If a regulatory sandbox was safe for fighting the pandemic, it’s safe for all other industries


July 30, 2021 11:44AM

Here at Beacon, we’ve written about the growing importance of making Tennessee the innovation capital of the U.S. In an economy increasingly shaped by rapid technological and information change, if our state is going to thrive in the economy of the future, we must become an innovation leader today. One way other states and countries have looked to foster innovations and help entrepreneurs is through a “regulatory sandbox.” A regulatory sandbox creates a special program for entrepreneurs and business owners to test, try, and scale a new and innovative product, service, or technology for a period of time with a lighter regulatory touch when current (and often outdated) regulations are ill-equipped to handle new technology. Effectively a pilot test, sandboxes give a business time to properly develop and scale the new idea while giving regulators time to properly study that idea. 

Historically, regulatory sandboxes have been limited to a few fields like financial technology. However, that is beginning to change. Earlier this year, Utah passed the world’s first industry-agnostic sandbox, allowing inventors and innovators to face less red tape while trying to bring an innovation to market. The growth of sandboxes has led some to fear that these and other regulatory reforms that seek to remove onerous bureaucratic red tape would endanger consumers and impact health and safety. 

However, in a forthcoming article, University of Illinois Law Professor Jacob Sherkow argues that the FDA’s emergency authorization of the COVID-19 vaccine, while not technically a regulatory sandbox per se, essentially is a sandbox because it operates exactly the same by:

  1. Allowing for the experimentation of a new technology and the collection of resulting data;
  2. Facilitating communication between innovators and regulators to craft individual approvals;
  3. Being technologically flexible to allow for significant variations;
  4. Allowing real-world deployment. Sherkow states that the point of sandboxes is to allow firms “to test their products with real customers in an environment that is not subject to the full panoply of rules”; and
  5. Limiting the scope, duration, identity, and participants of the program. 

Typically, obtaining FDA approval can cost hundreds of millions of dollars and roughly a decade, stifling the development of lifesaving new medicines and procedures. However, during public health emergencies the FDA, under the “totality of scientific evidence,” may temporarily authorize new innovative treatments rather than requiring the normal onerous process. While individuals may have personal reasons to not take the vaccine, few can deny that the rapid development, approval, and distribution of the COVID-19 vaccine has saved countless lives. 

If we can utilize a regulatory sandbox to fast-track the development and introduction of a vaccine for global distribution and overwhelmingly protect public health and safety, Tennessee should create its own sandbox to help spur the innovations that will improve our everyday lives. The idea that a regulatory sandbox could lead to a home being built poorly or some faulty engineering leading to a building collapsing or any other “what if” fear is unfounded. And who knows, it could lead to the next life-saving innovation being built right here in Tennessee.