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Lu93 comments on Blue or Green on Regulation? - Less Wrong
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There is one more factor, but in opposite direction: would you be more careful if there was nobody banning the medications? Do you read about medications now before you use them, and would you do that if there was no government doing tests? Your argument sounds to me like pro-minimal-wage argument, with the similar mistake: there are always two sides defining product/price, and one cannot think only about one of them and have good predictions.
https://en.wikipedia.org/wiki/Stamina_therapy
Read and weep.
This is a creepy story, but not a contra-argument for my point: these people were thinking that government ban bad medications, so they were not careful at all. I would like to see some study which tests how careful people are when they know someone else is taking care of them.
If there were no government to regulate medications, I think that people would make companies which would test these medications and which would give them scores, or something like that.