Who’s Gonna Make Our Drugs!?!?!
Daniel talks about incentives for drug innovation over at his blog.
Joseph Stiglitz, a Noble Prize winning economist, has written an interesting article arguing that medical a medical prize fund could improve the financing of drug innovations. The prizes would be funded by governments in advanced industrial countries and the prize winner would not own the intellectual property to the drugs or treatments.
This is an interesting idea, and I would endorse the plan if private individuals, not governments, financed it. Bureaucrats don’t make good decisions on the whole better they don’t have good incentives. Their incentives lead them to do things to increase their power and prestige, not the quality of their product.
His analysis is right on.
America hasn’t had a problem generating new drug patents. In fact we have been bearing most of the burden for drug development for the past 20 years. Nearly every new useful drug patent is developed in America or by an American drug company. Single payer healthcare systems like Canada’s or England’s eliminate much of the financial incentive drug companies have to develop new drugs. Americans currently end up subsidizing drug development for the rest of the world because our system doesn’t use the power of government to eliminate higher drug costs. As socialized medicine becomes the norm in more and more nations (Democrats will be pushing hard for it here over the next decade) governments will have to come up with creative ways to artificially provide incentives for drug companies to innovate. This is unfortunate because the market does a much better job of rewarding developers for inventing drugs people want/need than any prize fund manager could.
Medical innovation over the past 100 years has improved peoples’ lives more than nearly any other technological innovation. We will all be worse off when it is turned over to bureaucrats with competing agendas instead of being left to the market.
