Here’s something I didn’t post about last week because CT was so intermittent that I just didn’t get around to it. Megan McArdle responded to my critiques of her. Well, responded might be too strong. Reacted. She spends so much time speculating deeply about my apparently quite shallow motives that she doesn’t really get around to considering my argument.
Let’s start near the end: “So let me turn it around on John Holbo, et. al. Put aside your ideological commitments, and seriously consider the possibility that I might be right.” Putting aside my ideological commitments – which McArdle is poor at discerning, but they don’t really matter for present purposes – the problem here is that my post actually granted that she IS right. My post pointed out that McArdle’s argument consists entirely of “slippery slope arguments, arguments from unintended consequences, and suspicions that those who are proposing national health care really want different things than they say they do.” This amounts to an argument that things MAY go wrong. Now: I don’t think it merely might be true that things might go wrong. I think it is true. Honest, and for true. The problem is: her argument is much weaker than she thinks, in the sense that her conclusion is weak (not that the basis is shaky). She hasn’t proved enough. She is lofty in her disdain for discussion of what’s actually on the table. She takes her arguments to cut through all that. But I fail to see how they could.
Moving backwards in the post, I think we begin to see the source of the confusion. She is impatient with me for asking her to distinguish principled from practical objections. She sees this as mere ideology-sniffing, an attempt to avoid the argument: “John Holbo, I imagine, gets a great deal of value of knowing that we’re all in this together, getting the same thing at the same time. Unlike left or right, libertarians don’t see great value in feeling like a cell.” And I, for my part, may suspect that McArdle gets a great deal of value out of hallucinating that I aspire to be a card-carrying member of the Borg Collective. Pardon me, but it’s actually important to distinguish between opposition to health care reform on the grounds that it won’t work, and opposition on the grounds that it would be in principle wrong even if it worked.
McArdle’s own case is a nice illustration. As she herself admits: “My libertarianism is somewhere between 80-90% what Holbo calls practical objections. I think government programs, and regulations, usually cause more harm than good, and always have costs to liberty and “practical” considerations like national wealth.” That is, it’s the slippery slope and unintended consequences and power-grabbing bureaucrat arguments. But: “In principle, if it did everything the creators promise, would I support universal health care and generous national pensions? No. But that’s because I don’t think they add a lot of value.” This is a bit unclear, because there are certainly still practical objections bleeding in. (See below.) But I still think it’s important to clarify that 80-90% of McArdle’s own arguments, by her own lights, aren’t really the basis for her own beliefs about the things her argument is about. This doesn’t mean they are bad arguments, because she may take herself to be addressing people for whom these arguments should be decisive. A Kantian can offer utilitarian arguments to a utilitarian (although Kant might have disapproved of that practice. Stickler that he was.) Not that McArdle is a Kantian. Nevertheless, the fact that her own practical arguments aren’t decisive, for her, is causing her to be a bit neglectful of their features. How decisive should they be for others, unlike McArdle herself, who takes the practical question ‘will it work?’ as the crux of the issue? They aren’t bad arguments, but they just aren’t that strong. ‘Things might go wrong’ is certainly true, but so is ‘things might go right’. ‘We might be on a slippery slope’ is true, but so is ‘we might be on a tolerably sticky slope’. If you are weighing the pros and cons, you can’t just weigh the cons. You also have to weigh the pros. She says she has already counted that in. “I would probably need a better than 50% chance that I’m wrong. And I sort of definitionally don’t think it’s that high.” But the fact that she thinks she can’t be wrong, by definition, just shows that she is approaching the question at the wrong level of elevation. As I said in the post, she’s off in some Platonic Heaven of Public Choice Theory, where policies have an ideal tendency to go wrong. That is, they are modeled as tending to go wrong. Suppose I have a proposed public policy change. Call it X. In the abstract, treating it as a black box, it is fair to say that ‘it might work, it might not’. In the abstract, knowing nothing more about it, we can hardly convict the person who says ‘it might be wrong’ of being wrong – or of having a more than 50% chance of being wrong. It’s not an a priori truth that mostly people who say things might go wrong are mostly wrong. But this is hardly a consideration that’s going to worry Ezra Klein very much, is it? Nor should it.
To add another layer of confusion, McArdle admits that, if it all works gloriously as promised, she will be happy to retract her objections and say she was wrong. This is confusing because, obviously: she already said she’s opposed in principle, even if it works as promised. What is her principle, then? She says she is opposed not on some absolute property rights grounds but because she has this utilitarian argument that reform will kill medical innovation, so the cost to future generations will outweigh the benefit to present generations. Now this is coherent, but still sort of confused.
If liberals can build an alternative to the profit model that’s at least as productive, in dollars spent, as the private sector, and looks reasonably likely to scale, I’ll probably cave. (I reserve the right to worry about rationing, but I find that worry less pressing.) At the very least, my worries about the issue will move it to the back burner for me. But the thing is, you have to do it first. Use prizes, non-profits, the research agency Dean Baker’s proposed, or any combination of the above. You just have to do it first.
I’ve gone over the rationing canard separately. (She has a right to worry about rationing, if she wants, but I have a right to make posts about how that’s totally confused. Unless she has some response to all that.) But basically what she is saying here is that you have to achieve the good result before you plan for it. Build first. Blueprint later. Which makes no sense. So I think what she’s really saying is this: the proposed reform would shuffle things up, requiring that other pieces be moved. So we have to move them first. Aggressively fund government-sponsored research premptively, before you take the steps that might undercut the incentive of the private sector to fund it so heavily. But this is obviously impractical. (What if your attempts to reform healthcare then fail to pass? You’ve screwed things up now in a different way.) So she’s basically got a generic argument against any reform proposal: namely, you aren’t allowed to propose it unless it’s already happened, and all the other pieces have been happily shifted around to suit. (This sort of proves my point in my previous post: McArdle and Holbo are walking down the street. Holbo says: hey look, a health care reform proposal. McArdle: if that were really a health care reform proposal, someone would have screwed it up already. Now we get the variation. If that were really a health care reform proposal, someone would have had to have achieved it already.)
What it boils down to is one utilitarian argument. The US has a screwed up and expensive health care system. But: the US is also the engine of medical research and innovation. In the long run, the value of research and innovation is so valuable to the human race that, strictly on utilitarian grounds, we ought to say that the US already has far and away the best health care system in existence. Why would you want to mess with the best, just so you could be like all the rest?
Have I got it?
OK. But why would it be so hard to detach research and innovation from the existing system? It’s either the following, or else I just don’t get it: McArdle is drawing a too-strong analogy to other models of growth. Let me sketch a simple version of the analogy she is relying on. Capitalism is unjust. (It’s distributions of wealth and goods are often unsatisfactory, from an ideal perspective.) But, in the long run, capitalism – the market – produces growth better than any other system. And growth is vitally important. An economy that grows 4% a year, year upon year, will get soooo far ahead of an economy that grows at 1% a year, that eventually – really and for true – those worries about unequal distributions get swamped as all boats rise. Let us grant that this argument has great strength, as surely it does. (I don’t say it’s automatically decisive, end of story. There are lots of detail devils. But it’s a very serious argument, no doubt.) Now the problem here, structurally, is that you can’t just say ‘let’s let the government redistribute wealth more justly and ensure growth through wise command economy controls.’ Because that just doesn’t work so well. But there is no comparable problem with medical care. Why not? The barrier to command economy growth has to do with market signaling and information. The government doesn’t know enough to achieve steady growth. But there is no analogous barrier in the medical case. We have a distributively unjust health care system. (Let’s take that as a premise.) If it were the case that this unjust health care system were also functioning as a vital signaling system for those on the r&d side, telling researchers where to look for better cures and treatments, then you might be troubled by the thought that you might fix the injustice and thereby cut the signal, thereby undercutting the overall utility of the whole system. (That would be like the economic growth case.) But it’s just not the case that the signaling function of the U.S. health care system is so vital for r&d.
To put it very simply: when it comes to health care, government money can buy you the information you need, in a way that it plausibly can’t in the economic growth case.
If you massively publicly funded r&d, the results would be as good as massive private funding. Dollar for dollar, all you need is money. The US health care system is not better for r&d because it is a better signaling system for efficient r&d than are the systems of other countries. US r&d is just better funded. So there is no deep structural problem with health care reform that might cut private incentive to invest in r&d because there is no hard problem with how you could make up such an investment shortfall, should it arise. So there is no utterly vital structural reason to address that shortfall at the stage we are at.
I expect McArdle will respond that the government will have no strong incentive to fund r&d aggressively because more treatments just make it harder to fund the government health programs – make them more expensive, hence more a headache for politicians. But I just don’t see how we can know this is such a strong consideration that it should be treated as decisive in advance. [UPDATE: after all, it isn’t as though the incentives aren’t a bit screwed up as they stand.] It’s true that other countries don’t fund r&d as much as the US, but in part that’s a free-rider problem. I don’t see a strong reason why, in the absence of massive private profits for health care r&d, there must inevitably, for some intractable structural reason, be a critical public shortfall on this front.
Also, in arguing, it’s helpful to cut out the ad hominem when it gets in the way of saying what your opponent’s argument is. Sheesh. (I realize my original post was snarky, and I expect a certain amount of push-back on that, but you’ve still gotta address the arguments underneath all that.)
{ 74 comments }
nick.t. 08.23.09 at 3:12 am
One point that is not at all clear in McArdle’s discussions of this issue is whether, in fact the US is quite the unique paradise of innovation she claims, and, as a related question, whether that innovation is the product of the legendary “free market”, or whether government funding really primes the pump. I have the impression that the UK, despite being in the clutches of socialist healthcare, is actually fairly successful when it comes to innovation, drug discovery and so forth, although I admit to not yet having located a good comparative study. It would be interesting to know how the two compare. My strong suspicion is that in terms of comparative efficiency, the UK might in fact come out ahead.
buermann 08.23.09 at 4:32 am
I’m confused by both of you. The plan under consideration raises drug costs, and you’re both talking about some other plan that lowers them.
John Holbo 08.23.09 at 4:59 am
It’s true that our discussion/dispute isn’t really about the plans that are on the table. But that’s partly due to me objecting to McArdle’s position that it’s possible to argue against health care reform decisively without really considering what’s actually on the table, proposal-wise.
Nathan 08.23.09 at 5:55 am
I agree with most of your argument except for this. The incentives for people in the government in allocating research money are quite different from those in the private sector. I doubt developing treatments for Restless Leg Syndrome or impotence would have the same priority as they do now. You might view this as good or bad, but it is an obvious difference. A particular danger here, in my view at least, is the government may invest insufficiently in research that is very likely to fail but may provide high rewards, because the people who invest government money in such research are likely to be punished when it proves fruitless but insufficiently rewarded if it pays off.
Furthermore, it is unlikely government funded research would be as efficient as private sector research. Large drug makers may be as inefficient as the government (I doubt it, but will conceed it is possible) but there can be little doubt small biotech starts conduct their research more efficiently than the government would.
Finally, speaking as someone who is very glad to live in a country with “socialized” medicine, I have watched many of the oponents of reform in the US with puzzlement. To her credit, McArdle is at least debating from the correct planet. With so many opponents of reform gabbering about death committees that is much higher praise than it ought to be.
ndg 08.23.09 at 6:35 am
“Furthermore, it is unlikely government funded research would be as efficient as private sector research. ”
Really? In Australia the majorify of government medical research funds are disbursed under competitive grant schemes. Different university labs etc. in competition with one another have every incentive — fundamentally the same incentives as private enterprise — to be efficient and successful in their research. If they’re inefficient or their research is disastrously unsuccessful, they’ll get no more funding.
ben a 08.23.09 at 7:00 am
Here’s a two-step argument:
1. Health care reform of the Obama variety will lead to government price controls on innovative drugs and devices in the US market
2. Government price controls on innovative drugs and devices in the US market will lead to less innovation than the status quo. (Ceteris paribus)
Now you may not think that reform of the Obama variety will lead to price controls. Fine. Or you may think that the ceteris paribus clause does not hold, and that other aspects of reform will offset the innovation reducing effects of price controls. Or maybe you think price controls would have no effect on innovation. Are any of these your position?
nickhayw 08.23.09 at 7:00 am
The most coherent form of her ‘argument’ that I have heard is this: imagine a reform package that creates some sort of FDA-like agency that examines not only safety, etc. but also the cost-effectiveness of treatments. That agency (i.e. the government) is bent on pushing the cost-curve downwards (here come the oh-god-rationing scare-tactics), and so refuses to approve expensive drugs for public-insurer coverage. So the argument goes, this discourages innovation because biotech / pharma r&d costs are so high, they ‘need’ to make all that monies, and with the public-insurer’s slice of the market cut off, they’re not going to get their pound of flesh.
Of course, this argument (and I don’t believe it’s entirely a straw woman) seems to me remarkably incoherent. For starters, AFAIK this just isn’t going to happen with the current healthcare reform bills. Commenters above have addressed this.
And there are arguments to be made re: the particulars of government intervention stifling innovation. I don’t see how the fictional system as described above would create a disincentive for innovation: it seems like it would provide at the most a disincentive for research on drugs we don’t really need. McArdle also seems to ignore the possibility that the government might be willing to subsidise drug treatments for certain (debilitating, critical) conditions (as with the NHS in the UK, from what I understand, or as with the PBS here in Australia in certain cases). I’m murky on these points, so if anyone feels like correcting me, please do so.
At any rate, the connection between ‘healthcare reform’ and ‘stifling innovation’ reeks to me of a preconceived ideological division: to McArdle, it’s either the happy status quo or reform and the annihilation of profit. An untenable (false) dichotomy. Which brings me to the other (perhaps obvious[ly]) disturbing thing about McArdle’s position: she seems to hinge on the need for Big Pharma to make a profit, on the need to maintain the profit incentive. I’m certainly not going to question the usefulness of harnessing self-interest in the pursuit of good (excuse my vagueness). But I would question the elevation of ‘profit’ (step three!) to a position of supreme importance: the profit incentive is a means, and a faulty one at that.
Besides all that, it hardly needs to be said that McArdle’s calculus is a little cold…her assumption that ‘innovation’ will save a whole lot of people down the line somewhere (and, crucially, will save more than insuring millions would now) is just…my lunch, she is rising out of my tummy (IIRC correctly doesn’t she breakdown the uninsured groups into ‘immigrants, poor people, healthy people’? so glib, so glib…shame on you Atlantic for publishing such trash)
nickhayw 08.23.09 at 7:12 am
PS, Ezra Klein’s response to the same McArdle piece.
Dwarf 08.23.09 at 8:13 am
I don’t want to tread into dangerous territory but I think it comes with the package.
Question:
Consider it true that medical R&D will reach diminishing return, with more expenditure and smaller results for patients age 65 & over, do their products (the drugs and equipment) set the price from the cost of production and investments, or is the price set at the hypothetical “free market” value? To make myself clear, assume that I make $50k a year income, and that a drug will extend my life by exactly one year cost $50k . If I were not on a public plan, I wouldn’t use the drug (I want to remain budget neutral in death). Moreover, the utility this drug provides do not match (at least in this case) its price. However, looking from the perspective of the pharmaceutical companies, the price of the researchers, the facilities and operation overhead, plus the return on investments all point to a final drug price that must be higher than their utility, especially if its drugs for health problems that are more severe/dire in old age like high blood pressure, etc.
If Medicare (including Plan D) have little cost control when it comes to drugs/operations cost even with some “cost shifting” (so to speak, I’m sure the elderly who can afford additional health insurance are fairly well off and can pay generous premiums), and we all know that the baby boomers are going to sign up for Medicare in droves, how do we judge the value/utility of “innovations”? Statistics show that many western countries have higher life expectancy and higher percentage of elderly people while spending less on healthcare. Why is there no free market between say, French drugs and American drugs? How do we know that these “innovations” in fact have significant contribution to the health of seniors? This is with the presumption that the value of life is infinite but we know that to be not true.
I have no problem with public funding of research, (in fact, I fully support more funding for those starving grads who keep breaking the equipment), but how do we know that we are not already, or going to fund pharmaceutical company profits with tax payer dollars from Medicare?
Francis Xavier Holden 08.23.09 at 8:16 am
Perhaps it’s because I’m an Australian but my brain hurts trying to follow this “debate”.
USA spends about twice the % of GDP that we (and others) do on healthcare yet has worse outcomes on many, if not most, measures. Not only that; USA does worse than some third world countries on some measures.
Now the opponents of any change, and the change seems mimimalist to me, see an apocalypse a’comin’. I know this apocalyptic view is a general tendency of the US psyche and can make allowances. But it seems to me that the slippery slope argument and others are saying that the USA has vastly inferior health system management skills than UK, Australia, Netherlands, Germany, Sweden and so on.
Why should this lack of skills be so? And if it is so why not just import the skills from other countries?
Bloix 08.23.09 at 8:20 am
John, you are working much too hard. McArdle’s argument is that people must die now in order for other people to be saved later. She asks “whether we should permit a system that serves some current people badly in tangible ways [i.e. allows them to die when they could have been saved], merely because it will probably save the lives of other unknown people in some unspecified way in the future. ” And amazingly, her answer is yes, we should!
Thus, every person who dies of untreated diabetes today is a necessary sacrifice in order to cure people of Parkinson’s in the future! Do we really believe that she believes this? Note how she never quite admits that she is in favor of letting people die – she uses euphemisms like, “some people would be better off” if they had insurance – when what she means is, they wouldn’t die. If she is unwilling to say, straight out, that the deaths of ordinary people today are necessary to save lives in the future, then it’s really a waste of time to argue with her.
Henri Vieuxtemps 08.23.09 at 8:29 am
But isn’t it true that most of the basic R&D in the US is already (and has always been) government-funded? The NIH and so on. What the industry does is some applied R&D (testing, medical trials), but mostly marketing, manufacturing, and sales. And reaping profits, of course. It doesn’t seem like the functions performed by the industry are too critical, on the grand scale of things.
JulesLt 08.23.09 at 9:00 am
As per some of the comments, it’s obviously critical to distinguish between health-care provision and medical R&D.
The UK actually does very well at private sector medical R&D, having created an environment that is favourable for research firms to work in – Silicon Valley style clustering, tax breaks, a University education system producing enough graduates, no religiously motivated decisions over stem cells, and using the security services against animal rights activists targeting research facilities – there has been very intentional economic policy to encourage the development of the medical research sector.
This is entirely separate from whether the NHS or Britain’s private medical sector are consumers of the drugs and research, but rather because it’s a huge, and growing export business.
Of course, the priorities of the NHS do have an influence on the global market – they’re a big customer, even for American firms. The NHS, for instance, tends to be biased towards drugs that cure diseases that actually exist, rather than mood stabilisers for conditions that didn’t exist 40 years ago. A little cynicism there.
I also think there’s something a bit odd when so-called Libertarians worry so much about the liberty of companies, as if personal liberty and corporate liberty were synonymous (or indeed that government and business are inherently in opposition)
Tim Worstall 08.23.09 at 10:25 am
“If you massively publicly funded r&d, the results would be as good as massive private funding. Dollar for dollar, all you need is money. The US health care system is not better for r&d because it is a better signaling system for efficient r&d than are the systems of other countries. US r&d is just better funded. So there is no deep structural problem with health care reform that might cut private incentive to invest in r&d because there is no hard problem with how you could make up such an investment shortfall, should it arise. So there is no utterly vital structural reason to address that shortfall at the stage we are at.”
Worth perhaps bringing in one of John Q’s favrouite economists at this point, William Baumol. (At least, JQ likes Baumol’s Cost Disease as an explanation of much about services inflation.) He makes the distinction between invention (inventing new stuff) and innovation (getting that new stuff used across the society/economy).
Invention can indeed be done by other methods than the free market/capitalism shtick. John H’s argument here (although personally I would think that which diseases got researched would become part of the political process, perhaps not the ideal situation) about govt. being able to pick up any funding shortfall would therefore be valid.
As an example, Laser eye surgery was, if not originally, at least developed to usability under the Soviet system. As were many other technologies developed there (I still make part of my living by marketing one of them just as disclosure.) under that system.
However, as Baumol goes on to point out, it is the deployment of this new stuff, this new technology, service, method of organisation, which free markets/capitalism (yes, of course, they are different things but Baumol conflates them) is uniquely good at. As an example, laser eye surgery is now sold at what, $700 an eye or so right across the rich world?
Other examples abound: sure, GSM telephone standards had a large amount of govt input. Yet it’s still true that the penetration of mobile phones, the actual usage of them, is greater in countries with a competitive market than in places with a govt monopoly.
The R&D could be replaced by govt. then, but it’s the roll out of the drugs and treatments which could not be.
glenn 08.23.09 at 11:34 am
There are way too many people being disingenuous here. The conversations I have with my associates have a distinct smell of classism. US healthcare works for them. They generally get at or near the best of US healthcare (which I would submit is at the best in the world, certainly based on anecdotal evidence of experience in 4 countries in 3 continents); not only have they not had many bad experiences in this realm, they really connot conceive of what it’s like to be holding the short end of the stick. In short, it ‘works’ for them; US healthcare is far from broken to them. They well may recognize they are getting too good of a deal, and yes, they relly are. And it’s unfortunate that nearly all of the people who have a voice fit in to this group. Lucky for them (that they have relatively cheap and gret healthcare), but it’s unfortunate for the US and the rest of us.
conchis 08.23.09 at 11:50 am
@Bloix: I’m confused. McCardle explicitly frames the choice as a lives-lives trade-off in her 3rd paragraph (e.g. when she describes her opponents as claiming that “we should save lives now at the expense of lives later”). Whatever the other merits of her position, she doesn’t seem to be ducking that particular issue.
Barry 08.23.09 at 12:08 pm
I second Glenn at 15, and note that the ‘we must subsidize the rest of the world’ argument from the right comes in two and only flavors – we must maintain a world-dominating military empire, and a corporate-friendly health system. Odd, that. It’s almost like they’re lying.
Alex 08.23.09 at 12:24 pm
Yet it’s still true that the penetration of mobile phones, the actual usage of them, is greater in countries with a competitive market than in places with a govt monopoly.
Which ones are those? There are only a few small islands left where that is the case. Even Etisalat in the UAE isn’t a monopoly any more, and even when it was a couple of years ago it was a 100% penetration market. I don’t think there are enough left to make a meaningful data set.
Martin 08.23.09 at 12:38 pm
McArdle writes: “There are 45 million uninsured people in Americans. But there are 300 million people who are going to die of something we can’t cure.” Well, everyone dies, Megan, at least that we know of. Even the person who has the best health care coverage ever and has been protected from all the somethings we can cure — will die. Can it really be possible that McArdle is doing vulgar math and concluding that since 300 > 45 (I’m a little unclear whether that 45 is included in the 300 — I think it is), that means the tradeoff of insuring the uninsured (a massive gain in societal utility) can’t outweigh whatever complex and incremental change occurs to the 300 because of some alteration to R&D patterns that would be hard to predict? I fear she is arguing precisely that.
As John says, McArdle’s weakness is that she is making pragmatic arguments with almost no detail or specificity. When pushed, she declares her principles to be acting in the service of pragmatism. But they probably aren’t.
John Howard Brown 08.23.09 at 12:49 pm
In addition much medical R&D is already government funded through the National Institues of Health, Center for Disease Control, etc.
Henri Vieuxtemps 08.23.09 at 1:01 pm
The R&D could be replaced by govt. then, but it’s the roll out of the drugs and treatments which could not be.
It’s probably mostly the things like erection drugs and hair restoration that can’t be rolled out efficiently without for-profit actors. Because medical professionals aren’t too interested in those, they are low priority. It’s like government providing potable tap water, and business the bottled water.
engels 08.23.09 at 1:02 pm
It must be hard being a US wingnut. It would be the easiest thing in the world to just give-in and lend your support to a equitable and cost-efficient health system for the US but your conscience won’t let you do it because what would happen to those poor Frenchmen? Will nobody think of the Frenchmen?
Tim Worstall 08.23.09 at 1:03 pm
“Which ones are those? There are only a few small islands left where that is the case. Even Etisalat in the UAE isn’t a monopoly any more, and even when it was a couple of years ago it was a 100% penetration market.”
Eh? You’re trying to say that everyone in Congo, Kenya, Ethiopia, Sudan, has a mobile phone?
Uncle Kvetch 08.23.09 at 1:08 pm
Perhaps it’s because I’m an Australian but my brain hurts trying to follow this “debateâ€.
I can assure you, it’s not because you’re an Australian.
nick.t. 08.23.09 at 1:18 pm
One further point about the process of drug discovery/innovation – isn’t it the case that there has been progressive corruption of the review and clinical recommendation process in the US? Recently, we’ve seen a number of cases and whistleblowers that essentially speak to how willing the drug companies are to manufacture good reviews. Might it not be the case that tighter regulation of such processes would increase efficiency and enhance consumer protection? Isn’t this a partial refutation of McArdle’s claims about “free market” innovation? How much of this supposed innovation really produces value for money? And can we really talk about a “free market” in US healthcare and drug innovation anyway?
Kenny Easwaran 08.23.09 at 2:19 pm
Re Nathan at 4:
A particular danger here, in my view at least, is the government may invest insufficiently in research that is very likely to fail but may provide high rewards, because the people who invest government money in such research are likely to be punished when it proves fruitless but insufficiently rewarded if it pays off.
This sounded plausible to me at first, but now I think it’s pretty much entirely backwards. Basic scientific research seems to be of the “high risk-high reward” variety, while work on a specific drug with a specific mechanism for a specific disease tends to be lower risk. Yet the former is funded almost entirely through the government, while industry tends to focus on the latter.
But perhaps I’m looking at confounded data? Maybe the issue here is time frame from research to profit, which I admit is a poor proxy for the actual risk/reward structure.
Bloix 08.23.09 at 2:33 pm
#16 – Conchis – she puts the converse of her own position in the mouths of her opponents – a straw man, since none of her opponents say this. But she never says, “I believe that we should let people die now in order to save lives later.” She’s unwilling to put her own position forward forthrightly, because it’s too revolting even for her.
Steve LaBonne 08.23.09 at 2:43 pm
You are correct. And add to this that drug company development 1) is completely parasitic on this publicly funded basic research, 2) is dwarfed by their spending on marketing and 3) is heavily focused on “me too” drugs. This favorite wingnut talking point is ENTIRELY without merit. And it has been exploded so many times that when they repeat it now they’re simply lying.
James D. Miller 08.23.09 at 4:26 pm
Do you have any evidence that lack of medical care is significantly harming the health of poor Americans?
Please keep in mind that even if the poor received the exact same medical care as the rich one should expect the poor to achieve worse health outcomes than the rich.
The fact that the U.S. spends vastly more on health care than other rich countries without achieving better health outcomes indicates that much of our health care dollars are wasted and so the poor might not be significantly worse off from consuming less health care than the rich.
b9n10t 08.23.09 at 4:50 pm
“Studies estimate that the number of excess deaths among uninsured adults age 25-64 is in the range of 22,000 a year. This mortality figure is more than the number of deaths from diabetes (17,500) within the same age group.” 8
from: http://www.nchc.org/facts/coverage.shtml
8. Dorn, S, “Uninsured and Dying Because of It: Updating the Institute of Medicine Analysis on the Impact of Uninsurance on Mortality,†Urban Institute, 2008.
bianca steele 08.23.09 at 5:22 pm
The problem with McArdle is that she’s addressing two different audiences. With Atlantic readers she should give the state of the art of the argument. With intellectuals like John H. she only has to prove she knows what she’s talking about, that she has a point of view other intellectuals should take seriously. And she doesn’t distinguish enough. The problem isn’t just that she puts up straw men or lives in a Platonic ideal world. It’s that she confuses writing obscurely with having something complex to say.
However. It’s possible what she says gets under my skin more than I feel it should. Us both being women. Not that anyone thinks all women under 45 are supposed to believe same thing.
Barry 08.23.09 at 5:46 pm
“With Atlantic readers she should give the state of the art of the argument. ”
No, she’s supposed to sell corporate-friendly right-wing arguments. She isn’t an Atlantic columnist for her intellectual contributions, that’s for sure. And has been repeatedly pointed out (here, and in previous posts), she isn’t even coming up with good right-wing arguments.
Any view that McArdle is an actual intellectual will miss reality by a long, long distance.
Spiny Norman 08.23.09 at 6:22 pm
That is so much more serious a response than is merited by anything that Megan McArdle has ever written. She does not deserve it; she deserves scorn, mockery and derision. That is all.
Mitchell Freedman 08.23.09 at 7:11 pm
Big Pharma makes the window shades and curtains. Government R&D builds the foundation, the walls, the roof, and the front and back doors. Sometimes they collaborate on the windows together.
That’s the metaphor I think most often applies, doesn’t it?
I think if the government covered the R&D private industry spends, we’d really never notice. Most innovations are done by people in lab coats who are employees.
I could find links for these points, but I’m just tired of arguing with fundamentally ignorant people like McArdle, even though she is not an out and out moronic nutcase like the people who scream “Nazi” at the public forums. Still, she suffers from an inability to know how the real world works, like most folks who call themselves “Libertarian” in the US.
Henri Vieuxtemps 08.23.09 at 7:57 pm
Most innovations are done by people in lab coats who are employees.
Yes, but their corporate bosses guide them, tell them to concentrate on most important diseases. Without private industry’s guidance the lab coats might end up neglecting the wrinkle treatments and waste time on a cure for malaria or something. And that would be unnatural and harmful.
Patrick 08.23.09 at 10:48 pm
Francis Xavier Holden-
You asked whether this debate is assuming that the US has vastly inferior healthcare management skills to those of other countries, why this would be so, and if it were so, why it could not be fixed.
The key here is to understand that a significant percentage of my fellow Americans genuinely and truly and reflexively believe that the US is the best at pretty much everything. This belief is maintained by not examining other countries in much depth, and by maintaining a firm, ideological commitment that other countries are much worse off than they are in real life. As a result, the sorts of people who argue that the US will perform badly at health care in ways that are worse than other countries are doing now tend to be completely ignorant of the health care realities in other countries, or worse, well informed with lies. For example, it is part of our national mythology here in the US to believe that Canadians routinely flock to the US for medical care in order to escape their socialized medical system. In reality, of course, this is only true for expensive experimental treatments, and for regular medical care it is the Americans who sneak into Canada. Many Americans greet the assertion that other countries achieve health care results similar or better to ours with fractions of the cost with skepticism and disbelief, because they “know” that this cannot be possible. You can assert that the UK routinely denies medical care to the sickly in order to save money on treating them, and people will just nod as if they’re sad, but unsurprised, to hear their expectations confirmed.
This doesn’t just happen with healthcare. We’ve recently heard it argued that maintaining levies simply isn’t something a government can do, in blatant contradiction of the fact that many other countries do routinely and competently maintain levies. Criminal justice tends to suffer from this assumption as well, as does education policy.
Abby 08.23.09 at 11:22 pm
McArdle also plays some nasty games with the statistics she uses in her arguments, putting her on the fast train to intellectual dishonesty-ville and bad faith argument-town. She pulls out of thin air her claim that the innovation that would be cut off by the lack of private incentives (in itself a hole-ridden argument) will save 1% of lives off into the future. She claims that a generous reading of the statistics on unnecessary deaths of the uninsured would result in 0.8% lives saved. Since 1>0.8, the status quo wins, right?
But she fudges here: her 0.8% results from dividing the number of lives saved per year by the number of total deaths per annum. But the sneakiness that comes in here is that most of those total deaths are people 65+, who are already insured by a single-payer system. They are also older and therefore we are saving them fewer additional years (important years, yes, but fewer). The great crime of the US is that young people are dying unnecessarily. With little to no additional expenditures, we could be adding a huge number of life-years, the appropriate statistic. If you divide the lives saved estimate by the number of deaths in the 25-64 y.o. category, you are preventing something like 3% of the deaths in that category.
You would have to do a lot of convincing to show that profit-driven R&D that would get discouraged as a result of the reform would begin to do anywhere near as well, from a purely utilitarian perspective.
Dwarf 08.23.09 at 11:36 pm
#29:
“A recent study found that 62 percent of all bankruptcies filed in 2007 were linked to medical expenses. Of those who filed for bankruptcy, nearly 80 percent had health insurance.”
http://www.nchc.org/facts/cost.shtml
So yes, yes there is.
Stuart 08.23.09 at 11:37 pm
We’ve recently heard it argued that maintaining levies simply isn’t something a government can do, in blatant contradiction of the fact that many other countries do routinely and competently maintain levies.
I wouldn’t be surprised to learn that those right wingers that have heard of the geography of the Netherlands assume it is under water 90% of the time due to relying on the government to maintain the dikes and levies that protect large parts of the country.
Nathanael 08.24.09 at 2:54 am
“A particular danger here, in my view at least, is the government may invest insufficiently in research that is very likely to fail but may provide high rewards, because the people who invest government money in such research are likely to be punished when it proves fruitless but insufficiently rewarded if it pays off.”
DARPA and ARPA. Funded the Internet and other very-likely-to-fail, high-reward programs. Plus lots of programs which *did* fail.
So, nice hypothesis, but in fact government is perfectly likely to fund “out there” research, and in fact *more* likely to do so than the private sector. (Though perhaps less likely to do so than private *universities* with lots of tenured faculty, which have a whole different set of incentives.)
Helen 08.24.09 at 3:24 am
It surprises me that someone with McArdle’s credentials and a gig in a high-profile online magazine would spell Philosophical as “philisophical”.
Nick Barnes 08.24.09 at 9:59 am
those right wingers that have heard of the geography of the Netherlands
Assumes facts not in evidence.
Barry 08.24.09 at 1:03 pm
Adding on to #36 – right-wingers have a very selective America Uber Alles, at least where government is concerned:
Military – yes
Criminal punishment system – yes
anything else – no
And if you dig, you’ll hear excuses like ‘well, they have fewer minorities’, which pretty much confirms the theory that a majority of politics in the USA is about race.
Ginger Yellow 08.24.09 at 1:04 pm
“If you massively publicly funded r&d, the results would be as good as massive private funding
Basic medical research is massively publicly funded. The vast majority of funding for such research comes from the government and non-profits. R&D spend by the private sector is mostly about bringing new drugs to market (not a simple process) or finding new indications or modifications for existing drugs.
Eh? You’re trying to say that everyone in Congo, Kenya, Ethiopia, Sudan, has a mobile phone?
More or less. Mobile phones are far more common than landlines in Africa, for fairly obvious reasons.
Chris 08.24.09 at 6:58 pm
#21: It’s probably mostly the things like erection drugs and hair restoration that can’t be rolled out efficiently without for-profit actors.
That was my reaction too. Government-directed research would squander all its funding trying to save people’s lives without regard to their value to society (i.e. wealth – in free market utopia those are synonyms); it takes the awesome efficiency of the free market to target the markets with the most available dollars for health-care treatments, and convince them that they have a treatable medical problem they just hadn’t noticed before.
The high priority of ailments common to vain middle-aged men is easily explained once you realize that that’s where the dollars are. (Vanity not only makes the men afflicted with it compete more intensely for wealth throughout their lives – and therefore probably have more of it when they see your ad – but also is an easy way to influence them and relieve them of that wealth.) And of course targeting the sick is unprofitable – they’re likely to die and stop using your product. What you want, ideally, is something you can sell to people who don’t have any life-threatening (or economic-productivity-threatening) conditions, and can keep using for decades.
It’s interesting that with all these vanity treatments, free-market medical research hasn’t discovered a treatment for vanity itself; but maybe vain middle-aged men don’t really want to become less vain, they just want to have more basis for their vanity.
P.S. Couldn’t the medical research free-rider problem, if there is one, be counteracted by international collective action? Start with the US and EU – only two actors so negotiation shouldn’t be impossible, but both economic titans, so having them on board is a good start and establishes the ground rules. Then let other high-tech nations like Japan, Canada, or Australia join in a going concern. Any nation that joins and chips in some funding can also apply for research grants/prizes as well as being able to use the results of the research. This will attract China and India – medical research is a prestigious industry and one that contributes to economic development – and then you’re most of the way to a worldwide collaboration.
norbizness 08.24.09 at 7:58 pm
This chapter of the Holbo autobiography detailing this feud will be known as “The Wasted Year(s).”
rita matthews 08.24.09 at 8:55 pm
A lot of research and development is done in University research labs. This is supported by government grants and whatever is discovered is public information and is snagged by the pharmaceutical companies and they don’t pay a penny. Natural products can’t be patented so pharmaceutical companies just tweak the synthesis just a tad and there you go. It would be really interesting to see how much original research big pharma really does.
Salient 08.24.09 at 10:56 pm
This chapter of the Holbo autobiography detailing this feud will be known as “The Wasted Year(s).â€
No, they’ll just focus on Squid and Owl: Origins of the Legend.
someguy 08.25.09 at 2:04 am
Ginger Yellow,
Is it obvious? I thought it was commmon knowledge and yet somehow I think that most people don’t know.
Tim Worstall might be suprised about cell phone penetration in Africa but he was right about why it has happened.
http://www.spectrum.ieee.org/telecom/wireless/africa-calling
Govt provisioned monopolies handled land lines in Africa. They put a ceiling on price.[At least I assume they did]
They ended up with no new infrastructure and huge waiting lists. That I am sure of.
Enter the cell phone.
Rob 08.25.09 at 2:33 am
The fact that cell phones achieved something landlines doesn’t tells us anything about private vs government. Landline telephones are a natural monopoly and will act entirely different with regards to how they approach customers than competitive cell phone companies.. Monopolies will always serve fewer customers, you would think the Econ 101 brigade could remember that far into their lessons.
John Holbo 08.25.09 at 3:01 am
“No, they’ll just focus on Squid and Owl: Origins of the Legend.”
Thenk you kindly.
Alex 08.25.09 at 9:41 am
You’re trying to say that everyone in Congo, Kenya, Ethiopia, Sudan, has a mobile phone?
First of all, you’d be surprised, especially in Kenya and even in the DRC. Second, no, that isn’t my point and you need to read more carefully. My point is that your argument is lacking a control group – the big GSM roll-out happened after essentially everyone deregulated, and to a large extent, deregulation happened because of GSM, so there isn’t a meaningful data set of countries with a nationalised telecoms monopoly to compare the results with.
Second, it’s interesting that you mention Kenya, where the biggest mobile phone network (Safaricom) was set up by the state and only later privatised (in fact I think the government still owns a chunk of it).
Thirdly, the developing world was full of really awful national telcos until quite recently, but it wasn’t sufficient to privatise/deregulate to sweep them away; without a technology that made it possible to deploy an alternative service without a minimum trench mileage over 10,000, this would have remained a dead letter. Did the technological change entrain the legislation, or vice versa? In fact, the only successful overbuilds I can think of required either public sector funding, or else regulated access to ducts, poles and trenches; even the cableguys’ business model for deployment tended to include multiple bankruptcies. It costs a lot of money to dig that many holes.
derek 08.25.09 at 11:51 am
The R&D could be replaced by govt. then, but it’s the roll out of the drugs and treatments which could not be.
I think that’s not true, and I know Tim Worstall hasn’t shown it’s true, instead of just asserting it.
But suppose it is true. Then the right wing story about how the USA gives drugs to the world is 100% false. They may invent drugs for the world (I don’t think they do so much, actually) but the one thing the uber free market can’t do for the public health care systems of the world is roll the drugs out for them: they have to do that for themselves. If they can’t do it, then it’s false that the USA is helping them do it. If they can do it, then it’s false that it can’t be done by public systems.
Sebastian 08.25.09 at 4:36 pm
“If you massively publicly funded r&d, the results would be as good as massive private funding. Dollar for dollar, all you need is money.”
What makes you believe this is true? A huge part of the system involves scientists passionately believing in an idea, getting venture captial to start a small bio-tech firm, spending years researching it, with the only likely hope for money being paid back in being bought out by a large pharmaceutical company if the start up can show enough promise to get the drug near stage III trials. The economic calculation is done at a level pretty close to the specialization (and in some cases may initally be made by only a single scientific specialist and the 1-4 venture captialists he can convince to back him). No government controlled system is going to operate anything like that.
It also seems like you gloss over Megan’s objection about why no other country does what you suggest with respect to research. If governments really can do as well with practical therapies on a regular basis, why not let them prove that first. You suggest that it is currently a free rider problem (and I agree) but you don’t offer any suggestion about how to get European countries to start paying. You seem to non-explicitly assume that if the US stops paying, Europe will start paying. But that isn’t really how most free rider problems get solved, so it isn’t clear why you think it would work in this case. It isn’t clear that most European countries would want to add a large line item like that to their budgets at this point or at any other point in the immediate future. Especially since if they were committed to it, they could have already done so.
Nick L 08.25.09 at 5:20 pm
I don’t understand the veneration of private pharma whatsoever. While I might grudgingly admit to some “innovation,” I think most of the industry’s business is equally as profit-motivated as any other American industry, leading to the never-ending search for the next “blockbuster” drug. I also think the FDA’s lax supervision of the sector reeks of the same kind of permissiveness the SEC exhibited on Wall Street. Most conservatives/libertarians faith in the noble intentions of big pharma is entirely misplaced, and honestly hard for me to believe.
james 08.25.09 at 7:24 pm
Drug research
http://en.wikipedia.org/wiki/Medical_research
“Research funding in many countries comes from research bodies which distribute money for equipment and salaries. In the UK, funding bodies such as the Medical Research Council and the Wellcome Trust derive their assets from UK tax payers, and distribute this to institutions in a competitive manner.
In the United States, the most recent data from 2003[1] suggest that about 94 billion dollars were provided for biomedical research in the United States. The National Institutes of Health and pharmaceutical companies collectively contribute 26.4 billion dollars and 27.0 billion dollars, respectively, which constitute 28% and 29% of the total, respectively. Other significant contributors include biotechnology companies (17.9 billion dollars, 19% of total), medical device companies (9.2 billion dollars, 10% of total), other federal sources, and state and local governments. Foundations and charities, led by the Bill and Melinda Gates Foundation, contributed about 3% of the funding.
The enactment of orphan drug legislation in some countries has increased funding available to develop drugs meant to treat rare conditions, resulting in breakthroughs that previously were uneconomical to pursue.”
Chris 08.25.09 at 7:50 pm
@54: Simple. Make the following change to the existing system:
A huge part of the system involves scientists passionately believing in an idea, getting venture captial to start a small bio-tech firm, spending years researching it, with the only likely hope for money being paid back in receiving an advertised sum of prize money from the government if the start up can show enough promise to get the drug near stage III trials.
Unlike the existing system you don’t have to depend on the vagaries of large pharmaceutical company executives in addition to the speculativeness of your research itself. Prize amounts (and thus research priorities) are set based on the potential health benefits of the research instead of the potential marketability. Me-too drugs that provide tiny or no medical improvement but can be aggressively marketed because they are separately patentable get nothing.
In exchange for the prize money, the government receives the IP rights to the new drug/treatment, which it then immediately puts into the public domain so that private manufacturers can compete to produce affordable generics. This allows more people to benefit from the treatment faster, a clear public benefit compared to the existing profiteering system. A similar benefit could potentially also be achieved by exercising a form of eminent domain over certain IP rights in exchange for reasonable compensation to be provided from the public purse.
someguy 08.25.09 at 8:13 pm
10 Ten Selling Drugs
http://www.forbes.com/2006/03/21/pfizer-merck-amgen-cx_mh_pk_0321topdrugs.html
It seems less like a list of want items for vain middle aged men and more of list of drugs that treat serious illnesses and save lives.
Cholestrol + Blood pressure 4
Mental Illness 3
Acid Reflux 2
Asthma 1
Very brief discovery stories of top selling drug
http://www.world-of-fungi.org/Mostly_Medical/Mark_Gilson/Mark_Gilson.htm
http://www.scienceblog.com/community/older/2003/C/2003363.html
Perhaps big pharma is just a bit more innovative than some folks on this thread believe. Commercializing a moleclue seems to me to be pretty innovative stuff.
Sebastian 08.25.09 at 8:24 pm
“The National Institutes of Health and pharmaceutical companies collectively contribute 26.4 billion dollars and 27.0 billion dollars, respectively, which constitute 28% and 29% of the total, respectively. Other significant contributors include biotechnology companies (17.9 billion dollars, 19% of total), medical device companies (9.2 billion dollars, 10% of total), other federal sources, and state and local governments.”
You can’t really count biotechnology companies as completely separate from pharma company contributions, as the main way biotechnology companies make their investments back is by being bought out by pharma companies.
#57, your idea doesn’t fix the problem. Only those things with pre-approved prize money will get reimbursed, how will you get research in the things that don’t have a prize yet? Presumeably you will have to go through some channel to get it preapproved, and will have to convince multiple layers of government to do so.
And the me-too thing is at least somewhat more complicated than you let on. Drugs with similar effects and different side effects are a good thing.
watson aname 08.25.09 at 9:44 pm
You can’t really count biotechnology companies as completely separate from pharma company contributions, as the main way biotechnology companies make their investments back is by being bought out by pharma companies.
And the main source of ideas for the biotech companies to develop is academic research and/or academic researchers. It all hangs together, and nobody should discount the contributions made by pharma companies, However it’s a hell of a lot easier to construct other ways to do commercialization and/or delivery than it is to find other ways to do fundamental research. In the end, it all starts in speculative, fundamental research labs. Of the sort the corporate research is loath to fund, and for the most part, doesn’t. Fair enough though, as the terrible track record speaks for itself.
james 08.25.09 at 9:46 pm
#59 Its a book keeping item. You could add Pharma and Biotech expendetures together to get ~48% of research spending, but how does that change the discussion?
Forprofit enterprises are responsible for ~58% of all US spendiong on drug development. Pharma seems to have some value add to the process.
james 08.25.09 at 9:50 pm
#60 You are making a value judgment on the difficulty of fundamental research vs. commercial / technical solutions for human consumption. What are you basing this on?
Nick L 08.25.09 at 10:12 pm
#61 it might be impossible to determine, but it would be interesting to analyze how much of the forprofit industry’s 58% of spending comes from startup/biotech firms that have been integrated into each big pharma firm. The innovation seems to occur at the startup level, similar to the information technology industry.
watson aname 08.25.09 at 10:33 pm
#60 You are making a value judgment on the difficulty of fundamental research vs. commercial / technical solutions for human consumption. What are you basing this on?
No, not the difficulty of doing the two things, they are both difficult, and both very difficult to do well. I wouldn’t try and weigh these on the same scale, as it’s a bit of an apples and oranges comparison.
What is different is the fundamental difficulty in changing how the the two things are done. There are several effective models of development, commercialization, regulation, if you look internationally. At the very least it makes you realize that it is sensible to think about various approaches. However, nobody anywhere manages to do a good job of fundamental research based on commercial interest in this. It just doesn’t fly anywhere it’s been tried. Making progress in these areas tracks pretty well with investment in academic and related research programs.
63 is right that startups and the like are the lifesblood of bringing this stuff out of the academic labs. But again like IT, these startups thrive only with sufficient access the the products (both ideas and people) of fundamental research labs. It seems, based on the history of the industry here and elsewhere, to be a necessary, but not sufficient condition.
The same can not be said for a particularly US style approach to productization, regulation, and delivery, although you can certainly argue its pros and cons.
watson aname 08.25.09 at 10:37 pm
to do a good job of fundamental research based only on…
Sebastian 08.25.09 at 10:57 pm
“And the main source of ideas for the biotech companies to develop is academic research and/or academic researchers. It all hangs together, and nobody should discount the contributions made by pharma companies, However it’s a hell of a lot easier to construct other ways to do commercialization and/or delivery than it is to find other ways to do fundamental research.”
But the difference is that when you are talking about biotech funding, you are talking about funding that is expected to be repaid via buyout from a pharma company. So that research money is being funded by the pharma companies. The same is not true of the NIH which is being funded by taxes. So if you want to get picture of what research is being paid for by drug companies, breaking out biotechs as a separate entity doesn’t make sense. Acquiring a biotech so you can do phase III trials means that you are acquiring the cost of their research, but under your method you aren’t counting that as a research cost incurred by pharma companies.
“The same can not be said for a particularly US style approach to productization, regulation, and delivery, although you can certainly argue its pros and cons.”
What do you mean by this? Where is your alternate model being practiced? There is no governmental research unit which regularly puts out new drugs and devices on the scale of pharma companies. If this was easy, why don’t we have some big country doing it?
watson aname 08.25.09 at 11:24 pm
Sebastian, sorry I typed that earlier response too quickly and upon rereading realize I was quite unclear. I don’t really have time for this conversation right now, but I’ll try and clarify (and hopefully not muddy), but this will again be quick so I’ll sketch:
I’m not suggesting there is a govt. funded productization working on any scale of interest. My position is more:
1) you won’t get anywhere interesting without the fundamental research labs, period, as this is where the innovation starts.
2) the overwhelming majority of effective research at this level is being funded by governments, period, wherever you look. This makes the question “can government money buy medical R&D” misguided. Not only can it, but it is the cornerstone of the only effective way we know how to do a crucial first step in the process.
3) you need productization too, but here things aren’t as cut and dried
following that, I’m not really taking a “side” on the question of balance of funding except to not that while fundamental r&d dollars through academic and government labs are very roughly comparable across countries and research labs, the same is not even approximately true of commercial development. There are companies operating in other countries whose drug development costs are significantly lower than they would be here. However :
3) the costs of the pharma+biotech + whatever you want part of the equation are not actually directly comparable to the costs of the fundamental research side. The price of doing this business in the US is somewhat emergent from the regulatory, insurance and clinical regimes here too, as well as the expectations of capital markets etc.
It’s important not to mistake the large amount of R&D the US does in the area, with the global efficacy of it. We have a big economy spending an awful lot of money in these areas and we do a lot of development. It’s a mistake to think that this development is actually predicated on the way pharma is done in the country, however much the industry would like you to think so uncritically.
All evidence, however, points to it being predicated on the fundamental r&d labs looking something like they do now, with similar amounts of resources being put in.
Hope that makes more sense than initial stab at it, but now I must run.
engels 08.26.09 at 1:26 am
When The Economist is talking about the ‘diet of ludicrous untruths’ that ‘Americans have been fed’ in ‘the current apology for a debate’ you know that something is up. Ironic that not a few of these propagate from their own Great Economist, Megan McArdle…
Bloix 08.26.09 at 1:37 am
McArdle wants Beth Gabaree to die so that drug company profits will stay high.
http://www.guardian.co.uk/society/2009/aug/21/healthcare-provision-us-uk
That’s her argument. It would be revolting even if it made any sense, and that fact that it doesn’t makes it contemptible.
someguy 08.26.09 at 6:17 pm
Bloix,
No. This thread is littered with nasty comments like that and they are totally unjustified.
If Megan was against a decent minimium or redistribution those comments might have some justification but she has very clearly stated that she supports such measures in some form or the other.
Brian 08.27.09 at 5:19 pm
I think Megan is just quite rightly concerned that the government will get it’s hands on the NIH…
Barry 08.27.09 at 6:51 pm
Brian, don’t even whisper that. OMG, if the Institute of Health were to be *nationalized*………………… :(
Sam 08.30.09 at 1:48 pm
I’m late to this party, but here are my two cents. In my view, I think John Holbo should just bite that bullet.
Government control over health care will almost certainly lead to price controls and price controls will reduce pharmaceutical innovation. Why? Well, every developed country that has universal health insurance has imposed price controls because there is overwhelming incentive for governments to control costs (the US is a quasi-outlier here). And, predictably, price controls reduce innovation.
There seem to me to be three possible responses here:
(1) Pharmaceutical innovation is not that important for health and so forth. This seems to be false. More recent evidence here.
(2) Government could somehow compensate for the loss in private innovation. My response: why have no actual governments done this? European countries still lag the US in innovation. Moreover, I doubt they could. Governments are good at financing fundamental research, but bad at turning this research into actual drugs compared to the private sector.
(3) The health-related gains from state-financed universal health care would outweigh the losses from less pharmaceutical innovation. I think we should also be pretty skeptical of this hypothesis, as the expansion of insurance will likely have little effect on health outcomes.
Anyway, I think McArdle has the stronger position here.
bupalos 08.31.09 at 10:22 pm
>>>Moreover, I doubt they could. Governments are good at financing fundamental research, but bad at turning this research into actual drugs compared to the private sector.>>>
What is your evidence that government is bad at “turning research into actual drugs?” I think it’s probably akin to the evidence that government is bad at advertising erection pills. Simply, that has not been it’s role. You can’t take that as evidence.
Er. And I forgot about Bob Dole.
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