Regulators and Risk-Takers

Didn't Big Pharma or the FDA learn anything from the Gulf oil spill or the Wall Street meltdown?

By Eliot Spitzer
Posted Wednesday, July 14, 2010, at 2:01 PM ET

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It's a depressingly familiar story: A company hides enormous risk in its effort to get outsize returns, hoping that if and when the risk metastasizes, somebody else will have to pick up the tab. The name of the company may change, the sector of the economy may differ, but the basic narrative is as predictable as a Hollywood sequel.

Our two recent cataclysms—the financial meltdown of the past several years, and the more recent eco-disaster in the Gulf of Mexico—follow this pattern. The latest version of this story involves Big Pharma. Add GlaxoSmithKline and the Food and Drug Administration to the roster of actors, joining Goldman Sachs, AIG, BP, the Securities and Exchange Commission, the Federal Reserve, and the Minerals Management Service. In all these cases, the regulatory entity responsible for oversight failed to do even a minimally acceptable job of identifying and requiring protection against the risk at hand.