(2) is untenable. A company could theoretically widely distribute a drug with unknown effects/consequences, only to find after the fact that it negatively affects >10% of patients causing death and disability in major numbers. File for bankruptcy and disappear with no ability for the sufferors to get lifetime care compensation? Catastrophic, with no recourse.
Why would major numbers of people take an unproven drug with unknown effects/consequences? Seems like a self-limiting problem.
When a drug is unknown and unproven, relatively few people will take it unless they have pretty good reason to think it's really effective or they are really desperate - which are exactly the situations in which you'd want people trying the drug to see if it works. If there's already a known and proven and cost-effective drug that works, people would take that instead.
The FDA alternative is that lots of people go without drugs that - even though they're safe and effective - never get to market because proving them so to the FDA's satisfaction is so expensive and time-consuming as to be not worth doing.
A lack of new drugs causes death and disability too. Me, I'd rather err on the side of too many rather than too few drug options available for people to solve their problems with.
