January 5, 2006
From the desk of Jane Galt:Funding cataclysm?
I like drinking with economists, because they're funny. When I go drinking with, say, physicists, I usually end up mired in rants about string theory, which is tough on me because it makes my already limited pool of brains start rattling around in my otherwise empty skull. When I go drinking with economists, on the other hand, they start ranting about how the rest of the world treats them. The most common version of the complaint was summed up by one economist of my acquaintance who said: "You know, I never offer opinions on gall bladder surgery, chemical synthesis, or drawing up a will, but doctors, chemists, and lawyers--and everyone else--all think they know how to do my job better than I do."
Case in point: Paul Ewald, biologist, who thinks that finding an infectious basis for diseases like heart disease and cancer would destroy the health care industry as we know it:
One array of dangers arises because ideas that challenge the status quo threaten the livelihood of many. When the many are embedded in powerful places the threat can be stifling, especially when a lot of money and status are at stake. So it is within the arena of medical research and practice. Imagine what would happen if the big diseases — cancers, arteriosclerosis, stroke, diabetes — were largely prevented.Big pharmas would become small because the demand for prescription drugs would drop. The prestige of physicians would drop because they would no longer be relied upon to prolong life. The burgeoning industry of biomedical research would shrink because governmental and private funding for this research would diminish. Also threatened would be scientists whose sense of self-worth is built upon the grant dollars they bring in for discovering miniscule parts of big puzzles. Scientists have been beneficiaries of the lack of progress in recent decades, which has caused leaders such as the past head of NIH, Harold Varmus, to declare that what is needed is more basic research. But basic research has not generated many great advancements in the prevention or cure of disease in recent decades.
The major exception is in the realm of infectious disease where many important advancements were generated from tiny slices of funding. The discovery that peptic ulcers are caused by infections that can be cured with antibiotics is one example. Another is the discovery that liver cancer can often be prevented by a vaccine against the hepatitis B virus or by screening blood for hepatitis B and C viruses.
The track record of the past few decades shows that these examples are not quirks. They are part of a trend that goes back over a century to the beginning of the germ theory itself. And the accumulating evidence supporting infectious causation of big bad diseases of modern society is following the same pattern that occurred for diseases that have been recently accepted as caused by infection.
The process of acceptance typically occurs over one or more decades and accords with Schopenhauer's generalization about the establishment of truth: it is first ridiculed, then violently opposed, and finally accepted as being self-evident. Just a few groups of pathogens seem to be big players: streptococci, Chlamydia, some bacteria of the oral cavity, hepatitis viruses, and herpes viruses. If the correlations between these pathogens and the big diseases of wealthy countries does in fact reflect infectious causation, effective vaccines against these pathogens could contribute in a big way to a new golden age of medicine that could rival the first half of the 20th century.
The transition to this golden age, however, requires two things: a shift in research effort to identifying the pathogens that cause the major diseases and development of effective interventions against them. The first would be easy to bring about by restructuring the priorities of NIH — where money goes, so go the researchers. The second requires mechanisms for putting in place programs that cannot be trusted to the free market for the same kinds of reasons that Adam Smith gave for national defense. The goals of the interventions do not mesh nicely with the profit motive of the free market. Vaccines, for example, are not very profitable.
Pharmas cannot make as much money by selling one vaccine per person to prevent a disease as they can selling a patented drug like Vioxx which will be administered day after day, year after year to treat symptoms of an illness that is never cured. And though liability issues are important for such symptomatic treatment, the pharmas can argue forcefully that drugs with nasty side effects provide some benefit even to those who suffer most from the side effects because the drugs are given not to prevent an illness but rather to people who already have an illness. This sort of defense is less convincing when the victim is a child who developed permanent brain damage from a rare complication of a vaccine that was given to protect them against a chronic illness that they might have acquired decades later.
Mr Ewald combines deep knowlege of biology with gross ignorance of economics to produce an answer that is as silly as what you probably get when economic journalists start theorizing about evolutionary biology. (blush)
How many things are wrong with this argument? First, it assumes that the price of a vaccine is the same as the price for a dose of medicine. But how much would you be willing to pay for an AIDS pill that you have to take oer and over, versus a vaccine that has fewer side effects, plus you don't have AIDS? If you're one of those church ladies who makes pimento cheese sandwiches in between visiting the poor, maybe not so much. But if you're a sexually active young adult in an urban area, I'd venture that you'd probably be willing to pay at least as much for your AIDS shot as you would for your breast implants or nose job. The pharmaceutical company could collect all that money up front, and as we know if we stayed awake in Econ 101, a dollar today is worth more than a dollar tomorrow.
Second of all, it ignores marginal cost: pharmaceutical companies get to get all the money you'd pay for a vaccine, with only the cost of producing one dose. To stick you for AIDS drugs, they need a bigger manufacturing plant, more workers, and of course whatever raw materials go into the manufacturing. That's presuming that people only ever need one dose of a vaccine, which isn't right; most vaccines I'm familiar with require boosters every few years to keep immunity up.
Third of all, it assumes a lump of consumer demand for health care. Say we vanquish heart disease, cancer, and so forth (though given evolutionary biology, won't we need ever-expanding teams devoted to finding new anti-infectious agents? Couldn't we shift some of our statin and chemotherapy scientists over there?) If we're all living longer, we'll need new joints, a lot more plastic surgery, better pain killers, and some sort of drug to keep us awake after Sunday dinner.
Fourth, it ignores competition. Sure, if I'm a company with a blockbuster AIDS drug, I might not want to cannibalise my own sales. But the company across the street whose market-leading antacid just went off-patent would probably love to introduce a lucrative new vaccine.
The health care market can cope with change just fine. That is, if the regulatory system lets it. The problem with vaccines isn't that you can't charge enough money for them; it's that vaccines are very useful things, which tempts governments to break the patent. It is thus perhaps wiser for pharmas to invest in a good baldness cure than something that people actually need. But this is not a market failure; it is a government failure.
There are major incentive problems with vaccines, and to be fair he touches on one of them: because vaccines protect you against something you haven't got yet, patients are more likely to sue if something goes wrong. And as they become more widespread, people are tempted to free ride on the vaccinations of others. It is only because almost everyone is vaccinated that phobic parents are willing to let their children go un-immunized; if measles and polio were widespread, they'd be a lot more worried about possible blindness and paralysis than about the extremely rare side effects of vaccines. This is a public health problem in areas like boulder, where bobo parents refusing to vaccinate their children have caused a resurgence in diseases like Whooping Cough and measles--unfortunately, affecting not just their children, but adults whose immunity has waned over time.
But those are easily fixed with regulatory changes, such as requiring vaccination to attend school; they're not fundamental to the market. With a few tweaks, I predict that the health care industry will survive, and even grow, even if we vanquish heart attacks and conquer cancer.
Actually, you neglect to mention one other thing about vaccines that is a MAJOR problem (but still a government problem), which puts a big dent in your argument: price controls.
The price of vaccines is kept so low that there is almost no profit in them to begin with - nearly ANY lawsuit takes every last drop of profit and more. That's where the flu-vaccine shortage came from last year (directly from an egg contamination, but indirectly from almost all of the supply coming from 1 company, since no one lse wanted to touch the market with a 10' pole).
This assumes that the federal government takes no further steps to destroy the industry.
However, the feds are more than capable of taking actions which could, in fact, destroy it. Of course, the government would then have to "ride to the rescue", with some form of national limited health care.
I am not quite as sanguine about the future of the US healthcare industry, in something like its current form, as you appear to be.
I am a doctor, not an economist. I love to read alot about economics, because it so reliably explains the behavior of patients, coworkers, and businesses.
Ewald certainly speaks nonsense here. Anyone who practices medicine can recognize another obvious error yet unmentioned:
Modern medicine has been very successful at surgical and medical cures which most often result in turning acute problems into chronic ones. The discovery of a "cure" for heart disease will result, not in disease-free longevity, but in some other chronic disorder.
Why Ewald can't see that as having already occurred speaks ill of his judgement.
Even if he were correct, and the number of those employed in health care shrank, so what? They'd do something else, that's all. Why would that be anything more than pointing out how few people make radio tubes anymore?
Unless he is suffering from the type of conspiracy thinking that repeatedly generates the tale about the highly efficient engine kept hidden from the public by a collusion of GM and Shell.
If Paul Ewald is right, why wasn't the medical industry destroyed by the polio vaccine? Iron lungs and entire wings of hospitals dedicated to polio's victims were, almost overnight, no longer needed. Yet, somehow, the medical industry survived. I think the industry will survive just fine if heart problems are no longer a concern. Americans will spend money on other health problems, like toenail fungus.
"I like drinking with economists, because they're funny. ..."
Come on, Jane, admit it. You just like drinking. The economics discussion is just an excuse. (A physics discussion, might be a cause.)
Just don't try drinking around doctors. Many are neo-Puritans who only grudgingly accept the data that moderate alcohol intake is actually better for you than abstinence.
But they're deeply unhappy about that, so don't push your luck and take a second glass of wine. Just don't. And if you don't watch it, they'll legislate that choice away.
what is -up- with the pimento cheese sandwiches?
Paul Ewald made a splash several years ago by making the claim that most if not all chronic diseases were caused by infections. Trouble is, he didn't bother to make the claim in peer-reviewed journals. That of course does not invalidate the idea, but it is very odd.
Jane and Kevin F are right in their comments (if I'm reading them correctly) concerning substitution of medical needs. In fact, the country is currently suffering from an epidemic of Alzheimer's Disease. In fact, the epidemic is only projected to worsen as time goes on. What's happening? Is it something in the water? Maybe it has something to do with George Bush, Dick Chaney, and that damned Halliburton? Nope, it's just that more people are living to the age where they might come down with Alzheimer's.
But those are easily fixed with regulatory changes, such as requiring vaccination to attend school; they're not fundamental to the market.
Public schools? The ones you want to abolish?
Medicine will eventually completely merge with robotic manufacturing, as we swap out our parts made in our mother's wombs for those made elsewhere, and then health care will begin to resemble the automobile industry, with huge marketing efforts announcing the year's new models.
Eventually, some subset of tomorrrow's "doctors" will be seen as the equivalent of car salesmen, as they ask us, "What is it going to take to get you into a new set of legs today?" or "Well, I'll have to talk to my sales manager before I can agree to that price!"
The locally produced used-body dealership t.v. commercials should be fun to watch, however.
"But those are easily fixed with regulatory changes, such as requiring vaccination to attend school; they're not fundamental to the market."
Well, there's the educational market getting a nice dose of interference if we go with that idea.
I'm not sure what the big deal is with vaccination, except that of course parents should be proper caretakers of their own children. But if idiots around you aren't vaccinating and they mess up that sweet herd immunity that would have let you be yet another idiot not vaccinating without repercussions, the obvious solution is to... vaccinate yourself.
It's a free-rider problem, but not a very big one. Vaccinating yourself has very little downside and has a comparatively large marginal benefit unless practically everyone else in the world is also vaccinating; your own profit motive still leads you to vaccinate even in the face of a small positive externality.
"Medicine will eventually completely merge with robotic manufacturing, as we swap out our parts made in our mother's wombs for those made elsewhere, and then health care will begin to resemble the automobile industry, with huge marketing efforts announcing the year's new models."
I don't know about that. People don't really want to look like machines. What they want is their own bodies as they looked and worked at age 18-25. So what we're looking for is cloning of everything except the brain and transplanting the brain (really, transplanting the whole body, since the brain is the person undergoing the transplant).
Isn't there a joke about asking 10 economists for their predictions and getting 11 answers?
Do we think that Ewald's quality of analysis of health care markets can be divorced from his quality of analysis in etiology? The most interesting thing (besides the drinking) about listening to MDs spout economic theory or MBAs talk science is what we can learn about their black-box professional expertise from their amateur analysis. A blowhard's a blowhard, a conspiracist's a conspiracist, etc.
What does it say about a research biologist's intellectual and investigative processes when he demands, in a general-audience forum, that the world reform itself to conform to his earthshaking yet unproven idea? What an odd form of argument from authority.
I don't know about that. People don't really want to look like machines.
I disagree. I think it would be pretty cool to have android eyes (You know, like in The Terminator). Bear in mind, aesthetics is often influenced by perceptions of status. It could quite easily come to pass that machine looks could become a status symbol, both for the showing off of ability to afford transplants and their representation of a better position (neural links to computers would make this even more of a factor). I'm not guaranteeing this, but it's possible that organic qualities might be seen as kind of a "trailer trash" thing.
Do remember that there are plenty of infectious disease organisms for which vaccination just plain doesn't work well, so you might be arguing about an impossibility.
For instance, the influenza virus mutates so fast that they have to create a new vaccine every year, and whether it will work or not depends on how good they are at anticipating coming mutations six months before they become common. There have been plenty of unsuccessful attempts to make a vaccine against the rhinovirus that is the most common cause of colds; probably it mutates so quickly that any vaccine would be obsolete before it was available in quantity. HIV mutates so quickly that even the infected person's immune system cannot keep up with the changes; a vaccine is hopeless unless researchers find a constant part of the virus that is vulnerable to the immune system, but if there was such a vulnerability, why do HIV-infected people never develop antibodies that attack it? I have no idea how many viruses go through quick-changes like these, as compared to the ones like smallpox and measles that never change so vaccinations are long-lasting.
Then there are bacteria. Even without mutating, bacteria have other defenses against the immune system, so vaccines are not always effective. For instance, a vaccine for tuberculosis has existed for decades, and the FDA has chosen to restrict it's use. Widespread TB vaccination would invalidate the screening tests for TB, since these tests just detect antibodies, which are created both by infections and vaccination. The FDA thinks screening tests, tracing people that came into close contact with the rather small number of TB patients, and aggressive treatment of infections with antibiotics is better than the dubious protection provided by the vaccine.
Remember that that all vaccinations do is stimulate the immune system so it attacks invading germs faster. Anything that causes chronic infections (like the one that causes ulcers) must have some more or less effective way of protecting itself against the immune system, whether it's rapid mutations like rhinoviruses or armor that fends off immune attacks like TB. This will also provide some protection against the immune reactions primed by vaccinations. Often vaccinations will work, because there are just a few germs to kill off if the immune system reacts immediately, rather than the millions that will breed within a few days, but there certainly will be cases where vaccinations are not effective enough to be worthwhile.
But isn't it also true that if pharmaceutical profits (just as one example) began to shrink because we were all increasingly healthy, that the companies and their shareholders would gradually move their capital into other endeavors?
It's like the old shibboleth that the oil companies are certainly suppressing new technologies that would make oil obsolete. My guess is that if those technologies really worked they'd just shut down the wells and sell the new stuff.
From an economist. The problem with your analysis is that the causes of death have to sum to 100. So if they cure or solve one problem another will pop-up to become the major concern.
Might I suggest titling the post? It shows up as a curious empty spot in my rss reader.
Come on, Jane, admit it. You just like drinking. The economics discussion is just an excuse. (A physics discussion, might be a cause.)
I was going to say...! In fact, shouldn't the correct formulation here be "I like drinking, because I am a journalist"?
Who is more willing to pick up the bar tab, economists or doctors?
"Come on, Jane, admit it. You just like drinking. The economics discussion is just an excuse. (A physics discussion, might be a cause.)"
Yes string theory discussion has been known to drive quite a few people to drink ... not to mention drugs.
Regarding the free ride on collective immunization, the history of smallpox is relevant. Before the crossover with cowpox (source of the word vaccination) was recognized, people would result to variolation - exposure to weakened smallpox material from someone recovering from it. The death rate was around 25% - which made it a 3 to 1 bet against smallpox. Now we don't even need to risk an ugly scar on the arm.
But those are easily fixed with regulatory changes, such as requiring vaccination to attend school; they're not fundamental to the market.
Public schools? The ones you want to abolish?
I must've missed the post where Jane called for abolishing public schools. Though if pressed, I'd guess she'd be fine with moving to publicly-funded schools with a vaccination requirement, and no such requirement for other schools (but no legislative shield against liability for disease outbreaks, either). Or maybe it's just that I'd be fine with that, and I'm projecting.
But if you're a sexually active young adult in an urban area, I'd venture that you'd probably be willing to pay at least as much for your AIDS shot as you would for your breast implants or nose job.
I'm quite confused by many things in this venture, and given what I've read about the transmission rates of HIV in ordinary heterosexual intimacy, I'm afraid to ask for the inputs in your pricing model.
There are huge, problems with the vaccine market, due to government intervention. See here: http://www.professorbainbridge.com/2004/10/the_vaccine_pro.html From October 14, 2005.
I find it curious that Ewald posits that medical research has been at a stand-still except in his pioneering field of infectious causes; tell that to those who've developed all the new diagnostic imaging tools, surgical techniques, and radical new therapies and treatment protocols over the past few decades. The advances in orthodontia over the past 10 years have been amazing. I think Ewald needs to take off his blinders.
I'm getting deja vu here; earlier this week I read a piece that debunked MoDo's "Are Men Necessary?" premise, that there's a shortage of men for well-educated women. All the available sociological data shows that well-educated women are doing just fine, thank you. Can Ewald point to any data to support his contentions that the medical industry has been at a stand-still over the past decades, or that "curing" the top killers will cause the industry to collapse? I don't think so. But of course he's right, because infectious causes is his baby!
Ewald's position is that there are infectious causes for the big killers, and so of course there must be, but The Industry (da da DUMMM!!!) is suppressing his research because it knows it will collapse when his theories are widely accepted.
Please, spare me.It's a bit much to go on and on and cry doom when you don't know what you're talking about, don't you think? Someone should tell Ewald that his biologist credentials aren't enough to support his flimsy arguments.
"I was going to say...! In fact, shouldn't the correct formulation here be "I like drinking, because I am a journalist"?"
Not quite.
"I like drinking, therefore....
Joan,
I have to wonder if maybe it's occurred to Dowd that the shortage is of men interested in her, personnally.
I work in the trade show/corporate meeting industry, and get to sit in the room with a lot of folks who talk about this exact subject.
A lot of the big pharmaceutical companies are already making plans on what to do if we manage to shift over from "treat" to "cure" as the primary job.
A number of them are talking about moving into nanotech/molecular manufacturing - they're halfway there in many cases. Most drugs are just tailored molecules, and it's not a huge conceptual jump to go into other related fields.
I drink, therefore I am.There's nothing like drinking with gossipy lawyers if you really want to know what's going on.
The vaccination requirement to attend school already exists, at least where I grew up in the south. In fact, I was suspended from school once over a problem with my vaccination history.
I'm not sure what the big deal is with vaccination, except that of course parents should be proper caretakers of their own children. But if idiots around you aren't vaccinating and they mess up that sweet herd immunity that would have let you be yet another idiot not vaccinating without repercussions, the obvious solution is to... vaccinate yourself.
But that doesn't protect infants and very young children who haven't gotten their vaccinations yet. I'd be awfully upset if my vaccinated 8 year old brought home germs from school that gave my infant measles.
Terrific posts all around, but as someone who is somewhat economically minded (that is what I did my undergrad studies in). I would like to point one seemingly obvious point that Ewald has missed.
Any person's mortality rate is 100%, it is just a matter of what gets you in the end. If our society finds cures for all of the diseases currently plaguing our society...undoubtedly people will die of something else (barring the possibility that we do all become immortal eventually).
These folks Ewald then thinks will be unemployed, will simply be redeployed to the newer diseases affecting our society. As economics would suggest.
Isn't it a good thing to have some kids who are un-vaccinated? It's like a free booster shot. For an immune individual to be exposed to a sick one reinforces their immunity.
I don't blame Ewald for being paranoid. It really does seem there's resistance in American medicine towards seeing problems caused by pathogens as being caused by pathogens.
There's a reluctance to explain the damage done by chronic chlamydia infection. The Japanese are more likely to focus on Pityrosporum ovale feeding on scalp oil as a cause for male pattern baldness, while American companies focus on drugs to prevent testosterone to DHT.
Why is American medicine reluctant to see this? I don't know. But Ewalds observation that they are reluctant seems accurate.
As was somewhat mentioned earlier, some diseases like HIV and HCV change their viral coats very rapidly. The human immune system does react to these viruses and works to suppress them. One of the main tests for HIV relies on antibodies. (Don't ask me why this is reliable)
These rapidly mutating viruses evade the human immune system enough that they become chronic, despite an immune response. For this same reason, immunization has a low success rate.
The good news is that a rapidly mutating virus produces a huge number of non-viable virus particles. Because of this, the virus is often vulnerable to chemotherapy which targets non-variable properties, assuming the chemo is delivered early. (Like reverse transcriptase in HIV.)
I'd really like to see more antibody tests for Chlamydia. Maybe they could be offered by a religious group. I think that pathogen is a lot more common than people seem to think, and it's just now becoming clear that it is as big a risk factor for heart disease as smoking.
"I like drinking with economists, because they're funny."
The even get bawdy and ribald enough to make the gossip pages.
spencer, lannychiu: Exactly. Find a cheap, safe cure for cancer, and suddenly something else is going to become the "leading cause of death," subject of public service announcements and anxious articles in the newspapers. No one seems to realize that everyone is going to die of something or other.
spencer, lannychiu, and Michelle are all absolutely right. In addition to something else becoming the leading cause of death, another phenomenon Ewald ignores is the capacity of humans to habituate to any circumstance.
In the limit, even if all causes of death were eliminated (!), there would be a hue and cry for a war on the massive threat posed to mankind by something like athlete's foot, or something else that we now view as trivial.
People jump off the Golden Gate Bridge because they can't keep up the payments on their Porsches, while people in the Third World are thrilled to obtain a second chicken. It's all about the living standard to which they've habituated, and to their expectations.
When I go drinking with economists, on the other hand, they start ranting about how the rest of the world treats them.
There's a reason for that. Economists generally hold the formula for maximizing economic growth (free trade, minimal redistribution, minimal gov't intervention, etc.), just as generally doctors hold the formula for maximizing health (eat right, exercise, etc.).
However, when economists advocate their position, they're essentially stating a position that will force *everyone* to adapt. You can opt out of a medical treatment without giving up the rest of your life, but you can't (practically) opt out of society's economic system without removing yourself from society itself.
Moreover, in general public policy is voiced in the language of economics. Politicians are not really allowed to say "The policies that lead to more growth will make more people less happy, even if more prosperous".
People would like the right to a say in their future. They feel obliged to cloak in their arguments in economics simply to avoid being dismissed entirely.
That's why everyone has an opinion about economics and refuse to "leave it to the experts".
There is a free rider problem here that you do not mention, and that will affect the market price of the vaccine. The problem is that I might conclude that I do not need to buy the vaccine if I think that everyone else does buy it.
An economist is someone who is good at figures but doesn't quite have the personality to be an accountant.
Jane,
1) You might want to use a 'hyperlink' for long articles; this uses the 'internet'; as an MBA, you can get a techie to explain it.
2) From various physics blogs, I've come to the conclusion that string theorists aren't really physicists. They like coming up with bizarre theories, whose untestability is a feature, not a bug. Sort of like mathematicians, minus logic and rigor.
3) It's good to hear that you don't like this sort of stuff, people talking about what they really dont' understand. Of course, you are now legally required to have your MBA surgically removed:) Don't worry, the doctors say that it won't hurt a bit, unless the surgeon slips and cuts him/herself.
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