<You're probably philosophically inclined to advocate privatizing drug testing...but after the sorry record in the analogous field of corporate accounting, I wouldn't trust a drug certified as safe and efficacious by a lab hired by the drug company. I want a (theoretically) neutral third party to test the drugs.

A private lab hired by the drug company WOULD be a "third party," if it was a lab specifically set up to test drugs for companies. One key to private consumer protection would be to have the analysis outfit be paid by the company, but not part of the company. Such a company would serve many drug companies. Another key is that you MUST have competition in the analysis industry. What keeps such consumer protection outfits honest is the knowledge that if they are caught in collusion or fraud, even once, their company would be dead meat. Who would trust their results again? Competition in the consumer protection industry would help this process, since each company would be extremely eager to show that their competitors are less than trustworthy, and all of them would be watching each other like hawks.

In a free market society, there would be many such consumer protection outfits in all fields of endeavor. Think Consumer's Union multiplied many times.

Note that the accounting company Arthur Andersen has paid the price for fraud not just in a criminal sense, but with their own economic destruction. Who would ever use them again?

As for your testing idea, I'm not sure why the FDA would be able to do the job that much cheaper. The paperwork would still be required to document all the testing, since even the FDA would have to justify its results to someone in case of problems.

And I am leery about any private industry being able to "socialize" its operating costs in such a manner, even if the costs are imposed by the government. Why should the taxpayer pick up the costs for making drugs? And then if the final product is disposed of according to government edict, what's the difference if we just up and nationalize the drug companies?