Sunday, September 27, 2015

Weekend Roundup

With the weekend approaching, I had one entry (on drug pricing) in the draft file. Don't have time to add much, but I do have some open tabs I want to take note of before I go offline:

  • Paul Krugman: Religions Are What People Make Them:

    The current crop of Republican presidential candidates is accomplishing something I would have considered impossible: making George W. Bush look like a statesman. Say what you like about his actions after 9/11 -- and I did not like, at all -- at least he made a point of not feeding anti-Muslim hysteria. But that was then.

    Reason probably doesn't do much good in these circumstances. Still, to the extent that there are people who should know better declaring that Islam is fundamentally incompatible with democracy, or science, or good things in general, I'd like to recommend a book I recently read: S. Frederick Starr's Lost Enlightenment: Central Asia's Golden Age From the Arab Conquest to Tamerlane. It covers a place and a time of which I knew nothing: the medieval flourishing of learning -- mathematics, astronomy, medicine, philosophy -- in central Asian cities made rich by irrigated agriculture and trade.

    As Starr describes their work, some of these scholars really did prefigure the Enlightenment, sounding remarkably like Arabic-speaking precursors of David Hume and Voltaire. And the general picture he paints is of an Islamic world far more diverse in its beliefs and thinking than anything you might imagine from current prejudices.

    Now, that enlightenment was eventually shut down by economic decline and a turn toward fundamentalism. But such tendencies are hardly unique to Islam.

    People are people. They can achieve great things, or do terrible things, under lots of religious umbrellas. (An Israeli once joked to me, "Judaism has rarely been a religion of oppression. Why? Lack of opportunity.") It's ignorant and ahistorical to claim unique virtue or unique sin for any one set of beliefs.

    A couple quick points: Bush understood that American intervention in the Middle East wouldn't work without local allies, which the US at least had to go through the motions of cultivating. One side effect of this is that Americans and Arabs would develop attachments which would eventually result in many of the latter coming to the US (much as had happened with Cuba and Vietnam). Islamophobes should have understood this dynamic from the beginning, and as such should have resisted Bush's imperial ventures. Of course, they didn't do that -- they're not very bright, but at least they understood that Bush's wars in the Middle East were wars against the people there. Not so clear that either side understood that long-term wars there would only increase intrinsic Islamophobia among Americans, but that's probably the easiest lesson one could have deduced from a study of America's wars.

    The ending of the Arab enlightenment didn't correspond to economic downturn so much as military defeat, primarily by the Mongols and Turks. (A similar thing happened in Spain, first with the Moors then the Christians.) Of course, once the Mongols sack Baghdad it's hard to rebuild the economy. We've seen that in real time with the American occupation, which by most accounts was considerably less brutal.

    In Israel, Jewish military power has turned Judaism into a religion of oppression -- indeed a remarkably nasty one. Perhaps that "lack of opportunity" has prevented any safeguards from evolving. Indeed, one can point to episodes where Christian rule was at least as brutal -- the Spanish Inquisition, for one.

  • Andrew Pollack: Drug Goes From $13.50 a Tablet to $750, Overnight: The drug is Daraprim, a 62-year-old generic which was acquired by "Turing Pharmaceuticals, a start-up run by a former hedge fund manager." The first thing you learn in MBA school is that the price of something has nothing to do with its cost: it's simply what the market will bear. For a drug that can be the difference between life and death, a seller can get away with a pretty steep price. Under such circumstances, there's little difference between "smart business" and the highwayman's motto, "your money or your life." What's unusual here is that the drug is generic, so in principle there's nothing to stop other companies from competing, and competition should bring the price down to something related to costs. However, as the article shows, there are ways an operator can create and exploit a temporary monopoly -- even where none should exist. One the article doesn't mention goes back to MBA school doctrine: if all the smart operators look for is huge margin opportunities, they'll never bother to compete a price down -- which leaves the first mover with monopoly rents.

    The article gives several other examples of extortionate price increases. I've seen other reports that couple of them have been rolled back, basically by shaming the companies, although I suspect that the real leverage is that a few large insurance companies and, ultimately, the government are the main buyers of pharmaceuticals -- and while you may be powerless, they less committed to your health than to their own bottom line.

    Dean Baker tweeted: "We don't negotiate firefighters' pay when they show up at the burning house, why would we pay for drugs this way?" Baker argues that we should End Patent Monopolies on Drugs. I agree with everything Baker says here:

    The United States stands out among wealthy countries in that we give drug companies patent monopolies on drugs that are essential for people's health or lives and then allows them to charge whatever they want. Every other wealthy country has some system of price controls or negotiated prices where the government limits the extent to which drug companies can exploit the monopoly it has given them. The result is that we pay roughly twice as much for our drugs as the average for other wealthy countries. This additional cost is not associated with better care; we are just paying more for the same drugs. [ . . . ]

    A monopoly that allows drug companies to sell their drugs at prices that can be hundreds of times the free market price has all the problems economics predicts when governments interfere with the market. Drug companies routinely mislead doctors and the public about the safety and effectiveness of their drugs to increase sales. The cost in terms of bad health outcomes and avoidable deaths runs into the tens of billions of dollars every year.

    Drug companies also spend tens of millions on campaign contributions and lobbying to get [even] longer and stronger patent protection. The pharmaceutical industry is one of the main forces behind the Trans-Pacific Partnership, and its demands for stronger patent protections is one of the main obstacles to reaching an agreement with the other countries.

    We don't need patent monopolies to support research. We already spend more than $30 billion a year financing research through the National Institutes of Health. Everyone, including the drug companies, agrees that this money is very productive. We could double or triple this spending and replace the patent supported research done by the drug companies. With the research costs paid upfront, most drugs would be available for the same price as a bottle of generic aspirin.

    Still, as Pollack's article proves, the problem with drug pricing isn't just patents. Purchasers also need more leverage in negotiating prices -- by consolidating their purchasing power and by promoting more competitive options.

Also, a few links for further study (briefly noted; i.e., I don't have time for this shit right now):

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