Matt Yglesias

Time for New Ideas on Pharmaceutical Development

The generosity on display from Pfizer as they decide to offer 70 medications for free to the jobless is the kind of generosity that really only a pharmaceutical firm can offer. The reason, of course, is that while the costs of developing a new medication are high, the marginal cost of producing additional pills is tiny. So insofar as a firm can identify people who would be genuinely unable to afford to buy medicine, there’s no real cost to the firm in giving the product away to those people. Indeed, it generates good PR. And good PR is important to pharmaceutical companies, in part because it’s a marketing-heavy business but more importantly because it’s a heavily-regulated business that benefits a lot from direct government expenditures on research and relies on government-granted monopolies (i.e., patents) for its business model.

But while this is nice to see, it’s also a reminder that financing medical research by providing firms with patent-generated monopoly profits is a very costly way of getting the research. And it’s not a method we arrived at by rigorously weighing the alternatives. Dean Baker has an essay in Boston Review that gets at some of this:

We could expand the public funding going to NIH or other public institutions and extend their charge beyond basic research to include developing and testing drugs and medical equipment. Or the government could contract out the research and development process to private firms and pay for the work up front so that all patentable results fall in the public domain. Or the government could construct a prize mechanism under which it buys up patents after the fact for a premium keyed to the patent’s usefulness.

It seems to me that ideally we should be looking to develop a mixed system. There are a lot of so-called “lifestyle” drugs, like pills that are supposed to prevent baldness, that it wouldn’t really make sense to have direct government funding of. But it’s still good, all things considered, that those pills are developed. They’re basically a form of high-end consumer good, and their creation is progress. Our current system is a good way of financing that kind of thing. But bringing more prizes and contracting-out into the mix for key medical priorities could help build a much more efficient system.

Metaphorical Pirates

Noting the relative insouciance of the operators of the Swedish file-sharing service The Pirate Bay upon conviction, Tom Lee remarks “The gravity of the situation seems to have not yet struck the people involved — either that or Swedish prisons are awfully cushy.”

I think the issue is that Swedish prisons actually are pretty cushy. You can read a funny account here or a more serious explanation from Sweden’s Kriminalvarden agency. But the long and short of it is that, as I understand it, the Swedish system basically understands criminal activity as overwhelmingly stemming from substance abuse problems, mental illness, and lack of labor market problems. Consequently, though the prisoners are certainly closely supervised, the conditions in prison are extremely humane and not especially “punitive.” The emphasis is on trying to help people with their problems and trying to ensure that dangerous people aren’t out and about on the streets.

To the best of my knowledge, the system works pretty well. But what it won’t do is provide a ton of deterrence against criminals who are to a large extent motivated by a conviction that they’re actually doing the right thing. One would rather avoid Swedish prison, but it’s not a terrifying situation and a prisoner of conscience could comport himself relatively comfortably.

Culture in the Balance: Commercial or Non-Commercial

Via Julian Sanchez, a neat video mashup of different dance scenes from different Walt Disney animated films, that shows the reuse and recycling of certain motion patterns and tropes. Check it out:

I watched that video and got a few minutes of amusement from it. And so far thousands of other people seem to have done so as well. And with the video bouncing around on some blogs, that number ought to keep rising. So the world has, in a small way, been made a better place by the fact that modern digital technology makes it feasible for a hobbyist to create this even though there’s no real prospect of monetary reward.

And yet in the name of halting “piracy” there are those who would so tighten intellectual property rules as to make it impossible for these kinds of creative works to be made. That would boost the financial incentives for for-profit corporations to produce high levels of cultural content, but it would also raise substantial barriers to the creation of amateur, hobbyist, or not-for-profit content creation. That’s worth keeping in mind whenever you hear debates about intellectual property issues. Strong IP is usually branded as “good” for “creators” but the main impact of the digital revolution has been to advantage non-commercial producers relative to commercial producers, and the main impact of strong IP law is to shift the balance of power back to the commercial world. We’re accustomed to thinking of capitalism in opposition to socialism, state-direction production, but in the information realm the main opposition is between capitalism and activity that is simply non-commercial in nature.