I absolutely agree that the financial incentives are mismatched, with private companies less interested in trying to cure or improve underlying medical problems than in treating/controlling symptoms.
"Asking the government or charities to play this game is asking for politics to further enter into it, the outcomes are not likely to be good."
I'm curious where this die-hard free-market willful blindness comes from. I object to the categorical classification of government or charity being bad choices to solve problems.
The nature of the specific market under discussion makes all the difference in the world. The nature of the administrative path from funding to research & development also makes a difference. There can be efficient allocation of funds in government and in private sector charities, just as there can be inefficient allocation of funds due to bad management in private companies devoted to solving the same problems.
Free marketeers have effectively redefined "government run program" to mean inefficient... it may be that most of the time, but there is nothing inherent about government programs that demands inefficiency. There's a similar stigma regarding charity. Those are almost effects of free-market thinking: if everyone is convinced that government and charity are poor ways to solve any problem, then government and charity are left with incompetent administrators, bloated management structure, and poor oversight.
Since this problem is identified as one that the private commercial sector is poorly motivated to solve, the question is not whether public sector or charity should attempt to tackle the problems -- it should -- but how to structure charity or government programs so as not to waste the money they are given to address the problem.
When you talk about efficiency you're going off on a tangent I'm not intending; in this case, I'm much more worried about political choices on what approaches and drugs to pursue, and politics messing with the safety and efficacy testing. Also, anyone thinking there is anything like a "free-market" pharmaceuticals is simply not paying attention.
On the most general principles, I claim politics are a given in organizations of the scale we're talking about. My special claim about governments and charities is that for-profit companies have a governor in that if they don't make a profit, they'll suffer and eventually die. WRT to my testing point, I also don't want the same entity having a large hand in both developing and testing drugs. I'd also want to look at the current and past roles governments have had in pure drug development; it certainly can do amazing things like the wartime push of penicillin mass production, then again that's not the sort of problem we're having today with antibiotic resistance.
"Since this problem is identified as one that the private commercial sector is poorly motivated to solve...."
Which has a whole lot to do with the government's regulation of pretty much everything involved in getting a drug to market. Not everything, certainly, it's hard to develop these sorts of drugs, and I think its telling how many of the families use β-lactam rings. So I claim that changes in laws and regulations are in theory a very fruitful avenue. In theory because the demonization of "profit", especially in the context of saving lives, makes promises a government makes today highly suspect, "I am altering the deal. Pray I don't alter it any further."
So, continuing on the meta track, there are several cases when the private sector fails, which I'll try to categorize:
1. Government intervention screwing up what would work in a purely free market.
2. Markets that free enterprise is not equipped to handle. Massive front-end costs combined with unpredictable or insufficient future revenue (for instance, reducing or eliminating externalities in a way that the company can't capitalize on renders something unworkable for the free market).
3. Markets that have a pathological condition where they are inelastic and when there are less-desirable substitute goods one of which is vastly more profitable.
4. Markets that are monopolies or oligopolies: where there is insufficient competition.
Is it even productive to engage in a discussion focusing on category 1, when pharma has issues in all four categories, and reducing government regulation in any way even if it's merely to reduce unnecessary up-front drug development costs (which I agree is a noble goal) is likely to make some of those other pathologies worse?
Obviously we have grave disagreements here, enough in my opinion that I don't think it's productive for me to reply further. But I'd add at least a "5": too many monopsonies (http://en.wikipedia.org/wiki/Monopsony), e.g. nation states negotiating directly with drug companies, and insisting on prices barely above the costs of goods (well, I'm sure insisting on less, but settling on that).
"Asking the government or charities to play this game is asking for politics to further enter into it, the outcomes are not likely to be good."
I'm curious where this die-hard free-market willful blindness comes from. I object to the categorical classification of government or charity being bad choices to solve problems.
The nature of the specific market under discussion makes all the difference in the world. The nature of the administrative path from funding to research & development also makes a difference. There can be efficient allocation of funds in government and in private sector charities, just as there can be inefficient allocation of funds due to bad management in private companies devoted to solving the same problems.
Free marketeers have effectively redefined "government run program" to mean inefficient... it may be that most of the time, but there is nothing inherent about government programs that demands inefficiency. There's a similar stigma regarding charity. Those are almost effects of free-market thinking: if everyone is convinced that government and charity are poor ways to solve any problem, then government and charity are left with incompetent administrators, bloated management structure, and poor oversight.
Since this problem is identified as one that the private commercial sector is poorly motivated to solve, the question is not whether public sector or charity should attempt to tackle the problems -- it should -- but how to structure charity or government programs so as not to waste the money they are given to address the problem.