Who Hijacked Our Country

Sunday, August 24, 2014


Ebolanomics is the title of this article from the New Yorker

This is something that's been talked about off and on for decades an updated/global version of orphan diseases (diseases that are rare and hence there's no financial incentive for pharmaceutical companies to develop a cure).

The world has been terrified/fascinated by the Ebola virus for at least 25 years, and yet no drug has ever been approved to treat it.  The reason, of course, is that most Ebola victims had the nerve to be poor and live in an undeveloped country.

Two million people a year die of malaria and tuberculosis, but the pharmaceutical industry puts more time and money into treating high cholesterol.  Another example:  Out of the roughly 1,500 drugs that were put on the market between1975 and 2004, exactly ten of these drugs were designed to treat Dengue and Chagas disease, which together have stricken more than a billion people worldwide.

This article isn't lashing out at the pharmaceutical industry.  We need a different business model that would make it profitable for a company to develop new drugs even if these drugs won't be used by millions of rich people.  Instead of being granted a patent on their drugs and charging sky-high prices, companies would be given a prize for the new drug they've developed.  From the linked article:

“The government would make a payment or a stream of payments to the company, and in exchange the company would give up the right to sell the product. The drug company would get paid, and would avoid all the expenses of trying to push a new product...Society would get a new drug, and public-health officials would be able to control how it was promoted and used.”

These prizes have already been widely used for numerous technological breakthroughs.  Just one example:  an arsenic filter for drinking water.  Prizes are:

“...cost-effective, since you have to pay only if the product works. They’re well suited to encouraging investment in public goods—like antibiotics and vaccines—where the benefits of an innovation aren’t reaped only by those who use it. (My family is safer if yours is vaccinated.) They rely on existing infrastructure. And, in economic jargon, they harness market forces by 'pulling' research into neglected areas.  [from the linked article]

I think it's worth a try.



Anonymous Anonymous said...

My Fear is the Drug companies - citing the time and expense to making new drugs due to government bureaucracy will ask for another "Fast Track" Program. That's the program during the Clinton era in which the Drug companies said "Trust Us!", the Government said "OK!" and a lot of junk medicines came out during then.

I'm also thinking they're going to demand a limited liability clause so that a million third worlders, misshapen because of a side effect, can't sue them for damages.

If Bhopal had that, Union Carbine would still be there.


August 24, 2014 at 9:53 PM  
Blogger Tom Harper said...

Erik: I certainly don't trust the drug companies, but I think the proposed new business model would be an improvement over the one we have now. Good question about who would be liable if millions of people get side effects from new drugs.

August 25, 2014 at 8:09 AM  
Anonymous Anonymous said...

what's worse than a side effect for an Ebola drug?

August 25, 2014 at 1:59 PM  
Blogger Tom Harper said...

In the case of an Ebola drug, I'd risk the side effects. Then again, there was Thalidomide...

August 25, 2014 at 3:25 PM  
Blogger Snave said...

Big pharma is only in it for the money. I don't think they give a rip about finding cures for diseases or about increasing peoples' quality of life, whether those people live in America or elsewhere (especially elsewhere).

August 28, 2014 at 9:58 AM  
Blogger Tom Harper said...

Snave: I agree Big Pharma is only in it for the money. But I think the author's proposed new business model would provide the necessary financial incentive for drug companies to find cures for orphan diseases and diseases in Third World countries. The payments to these companies would be huge, but in return they'd be forbidden from price gouging and patent trolling.

August 28, 2014 at 11:34 AM  
Blogger Unknown said...

A modest proposal: Our libertarian friends like the idea of a "free" market without regulation. But they pointedly maintain the "necessity" of patent protection which is the reason drugs, many of marginal efficacy, are costing upwards of $100,000/year--and drug companies are big earners. I would suggest that patents be dramatically limited and perhaps eliminated using another model for drug development. Lets give the "free" market a chance to lower prices and use some of the saving to fund targeted drug development.

September 3, 2014 at 6:02 AM  
Blogger Tom Harper said...

Unknown: Not a bad idea. Republicans and conservatives love the "free market," except when they want their corporate donors to get huge tax subsidies, patent protection and protection from any sort of competition.

September 3, 2014 at 10:13 AM  

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