Although the US pharmaceutical industry has had an outstanding record in innovation since the 1930s, new drugs have been subject to increasingly stringent regulatory controls in the past 20 years. The 1962 Kefauver drug amendments required the innovating firm to prove the safety and efficacy of a new drug to the Food and Drug Administration (FDA) and instituted strong regulatory controls over the clinical development process. As a consequence, the authors maintain, FDA officials now have strong incentives to be overrestrictive in approving new products.

The authors review the empirical evidence concerning the FDA's effect on the rate of innovation, the delays in introducing the new drugs in the United States compared with Great Britain and other countries, the profitability of pharmaceutical research, and the reduction of risk to patients resulting from regulation. They conclude that US patients have forgone significant health benefits because of regulatory delays and obtained only modest benefits from their reduced exposure to risk. In the final chapter, the authors appraise various policy proposals, regulatory reform initiatives, and legislative amendments to the Food, Drug, and Cosmetic Act.