Cary Coglianese is the Edward B. Shils Professor of Law and the director of the Penn Program on Regulation at the University of Pennsylvania Law School. He specializes in the study of regulation and regulatory processes, with an emphasis on the empirical evaluation of alternative regulatory strategies and the role of public participation, negotiation and business-government relations in policy making. He has written extensively on the topic of regulation, including many published articles, book chapters and books. He served as editor of, and contributor to, the 2016 book, Achieving Regulatory Excellence.
I interviewed Coglianese as part of the Regulatory Focus series, ‘Focus on…,’ where we talk with regulatory leaders, thinkers and influencers from a variety of backgrounds. In contrast to previous interview subjects in the series, he is not himself a regulatory professional or a RAPS member, and his study of regulation extends beyond healthcare to other sectors, such as energy, communications and financial markets. In our interview, he shared his thoughts on the concept of regulatory excellence and other related areas. The interview has been divided into two parts; following is part one. Read part two here.
What is the mission of the Penn Program on Regulation (PPR), and could you talk about your role as the program’s director?
The Penn Program on Regulation is based at the University of Pennsylvania Law School but draws together more than thirty faculty from different disciplines across our entire university. The program is dedicated to connecting nonpartisan academic research with the world of policy deliberation and practice. We focus in particular on important emerging issues related to regulation, and bring together leading researchers and professionals to conduct cutting-edge research. Our major program research initiatives in recent years have focused on timely issues such as global trade, regulatory quality and management, and the relationship between regulation and employment. Currently, we are studying the connections between regulation and inequality, and we have underway a major study on how the benefits and costs of regulation have been distributed across eight major federal regulatory areas in the United States.
Our commitment to rigorous but relevant analysis sets us apart from many think tanks and research programs that tend to lean toward one ideological side or the other in policy battles. Being situated within an Ivy League academic institution, we see ourselves as providing a neutral space for evidence-based inquiry. We also sponsor a publication—The Regulatory Review
—which provides an open platform for researchers, lawyers, analysts and public officials to share new ideas and exchange views across the political spectrum. In addition, we sponsor a variety of executive education training opportunities, research seminars, workshops, and conferences. As the program’s founder and director, I see my role as one of building on the extraordinary intellectual energy and talent of my amazing colleagues, graduate fellows and students, supporting and channeling their work in a productive direction—and then helping to communicate with the world outside the university about what our research and teaching has to contribute.
Regulatory excellence is an important concept to RAPS and its members, and one that you and your PPR colleagues have examined extensively. In simplest terms, how do you define regulatory excellence and why is it important?
Regulatory excellence is not altogether different from excellence more generally. The simplest way to approach it might be first to think about excellence in another context. Consider, for example, what makes Yo-Yo Ma an excellent cellist. Clearly he possesses innate, inner talent: a graduate of both Julliard and Harvard, he’s a humble but brilliant musical interpreter. But he also has acquired through years of training a masterful technique. And in the end, the combination of his talent and technique moves all of us who listen to him perform.
Regulatory excellence entails a similar combination of internal traits, appropriate actions and desirable outcomes. That’s why, in those respects, it’s not much different than excellence in any endeavor. That said, I also think that regulatory excellence can be even harder to achieve than excellence in other settings. A cello, after all, doesn’t actively move during the cellist’s performance. By contrast, regulatory professionals are constantly trying to keep up with highly dynamic environments, as firms’ business practices and their technologies change. Regulators are also not performing all alone on the stage. They operate in complex institutional and political environments with other governmental and nongovernmental actors critically shaping their work environments. Moreover, the values and demands placed on regulators are themselves subject to change and may even conflict with one another. This further complicates regulators’ work, often creating vexing or even intractable tradeoffs. Make no mistake: regulating well can be remarkably difficult.
To help guide regulators on a path toward excellence, I’ve defined regulatory excellence as an integration of three core attributes—or what might be thought of as three atoms that combine to make up a molecule, “RegX
.” These core attributes emerged from an extensive, multi-method research project we conducted at the Penn Program on Regulation. They can be described as utmost integrity, stellar competence, and empathic engagement. For each of these attributes, I have elaborated elsewhere, in greater detail, a series of underlying qualities and tenets. The adjectives for each of the three attributes—“utmost,” “empathic,” and “stellar”—are crucial because even merely “good” regulators need a healthy dose of integrity, competence, and engagement. It is just that excellent regulators will consistently exhibit these attributes at high levels.
When talking about regulatory excellence, I think most people immediately understand the significance of stellar competence. Excellent regulators must deliver substantive outcomes that maximize public value, promoting effectiveness, efficiency, and equity. They must be knowledgeable and well-trained.
They also need to be honest, so I suspect most people readily see the importance of utmost integrity too—although, for a regulator, integrity actually entails much more than merely a lack of corruption; it also demands a consistent commitment to delivering public value, following the law and staying even-handed.
When it comes to empathic engagement, though, I find too many regulators tend to overlook its significance for the regulator. Partly that’s because simply staying on top of the technical aspects of regulation—maintaining competence—can be so demanding that it seems to leave little time or energy for active listening and engagement. Regulators do need to master an incredible amount of instrumental knowledge—and that can make regulation seem to many professionals like it is mainly a technocratic enterprise. But regulating well demands much more than that. Regulation is fundamentally a social enterprise. It is all about trying to influence what people do in their businesses and other regulated activities, all in the service of still other people in society.
For this reason, regulatory excellence requires what I call “people excellence.” That is, it depends vitally on regulatory professionals who themselves are constantly striving to maintain and strengthen their integrity, competence and ability to engage empathically with others. It also depends on regulatory organizations that have the necessary resources, training, clarity of mission and overall management vision articulated by leaders who themselves uphold the values of integrity, competence and engagement.
What role should regulated industries, like the pharmaceutical and medical device industries, play in fostering regulatory excellence?
In principle, the qualities of integrity, competence and engagement apply equally well to regulated firms and their leaders. The management of any private-sector organization poses its own internal “regulatory” challenges, because managers, like regulators, must seek to guide and shape the behavior of others in ways that advance larger goals.
An ideal regulatory environment is one where both regulators and regulated industries are each committed to maximizing public value, and where both commit themselves to operating with utmost integrity, stellar competence and empathic engagement. This does not mean that public and private actors would work together in cozy, closed relationships. On the contrary, whenever regulation is needed, by definition there will be conflicting priorities and perspectives between public-sector and private-sector actors—and there will need to be roles for civil society and the broader public to play too. But such conflicts can be constructive and they can also be managed professionally by those in business and government.
In this regard, professionals within private industry can and should recognize the different but vital roles that public-sector regulators play. Private industry can and should recognize that it benefits—as does society overall—when regulators achieve excellence. Although plenty of regulators do make mistakes, and none can be said to be perfect, businesses can support a political climate which does not unduly denigrate regulation, that encourages bright, talented young people to join the ranks of regulators, and that supports policies that give regulators the resources they need to do their jobs well.
Historically, regulation has been seen as a restrainer, but does regulation have a role to play in driving innovation?
The relationship between regulation and innovation is complex and fascinating. The need to comply with stringent new regulations can certainly drive innovation. Innovations in pollution control technologies, for example, have arisen due to the need for companies to comply with environmental standards. But sometimes the same drivers of regulation are also at work independently driving positive innovation in the private sector. In pollution control, some innovations have emerged separate from regulation in response to employee, community or societal demands. Likewise in other areas of regulation. Although some innovations in automobile safety, for instance, have emerged due to regulatory requirements, many others have emerged to respond to consumer preferences for safe vehicles.
Regulation is typically justified as a tool to correct for market failures—externalities, information asymmetries and monopolies—not so much as a driver of innovation. But regulators do need to be mindful that they do not create unproductive barriers to entry or obstacles for productive innovation. They should consider in appropriate circumstances using flexible forms of regulation (e.g., performance standards, market instruments, management-based regulation). Even when using less flexible, more conventional regulatory instruments, regulators can and should consider updating their rules periodically to take into account any innovations or changed circumstances that may arise. Furthermore, some innovations in widespread use in the private sector—such as advances in sensing technology and in machine learning—might well be usefully adopted by regulators themselves to make their work smarter, more effective and less costly.
We have heard a lot of political rhetoric decrying government regulation as overly burdensome to business. How do you see it?
I’m emphatically opposed to unnecessary or excessively burdensome regulations. But the rub comes in determining which regulations are unnecessary or excessive. Some of the folks who decry regulation have strategic, self-interested reasons for doing so, while some of the most fervent advocates of increased regulation have their own biases and can give insufficient consideration to regulatory costs. We need to look beyond the rhetoric and gather credible evidence, recognizing both that markets can fail and so can governments. I’ve been a strong proponent of much greater investment in retrospective review of existing regulations in order to learn better what is working and what is not—and, even more importantly, to learn why and when regulation can deliver positive public value.
Yet, even many critics of government regulation seem to view oversight of medicine and healthcare products differently than regulation in other sectors, such as energy, communications or finance. Why do you think that is, and is it in fact fundamentally different?
Each area of regulation has its distinctive challenges. So, yes, the regulation of medicine and healthcare products has its own too. Although innovation occurs in many domains, the incredibly rapid pace of scientific and technological advances related to healthcare—such as in genetic engineering, synthetic biology, nanotechnology, precision medicine, to name a few—makes regulating especially challenging.
At least part of that challenge arises when a gulf in technical knowledge exists between government regulators and their counterparts in industry and the research community. One of the main rationales for regulating medicine and healthcare products has long been the asymmetric information between consumers and patients, on the one hand, and healthcare providers and pharmaceutical companies, on the other. If government also finds itself behind the knowledge curve, it cannot correct that information balance very well. And to the extent that some new technologies might present externalities, there is the potential that regulators, as well as industry researchers, might miss those risks entirely. Still, simply holding up innovation so that regulators play catch-up may be both unrealistic and undesirable as delay may only forestall the introduction of new, beneficial treatments.
But the challenges are not simply technical or informational ones. As occurs in many areas of regulation, a still more fundamental challenge in regulating healthcare products arises because of value uncertainty. Society has yet to develop a clear set of values and priorities over some advancing technologies, such as genetic engineering. Regulatory decision-making inevitably demands the resolution of tradeoffs, which by extension inevitably necessitates making choices among competing values. A lack of sufficient normative clarity in society only complicates the regulator’s task.
This article is part one of a two-part series interviewing UPenn Professor and Director of the Penn Program on Regulation Cary Coglianese. Read part two here.