$11 Billion to Ban Trans Fat
June 18, 2015
Banning "trans fats" could cost $11 billion, according to the Food and Drug Administration (FDA), which recently released a "declaratory order" regarding partially hydrogenated oils, the source of trans fats. The order finds that trans fats are no longer considered "generally recognized as safe (GRAS) for any use in human food."
What little analysis FDA does provide looks at "the costs of all significant effects of the removal, including packaged food reformulation and relabeling, increased costs for substitute ingredients, and consumer, restaurant and bakery recipe changes" and the "expected medical expenditure savings" as its benefits.
Here are the FDA's estimates:
- Average Total Costs: $6.2 Billion ($417 Million Annualized)
- Average Total Benefits: $140 Billion ($9.4 Billion Annualized)
- Though they do give a range of figures with high-end costs reaching $11 billion and benefits reaching $440 billion. FDA estimates that banning trans fats could prevent 1,620 to 23,350 coronary heart disease deaths annually.
It is difficult to examine the full extent of FDA's economic considerations. The result: an "economic analysis" that takes up less than a page based on an apparently as-of-yet not-publically-available memo dated June 11, 2015. At least FDA is consistent in utilizing economic analysis within such a short time window. The corresponding memo for the "Tentative Determination" is dated November 5, 2013 — three days before the agency published that determination.
Perhaps FDA is technically within its bounds to make such a determination, but this stands as a high-profile example of flawed regulatory policymaking. A regulatory order that, within hours of its release, grabs dozens of headlines and admits to affecting the economy by billions of dollars annually ought to undergo a more rigorous, standardized and transparent process than this action.
Source: Dan Goldbeck, "FDA Trans Fat Ban," American Action Forum, June 16, 2015.
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