August 27, 2003

The Pfizer Review

Browsing National Review Online... fourth in their list of headings, after "WAR", "WORLD", "CRIME & LAW", is "TRADE AND DEVELOPMENT"... Under the trade and development heading is "Special: Top authors report on global trade policy."... Click...

Why, it's Brink Lindsey giving an overview of Bush Administration trade negotiations, such as they are. Brink is brilliant, and almost always fair. This is a great improvement over National Review's standard economics coverage... He hits the right points (although his critiques of the Bush Administration are softer than I would have made them):

glaring sellouts... tariffs... on imported steel... atrocious farm bill... market-distorting subsidies... effect of the administration's... protectionist moves was to swing only a very few votes into the pro-T[rade ]P[romotion ]A[uthority] column; other vote-buying strategies--corporate welfare for import-competing industries, or added subsidies for their dislocated workers--could have brought in as many votes with less damage to U.S. trade policy... How could the United States lecture the world on the virtues of free trade, when it couldn't even stand up to 200,000 steelworkers?... The achievement of a real and lasting trade legacy will require threading the needle with often-fractious trading partners and an always demanding Congress.... For now, give the Bush trade record a flawed but promising "incomplete."

What Brink doesn't say is that with students like George W. Bush, I's (i.e., "Incompletes") usually turn into F's when the following semester comes to an end.

But what's this doing in National Review's economics coverage? Have they had a change of heart? It's much, much better than usual, and its format is completely different. In fact, the page is one big graphic.

In fact, it's an ad from Pfizer. Look up at the top of the web browser: the pages are being served from http://ads.nationalreview.com/.

A big ad from Pfizer. Eight full screenfuls of text analyzing the current world trading system. Needless to say, there's no clue on NRO's front page that the link takes you to something that Pfizer commissioned independently of NR. Pfizer must have paid extra for that...

Is this a bad thing? Is there any reason to think that the Pfizer Forum's editorial judgment is any worse than National Review's? In general, not--on almost all issues, the PR staff for a large, rich multinational drug company is more likely to come up with something worth reading and informative than the editors of National Review. So let them take over the whole thing!

But there is, of course, one area in which the Pfizer Forum's statements are not worth the photons that carry them: on this page I read that: "...patents are not a significant barrier to [pharmaceutical] access. Indeed, 99 percent of the drugs that are most desperately needed--including medications for malaria, AIDS, TB, and many other diseases of poverty--are not on patent in most of the poorest countries..."

Now I'm not one who wants to paint Pfizer as a villain. It's biochemists and researchers do wonderful, wonderful work, and I believe are more productive working where they are than they would be if we added them en masse to the NIH staff: private companies have incentives to prune bureaucracy and try out low-probability but high-potential-return ideas that public servants do not. (Not that I think the NIH staff should be transferred en masse to Pfizer either.) And Pfizer continues to exist only by selling its drugs for prices far, far above their marginal cost. It is not a villain but, rather, the bearer of certain economic relationships and patterns that are heavily flawed because of our inability to square the circle and create a pharmeconomic system that (i) supplies drugs at marginal cost to the sick, (ii) create an adequate resource flow to fund pharmaceutical research, and (iii) provide the right incentives for the biochemists and molecular biologists and those who employ them to work on the highest-priority drugs--those drugs best able to improve high-quality life expectancy, cure the sick, and reduce human suffering.

That said, I don't want Pfizer warping our debate over how to fund pharmaceuticals with self-serving propaganda.

Posted by DeLong at August 27, 2003 08:41 PM | TrackBack

Comments

>> private companies have incentives to prune bureaucracy and try out low-probability but high-potential-return ideas that public servants do not.

Can I respectfully disagree with that, Brad? Or at least quibble: if you look at the work of publically-funded research labs such as those in Oxford (about which I can speak with some second-hand knowledge) you see a large amount of low-probability ideas tested, many of which remain low-return ideas until the knowledge of the field is sufficiently advanced by that research that a high-return use is established. That's to say, public funding, if not public management, makes possible the kind of research where utility is only apparent into the second- and third-generation of progress.

(Of course, it's at that point when the best researchers get picked off by private industry. Or by Stanford, as was the case with a former housemate.)

Posted by: nick sweeney on August 27, 2003 09:43 PM

Putting Nick Sweeney's point a little differently, publicly funded research is probably better at conducting investigations with a long time horizon. Also, public research doesn't have to consider the question of how well an entity such as a company can capture the benefits for themselves.
Indeed, I have seen arguements (sorry, too lazy to come up with citations) to the effect that, due these problems we underinvest in research.

Posted by: Jonathan Goldberg on August 28, 2003 07:00 AM

More importantly to me, more publicly funded research could focus on actually useful new drugs serving unmet needs, such as an anti-malarial. Malaria causes huge economic losses in Africa, as large portions of the population is at least infected at a low level.

Instead, patent monopolies extended to big pharma insures that research gets wasted on things like the newly released copy of viagra (what the heck is it called? "Leviticus", or something), and the one-a-day omeprazole, which has no benefits over generic except that it can be patented.

-steve

Posted by: ssoar on August 28, 2003 09:35 AM

More importantly to me, more publicly funded research could focus on actually useful new drugs serving unmet needs, such as an anti-malarial. Malaria causes huge economic losses in Africa, as large portions of the population is at least infected at a low level.

Instead, patent monopolies extended to big pharma insures that research gets wasted on things like the newly released copy of viagra (what the heck is it called? "Leviticus", or something), and the one-a-day omeprazole, which has no benefits over generic except that it can be patented.

-steve

Posted by: ssoar on August 28, 2003 09:48 AM

i was surprised at the blancket staement about private vs public . beurocracies exist every where . that will be the day when pfizer 's research can equal NIH .i am a biochemist and happen to know a tiny wee bit . one of the simple thing ( which drug industry has fought tooth and nail ) will be put actual; research dollars minus promo on account staements. the actual research monies are much smaller . also prof does not seem to realise how much of the initial research is done with public moneys and at late stage private entities take them over . azt ( aids drug ) . almost all the work was done with public money from initial identification of the molecule way back in time . only the profits and in billions went to private sector . in normal world it will be called loot.

Posted by: badri on August 28, 2003 12:22 PM

i was surprised at the blancket staement about private vs public . beurocracies exist every where . that will be the day when pfizer 's research can equal NIH .i am a biochemist and happen to know a tiny wee bit . one of the simple thing ( which drug industry has fought tooth and nail ) will be put actual; research dollars minus promo on account staements. the actual research monies are much smaller . also prof does not seem to realise how much of the initial research is done with public moneys and at late stage private entities take them over . azt ( aids drug ) . almost all the work was done with public money from initial identification of the molecule way back in time . only the profits and in billions went to private sector . in normal world it will be called loot.

Posted by: badri on August 28, 2003 12:25 PM

I was ready to say something nice about Stephen Moore's most recent write-up at NRO. He shows how the real price of gasoline has evolved over the past 50 years to show that the current market price is below where it was in 1979. Good lecture on real v. nominal - even if Moore often violates what he rightfully preached.

But then I read his comments about the cost of electricity which has risen less rapidly over the past 50 years than nominal wages. Wait - have not real wages increased? And thus, he changed his deflator? Odd. Let's see, I'll plot the nominal price of electricity from 1968 to now versus the nominal minimum wage and wow, the relative price rose. Now I know that's a bit dishonest. But so is Moore's little switch. Why can't just once Moore write something that is honest from start to finish? I did so much what to say something nice about his writing today.

Posted by: Hal McClure on August 28, 2003 02:13 PM

A while back, Brad posted a review of a piece of Moore's writing wherein Moore didn't adjust for inflation (while comparing ~1900 with ~2000), even though adjusting for inflation would have helped Moore's case look better.

I'd think that that would be embarrassing for a BS in econ,
let alone a Ph.D.

As for real wages increasing - doesn't that depend on the starting percentile of the wage population? IIRC, real wages decreased for the bottom half of the population from 1973 - 1997.

Posted by: Barry on August 28, 2003 03:31 PM

Drug companies have incentives to sell maintainence drugs - drugs that suppress symptoms, but don't actually cure diseases. Likewise immunization is not particular profitable.

Public service researchers, not having to return the same profit, are not directed so much towards the most profitable drugs but more to the most effective and efficient ones.

In other words, the societal opportunity cost of having all those biochemists working for Pfizer is that they are generally being directed towards the most profitable drugs - not the most effective or efficient ones. And that distinction is important - remember it's more profitable to sell someone a pill ever day for the rest of his life than it is to cure him or make sure he never gets sick in the first place.

Posted by: Ian Welsh on August 28, 2003 05:45 PM

Barry - you are quite right about real wages over the past 30 years. But then real wages rose considerably in the 50's and 60's when we had fiscally responsible governments and a national savings rate near 10%. But Moore prefers the Reagan and Bush43 fiscal policy that has lowered savings. Somehow he says this is good for growth. Ah, economics at the NRO!

Posted by: Hal McClure on August 29, 2003 10:18 AM

Barry - you are quite right about real wages over the past 30 years. But then real wages rose considerably in the 50's and 60's when we had fiscally responsible governments and a national savings rate near 10%. But Moore prefers the Reagan and Bush43 fiscal policy that has lowered savings. Somehow he says this is good for growth. Ah, economics at the NRO!

Posted by: Hal McClure on August 29, 2003 10:21 AM

Economics at the NRO as all else is propaganda. Never expect honesty there.

Posted by: lise on August 30, 2003 07:54 AM
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