You never let a serious crisis go to waste, as Rahm Emmanuel once said. Mariana Mazzucato fully agrees, and thus she replies to a question of the British Medical Journal: “Is it time to nationalise the pharmaceutical industry?” with a resounding “yes!”
It is easy to imagine that calls such as these will multiply, in the Coronavirus epidemic. In her contribution, Mazzucato writes about the misalignment between the pharmaceutical industry (that prioritizes “blockbuster drugs”) and real public health needs.
An answer to Mazzucato (who writes together with her colleague Henry Lishi Li) is provided by Ara Darzi, a former Health Minister with the Labour Party and the director of the Institute of Global Health Innovation at Imperial College London.
Writes Darzi:
The profit driven pharmaceutical industry is the worst system for discovering new drugs—apart from all of the others. This is a familiar trope, but it contains an important truth. There are downsides to any system. The challenge is to manage them.
Over the past 50 years, big pharma has delivered transformative improvements in global health. That is incontestable. The eradication of smallpox, the discovery of HIV drugs, the introduction of monoclonal antibodies: these three alone have saved millions of lives. The UK’s long history of drug discovery and development is the envy of the developed world. The life sciences industry employs 140 000 people in one of the most productive sectors of the economy.
Drug companies do make big profits, but these are necessary to fund the enormous costs of developing new medicines.
I find this persuasive and Darzi’s reply well worth reading.
One point Mazzucato makes may have some merit: “patents are often abused, being too upstream, wide, and strong, and high prices can persist even as generic competition kicks in, as a result of occasional cases of inefficient competition”. Yet I don’t quite understand why and how direct government intervention (i.e. the establishment of a government-owned pharmaceutical company) could solve this problem, which looks to me a normative and regulatory one.
READER COMMENTS
Grant Gould
Mar 11 2020 at 3:44pm
A lot of the anger at the pharma industry stems from its treatment of out-of-patent drugs like insulin, where regulatory approvals and laws against generic substitution have created quasi-property rights. This gets lumped in with the problem of patents, which could in theory be separable, but looks the same: Property-like rights against competition.
The idea that a nationalized industry would get around this is silly, of course — if there were political space to move out-of-patent drugs to the government sector, there would be political space to abolish the post-patent frictions that prevent competition in them in the first place; it is after all the same government in both cases. But the underlying complaint that an industry is trading in monopolies (what many leftists mean by the word “capitalism”) is legitimate and will need to be addressed if this sort of proposal is to be defeated.
(And then of course these same costs insisted on by the drug makers and governments will be cited by those same drug makers and governments to argue for ever-greater patent and post-patent restrictions — up-front costs are a self-licking ice cream cone in this regard.)
Eventually progress toward new “blockbuster” drugs will be held hostage by the industry’s fondness of functional monopolies on old drugs, as people recognize that the oft-repeated libertarian promise of today’s blockbusters being tomorrow’s generics is a chimera — the generics will always be a few more years off, or no facility will have been approved to make them, or your prescription won’t run to them, or doctors will switch to the ever-newest variant regardless of price, and so the out-of-patent drug will somehow vanish. These are not separate accidentally aligned problems but the same systemic problem; people broadly, and leftists in particular, have recognized this and libertarians should as well rather than fixating on details.
Phil H
Mar 11 2020 at 10:16pm
One of the arguments that I always used to think was persuasive was the perceived lack of attention to women’s health. Viagra gets way more attention than good drugs for period pain, lack of funding for breast cancer, that kind of thing. But the rampant advertising for tampons and sanitary towels has me convinced otherwise. Clearly industry can respond enthusiastically and creatively to women’s medical needs. I’d be interested to know if the sex bias thing still holds up.
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