FDA Risk Aversion Creates Deadly Regulatory Inertia

The United States has not approved a new sunscreen ingredient in thirty years. This freeze reveals a systemic failure: an invisible graveyard of harm caused by excessive caution. By classifying sunscreen as a drug instead of a cosmetic, the FDA prioritizes avoiding immediate, visible regulatory errors over the long-term public health benefits of innovation. When regulatory systems become this risk-averse, they create hidden, compounding costs, such as millions of preventable skin cancer cases. For policy observers and industry leaders, the lesson is clear: institutional inertia is not a neutral state. It is an active decision to accept the known harms of the status quo to avoid the political fallout of potential, unproven future risks.

The Hidden Cost of Deadly Precaution

Economist Alex Tabarrok argues that the FDA’s risk-aversion creates a lopsided incentive structure. Regulators are heavily penalized for approving a product that later causes harm, which is a high-visibility event. However, they face no accountability for the invisible graveyard of people who suffer because a safer or more effective product was kept off the market.

In my view, thalidomide killed far more people by creating this excessively precautionary risk-averse attitude in the FDA than it ever did by briefly being approved in elsewhere. People are buried in what I call the invisible graveyard and because they are much harder to see, the political process does not take into account the deaths in the invisible graveyard as much as it does the fewer but more visible injuries which are caused when a bad drug sometimes is approved.

-- Alex Tabarrok

This dynamic explains why the U.S. remained stagnant while the rest of the world moved forward. The system is designed to avoid innovation to protect its own reputation, shifting the burden of risk onto the consumer. Consumers are left to navigate a market of inferior, gloopy products that discourage daily use.

When Regulatory Barriers Become Moats

The path to approving bemotrizinol, the first new sunscreen ingredient in thirty years, shows the scale of the barrier to entry. DSM Firmenich spent at least 18 million dollars and decades of effort to navigate a process not designed for the realities of modern skincare.

This is not just about one ingredient. It is about the systemic friction that prevents competition. When compliance costs reach 18 million dollars, only the largest incumbents can afford to play. This creates a feedback loop where the regulatory process protects existing market players by ensuring that smaller, more agile innovators cannot afford the arduous legislation required to bring a new product to market.

They had lobbyists and I had to learn the hard way on how things are actually boobed through sometimes arduous legislation.

-- Charlotte Palomino

The Failure of Conventional Wisdom

The conventional defense of the current system is that it ensures safety. However, this perspective fails when viewed over time. By delaying the approval of superior sunscreens, the FDA has maintained a standard of safety that, in practice, has contributed to a public health deficit. With one in five Americans facing a skin cancer diagnosis by age 70, the safety of the current regulatory framework is incomplete.

Tabarrok’s proposal for peer approval, which involves automatically accepting approvals from stringent foreign authorities, attempts to solve this by externalizing the regulatory burden. If the system trusts a foreign government to regulate the drivers on our roads, the argument goes, it should trust them to regulate the chemicals on our skin. The resistance to this idea is not based on scientific failure but on the political necessity of maintaining absolute jurisdictional control.

Key Action Items

• Audit Regulatory Friction (Immediate): Identify internal processes that prioritize the avoidance of visible errors over the prevention of invisible long-term costs.
• Advocate for Reciprocity (6 to 12 months): Support legislative efforts to adopt peer approval models for products already vetted by equivalent regulatory bodies in other developed nations.
• Diversify Evidence Standards (12 to 18 months): Push for the integration of broader types of safety and efficacy data, moving away from rigid, drug-only clinical requirements for consumer-facing products.
• Quantify the Invisible Graveyard (Ongoing): When evaluating the impact of delayed innovation, track the negative health outcomes that occur while waiting for regulatory approval. This data is essential for shifting the political narrative.
• Leverage Bipartisan Coalitions (Immediate): As demonstrated by the success of the 2025 law, align niche regulatory reforms with high-profile consumer advocacy to build the political momentum needed to break institutional gridlock.