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ShannonFriedman comments on Belief Chains - Less Wrong
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In most cases it doesn't. In most cases the FDA tells companies to do research and then show the FDA the results of that research so that the FDA approves the product.
Okay, so FDA is one step removed, and is reviewing the research rather than doing it themselves.
To be fair, you simply spoke about the cluster of beliefs that many people have and many people probably do believe that the FDA does extensive research on their own.
Issues like the fraud at Ranbaxy aren't well known.