its tests on March 15, with many of its counterparts following soon after. Private production was majorly ramping up.

A wide variety of tests began popping up with the help of the private sector. Some are "point-of-care" tests, which can be performed anywhere—helping to save hospital beds. Others can only be conducted in labs containing special machinery, which process large quantities of swabs at a much quicker pace. Turnaround time has been another area of frequent innovation: Abbott Laboratories released a test at the end of March that can give results in as little as five minutes. Even quick, easy at-home tests were becoming available before the FDA cut their production short. Rolling back federal overreach helped expand not only the overall number of tests, but also the number of different types that could be accessed.

On March 16, the FDA announced yet another policy change. It finally allowed private manufacturers to distribute their tests before receiving an EUA (and without CLIA certificates). The regulatory structure was thoroughly decentralized, permitting each state to directly authorize tests developed within its borders—a licit sidestep of the FDA's authority.

The problem remaining is autarky—states can only authorize the tests of private developers from their own states, making EUAs still necessary for these tests to be used nationwide. Even still, on March 31, the US passed the 1 million mark for the number of tests performed—a significant milestone, though achieved later than officials had hoped. Moving into April the country was testing at much more suitable levels than it had been, more than one hundred thousand each day.

But after all this, some patients were still being refused tests. The FDA's policy changes neither came soon enough nor went far enough.

Solutions for the Future

Imagine how much more success the US would have had in combating the virus if private tests had been made available earlier. Roche, to name just one example, claims to have developed its test by January 30, but it wasn’t approved until March 12—thanks to the convoluted EUA process. Diagnosing more cases at the beginning of the crisis would have saved thousands of American lives later on.

But this isn't uncharacteristic of the FDA—its snail's-pace approval process regularly restricts many Americans from accessing lifesaving medicines, killing tens of thousands of sick patients each year. Even while granting EUAs as an emergency fast track, the agency fell fatally short. It was forced to delegitimize its own authority just to save face. But a serious solution must go deeper: the regulatory system must be turned on its head.

First, the FDA’s emergency decentralization policies must be made permanent and standard bearing. Then, the March 16 guidelines have to be taken further, to their logical extreme: the FDA must be smashed to pieces and replaced by a patchwork of fifty-six little FDAs. The health departments of all fifty states, the five major US territories, and Washington, DC, already have the infrastructure in place to regulate independently—it could become reality overnight with a single pen stroke.

Of course, this would be a mere stepping-stone on the road to further privatization and freedom of choice: the government's rubber-stamp restrictionism will have to be completely dismantled state by state. People must be free to use and ingest whatever products they choose, leaving food and drug regulators an advisory role but no force of law. Coercion would be nowhere to be seen. Then, the private certification market—which already grades food as organic and kosher—could quickly begin certifying drugs and diagnostics as "safe" and "effective," leaving the remaining vestiges of the regulatory state to evaporate.

Had this free choice advisory system been in place during the current coronavirus pandemic, a wider array of tests would have been made available much sooner. There would have been a lot less panic, confusion, mismanagement, infection, and death if individuals and firms had been allowed the basic liberty of making decisions for themselves.


James Ketler

James Ketler is a high school student living in Massachusetts with his brother, sister, and parents. He became interested in libertarianism in 2015 after hearing about Rand Paul's presidential campaign and followed the rabbit hole straight down to Mises and Rothbard. When he's able to find the time, James loves to study and write about liberty, ethics, history, and economics.

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
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