Table of Contents
Macau Online WSDC 2021 Semi-Final (Canada vs Singapore)
- Motion: THW nationalise the research, development, and distribution of pharmaceuticals
- Infoslide: To nationalise means to transfer from private or regional ownership and control to state/government ownership and control.
- Proposition: Canada
- Opposition: Singapore
- Result: Prop wins on a 5-2 split
Here’s the video: Macau Online WSDC 2021 Semifinals (Singapore vs Canada)
This debate is transcripted by Jiansheng Zhang and Daiwik Dhar for the Debating 404 project.
Proposition 1st Speaker: Gaby Lin
Big Pharma takes advantage of the desperation of the sick and dying to misinform people, to neglect them, and to make them pay exorbitant prices for drugs. On proposition, we say, it’s time to end their tyranny.
In this speech, first I’ll model this debate, then I’ll talk about why we get more accessibility for treatments. Secondly, I’ll talk about why we get more drugs that wouldn’t otherwise be developed. And my third point will be about misinformation from pharma companies.
Three points of setup in this debate:
Firstly, by “nationalise”, we would buy back companies and compensate the shareholders of those companies. Now, the federal government owns these companies.
Secondly, these national pharma companies would have the best scientists, doctors, and business people that we can hire in the same way nationalised space agencies like NASA attract the brightest scientists of that country. We might hire people from the old pharma industry; we might attract new talent. But the point is that we have good people working for us.
Thirdly, we would publicise what the government is researching and make regular reports on how, for example, the government is allocating funds, which means that our nationalised company would be very transparent.
Argument 1: Accessibility of drugs
The characterisation here is that private pharma companies are natural oligopolies with a few large players. The structural reason for this is that there are very high fixed costs of technology. For instance, if you’re studying STEM Cells, you need very expensive technology to do that. But also there are high costs to speculative R&D. So, many firms get weeded out before they can even enter the industry because they aren’t able to establish a foothold and become profitable.
There are three reasons, then, why private pharma companies are problematic:
Firstly, there’s little competition because oftentimes these firms operate in different fields, even if there are multiple firms in the industry. And this is because there is a first-mover advantage in the pharma industry. So once you start establishing a drug, everyone flocks to you and it’s harder for future firms to come in. The opposition might respond to this with COVID. Most diseases aren’t as widespread as COVID, and not every company is starting at the same time. Once one company has gotten the opportunity to entrench itself, it is much harder in the future. So this is why insulin is almost exclusively produced by Novo in the States and why epinephrine is monopolised by EpiPen.
The reason that governments are better is that the government might be similarly a monopoly, but different segments of drug research can share technology between them. So, that looks like how research for one disease, like STEM cells, can be cross-applied to cancer, whereas in the opposition’s world that would be two different firms. Or if you’re doing mRNA research for COVID, that can then be applied to other vaccines in the future that would otherwise be developed by a different firm. Therefore, we allow technology sharing that improves the efficiency of development.
Secondly, you need IP protection like patents to incentivise production. This is why Opposition can’t just say they’ll have price caps. These are impossible since then firms would just stop producing drugs. Prices are driven up by patented technology. Since there is no competition, oftentimes it becomes extremely unaffordable. This is why Insulin is $10,000 for a month’s supply in the United States, but it’s barely above production costs in Canada. It’s because, in the US, private firms and their patents make it so that there is largely only one seller and they can jack up prices however they want.
On the flip side, governments are held accountable by voters. There’s a huge backlash if people die or if they’re forced into having to pay exorbitant amounts of money for life-saving treatments. Governments are made to seem like tyrants in these cases. Even if Big Pharma is seen as the same, they don’t really care because all they want is profit, whereas governments care about their perception.
Thirdly, pharmaceutical goods are inelastic. What we mean by that is that people are desperate if they have something like cancer, so they will buy these drugs no matter what the cost is. Since companies are profit-maximising, it is very easy to price gouge as much as you want because people need those drugs to save their lives.
The government, on the other hand, is not profit-driven. They can have lower prices, and they can suffer losses. That is because they have a lot of other avenues of funding, for instance, tax revenue, whereas companies don’t have the same thing. If they don’t get as much profit as the money they put in, that is an existential threat to the survival of the company, which means there’s a far greater incentive to price gouge.
The impact of this point is that it is super important for people to have access to life-saving medication. It’s not enough for drugs to exist. You need to access these drugs without having to forgo paying your rent, without having to go into debt, or without having to not seek treatment in the first place because you need to pay for your kid’s schooling instead.
POI: What is the incentive for a government to engage in long-term research if it’s their competitor in the future which is able to gain from the electoral advantage?
Answer: Firstly, many drugs can be developed within a four-year term, see the development of COVID drugs. But also, if you gain a significant amount of progress in one particular drug, even if your successors are able to continue that research, you’ll still get a lot of clouts, especially through the reports that we mentioned in our model.
Argument 2: More niche drugs
The premise here is that private corporations have no incentive to research drugs that won’t be profitable because they want to get as much money as possible. So even if the return might be high, you are still unlikely to take these risks since there’s like a 2% chance of that drug being successful but now you’re $10 billion in the hole. This looks like not developing drugs for terminal illnesses when you know that you won’t get recurring customers, or being unlikely to develop cures for diseases that primarily affect poor people such as mesothelioma or asbestosis.
The comparative then is, firstly, the government has a large voter base that cares about people, such as terminal patients. People with parents and family members who suffer from these illnesses and whom they want cures from. The government cares about people’s emotions more than companies do.
Secondly, for groups like poor people, their political power exceeds their economic power. So they might not have enough money to buy drugs or to pressure a company as a shareholder to develop particular forms of drugs. But they have a vote and can pressure the government to innovate in certain fields.
Thirdly, even in the cases where these niche drugs are produced, they are marketed at insanely high prices like 100,000 dollars to justify the huge R&D costs when you’re only selling to a small market that you can’t diffuse the cost in. However, governments have a huge market share across different fields. So, maybe they develop a drug for a disease that is very common and so they can take the profits from that to offset the costs of investing in a niche disease.
These people matter too. Even if your disease isn’t experienced by a large portion of the population, you still deserve to have treatment.
Argument 3: Misinformation by companies
Three parts to this argument:
Firstly, private companies have an incentive to cover up concerns about their drugs, i.e that drug being dangerous. The government, on the other hand, has greater scrutiny on them as per our model. Companies on the other hand can say their information is protected because it’s Intellectual Property. On the flip side, there is a democratic expectation for investigative journalism into the government.
Secondly, companies have an incentive to manage people’s symptoms instead of actually curing their diseases to keep you coming back. This is why they want you to be on insulin where you need to get a weekly shot instead of actually developing a cure because then you’re one and done. You aren’t a money source for them anymore. That’s why the new Alzheimer’s drug is $50,000 to slow the spread of the disease and give people false hope instead of actually curing it. The state is better here because it loses money when people keep being sick — while pharma companies gain money — because the state has to do things like pay for treatment and hospitals. Therefore, it’s more likely to invest in cures.
Thirdly, on overprescription. Companies want to get you hooked on a drug. This is why drug companies like Purdue Pharma started the Opioid epidemic that claimed thousands of lives, where pharma companies took doctors out for lunches and ski vacations and put out ads that marketed opioids. People lost their life savings to line the pockets of CEOs. On the other hand, the state has to clean up the mess when people take time off work, when they get addicted, and when things like underground crime rings pop up. Therefore, they don’t have an incentive to overprescribe in the same way.
It is time to topple Big Pharma’s tyranny over our health. I’m very proud to propose.
Opposition 1st Speaker: Tajei Puthucheary
Team Proposition gives us lots of reasons why certain private markets in the status quo are problematic. They do not prove why nationalisation specifically is the only way to solve all of these problems.
How do we solve these problems on Opposition? First, we would not nationalise the research, development, and distribution of pharmaceuticals. Instead, we would use the immense political and financial capital that Proposition consumes to keep the cost of drugs affordable. Governments have a structural incentive to do so because health care is an important voting issue by the concession of First Prop, and voters already support regulation on big pharma companies.
We specifically support three mechanisms:
First, we regulate against monopolistic practices, for instance, price gouging or misleading information from companies about addictive drugs like opioids. They say this is not possible because the company is not profitable, and in the same breath they say companies are already making excess supernormal profits. So even if we keep this price down, companies can still be profitable because the profit they are making in the status quo is excessive.
Second, we will subsidise companies to produce unprofitable drugs, such as treatments for rare diseases or those that afflict the poor. This deals specifically with their second argument because we incentivise companies to do this on our side as well.
Finally, if for whatever reason drug prices continue to remain high, we can apply a toolkit of measures to keep healthcare affordable. This includes means-tested subsidies for consumers or universal healthcare insurance.
We do not have to defend what First Prop calls a comparative of extortion or misinformation. In countries where healthcare is the cheapest, for instance, Norway or Sweden, the model is not one of nationalisation; it is our model of regulation. They have to prove why nationalisation is the only viable medal to achieve their ends.
We have three arguments: first, that Proposition suffocates innovation; second, that Proposition aggravates global inequality; finally, that Proposition sets a dangerous precedent for other life-saving industries. Before that, let’s take a look at the case Proposition presents.
They first say it is important to have accessible drugs. I’ve given you numerous alternative policies by which we can guarantee this on our side of the house. But even if you don’t believe that, let’s look at the logic of their arguments.
They first say there are high barriers to entry in the big pharma sector. That may be true, but companies can overcome these high barriers to entry by cross-subsidising from other firms. For example, GSK was originally a milk formula company. It overcame the high barriers to entry in big pharma by using the profits from milk formula to enter the pharma industry. Even if high barriers to entry exist, they are not insurmountable.
Second, they say that brand name is a problem. It is very hard to believe that consumers would continue to buy a subpar drug that literally affects their health and lifespan insofar as they brand-name. They have to prove why it is so important.
Next, they say technology sharing is uniquely enabled by governments. It’s not. Many of these big pharma companies already engage in lots of different sectors as there’s an incentive to do so so that you can capitalise on your advantage in one sector in order to gain an advantage in another sector by being the first mover in that industry. So technology sharing also exists on our side.
Finally, they say governments have good incentives because there’s backlash in subpar treatment by governments. That’s not true because governments can deflect blame using the exact rhetoric of the Proposition team. Governments can say this is the only method we can use because any alternative will fall prey to the evils of private industry. This is exactly what the British government does in England, where despite the fact that the NHS has month-long waiting lists for crucial surgery treatments, it avoids public scrutiny because it tells voters that this is the only option and any alternative will be even worse.
Second, they say a diversity of drugs is important. I’ve already proven why this exists on our side of the house as well. Moreover, they don’t show why governments are willing to bear this particular risk. We pointed out in a POI that if you bear this immense risk as an incumbent government, it is highly likely that the credit for that drug will go to your successor government, which is overwhelmingly likely to be from a different party or at least not the same person as you. Therefore, even if it’s true that our world is imperfect, they need to prove why governments will be any better.
Finally, they say misinformation is likely to exist. First, when it comes to things like harmful drugs, obviously you have to pass many stages of government trials like the FDA in the United States. This argument is not relevant. Second, they say consumers are dependent on your drugs. This assumes that companies can say for sure that these consumers will come back to your particular company rather than a similar drug from any other company. Insofar as that cannot be guaranteed companies cannot rely on dependents. Finally, they say the opioid epidemic is something that is unique to these particular companies. I would note that most countries have solved or avoided an opioid epidemic without resorting to this drastic policy of Proposition. They need to prove why nationalisation is the only method to solve this.
So for all of those reasons, the arguments that Proposition gives to us are out.
Argument 1: Development of pharmaceuticals
The premise of this argument is that government-run firms have bad incentives in terms of their production of pharmaceuticals.
First, it’s because of government short-termism. Both sides in this debate agree that there’s high risk and high cost of investing in pharmaceuticals. The problem on their side is that if you are a government, as I mentioned before, the benefit to you from the development of that drug goes to your successor rather than you, whereas on the comparative, companies remain the same. They pass these election cycles, and therefore there’s an incentive to break into these new markets.
Second, on the specific metric of safety that Proposition tells us about, governments are actually a lot more short-termist because often these particular problems with drugs are only found out many years down the road by which time again another government is in power. Therefore, governments have incentives to fast-track the development of drugs, bypassing safety procedures so as to get short-term political benefits. In contrast, companies’ reputations don’t disappear after four years. For instance, GSK still has a bad reputation from the development of thalidomide in the 1960s because that had bad effects on pregnant women. There are therefore stronger incentives for companies to actually maintain higher standards of safety on our side of the house.
Finally, Proposition harms the development of medical technology overall. Many technologies start off non-medical, for example, the mRNA technology used in the COVID-19 vaccine was originally used in agricultural fermentation. The problem is that specific research is needed to develop the medical applications of these technologies. On their side, the moment you engage in that research, all of your technology is now seized by the government as a pharmaceutical. And there is therefore no incentive for holders of patents for these particular intermediary technologies to develop medical applications of their technologies. They will either hide these particular technologies from governments or simply not extend their medical applications. What this means is there is no innovation in terms of medical products on their side of the house. On our side, when we ensure that these individuals can continue to hold on to their patents, we, therefore, ensure there’s a continued incentive to innovate.
And moreover, when it comes to issues of cost which is the main argument that their side brought, we can heavily subsidise these firms. For that reason, the development of medical technology is better on our side.
POI: A private Alzheimer’s drug was just fast-tracked through the FDA by corporate lobbying despite being ineffective. Why should companies be able to operate without public scrutiny?
Answer: We think there are structural incentives for companies not to do that because the blowback against them is far greater than governments as I illustrated.
Argument 2: Global inequality
On their side, every country must develop and produce its own pharmaceutical products. There was shockingly little analysis in the First Proposition speech about countries that are not the United States and don’t have overwhelming first-class medical technology. This is terrible because there’s a huge disparity in terms of capital, skills and technology, meaning that Third World countries will not be able to produce any medical technology where they nationalise and no private actors exist.
Now, why won’t you be able to buy from developed countries on their side of the house? Because there’s a fear of political backlash. Governments of developed countries know that if in the future they lack a particular medical product, there will be a huge backlash against them from voters if they initially chose to sell that medical product to another country. Therefore, the incentive of governments is to hoard all of the medical supplies to themselves and not send them out, particularly because it’s usually unpopular with voters to help these particular developing nations by selling products to them.
The outcome of this, therefore, is that developing countries have no medical technology on their side. On our side, at least they can buy from the private market. Even if the cost is high, it is still better than on their side where there is no access at all.
For all of these reasons, we will not dull the cutting edge of medical technology. We are proud to oppose
Proposition 2nd Speaker: Isaac Cape
How much is a life actually worth? That is the calculation Opposition’s corporations make when they set prices that destroy people’s lives. Is it a hundred thousand dollars? Five hundred thousand dollars? Your entire life? Canada sells insulin at prices barely above the production price. But in the US where big pharma isn’t nationalised, thousands of dollars are spent by consumers constantly, and people are flying across borders to try and get access to the insulin that they can afford. It’s time to topple big pharma’s tyranny over our health.
I want to deal with three things in this speech. First of all, on their claim on regulation, and why that doesn’t actually solve all the problems they identify in the debate. Second, on innovation and access, and why our claims on quality access and development are so much more important. And third, our claim on misinformation, weighing that up against their concerns over discrimination against poorer countries.
Point of Contention 1: Regulations
First of all, in terms of their claims on regulation. This is the first section of my speech. I want to point out that this is a massive abuse of their fiat in terms of what they are looking for. You can only fiat regulations at this present precise slice of time right now, but they have overused their fiat in trying to get universal healthcare.
Because lobbying exists into the long term, there are still companies that exist that are going to try and surmount the political will that you have used at this slice of time. Because the players are still in the market — Pfizer is still there, J&J is still there — there is massive pressure to overhaul these regulations and let companies be profitable once again. That means that, into the long term, because these players are still there, you’re going to have regulations being rolled back. On our side, we take the players out of the market instantly.
And the extent to which this is an excessive abuse of government control borders on supporting our case with none of the efficiency benefits because, effectively, what they want is governments dictating what is developed in the same way that they do on our side, but they don’t want them to do it in any of the negative ways. Except for what they end up lacking then, effectively, are all of the efficiency benefits that we can claim under our first argument that doesn’t get a lot of response.
Point of Contention 2: Innovation
So then let’s deal with the clash on innovation and why is it that quality access is so much more important. They contest whether or not there are high costs, and they give the example of cross-subsidization where there was literally another business that already existed that was able to subsidise the development of the pharmaceutical industry. This does suggest that their very examples point to the fact that startup costs are incredibly high for business, given that you had to rely on literally some sort of milk business.
But the extent of their clash is effectively on short-termism. They basically push that governments are short-termist with very minimal comparative analysis, I’d like to note. We have three responses:
First, this argument is incorrect because we explicitly show where money is being spent so that voters can hold governments accountable. That suggests that you can claim the benefits of spending money on something like cancer research even as a politician now because that is being regularly released to the public so that they can see what is being invested into and what drugs are trying to be produced. So governments can still claim these benefits.
Second, there is a first mover advantage in politics which is extremely significant. If Bernie Sanders raises a concern in government, then Biden needs to begin to care about it. This is because politicians don’t want their opposition to incur all of the benefits of realising and suggesting the development of a particular drug. So there is an extremely significant incentive on the part of governments to try and realise drugs quickly and enter those into the market even if it suggests that they are in the long term. So the initial production phase and the initial investment that we can achieve are unique.
Third, there is actually an incredibly strong safety standard because you can still incur problems of blame. Let’s be quite realistic. You will still blame the government and the politician at the time who overrode certain safety regulations. Voters are not that foolish. But comparatively, companies do want to move quickly, which suggests that, at the very least, this is a wash for them in terms of this particular mechanism but not the others on short-termism. Crucially, the blowback is much more on our side where voters get incredibly angry because they can see people dying in the streets. In comparison, shareholders were behind the decision to speed up the process in the first place and to override safety regulations as Gabby’s POI identified. That suggests that shareholders stay around, so you don’t actually incur any of the profit losses. There is still an incentive, then, to be bad and to act in negative ways.
Our deadlock breaker is that technology sharing between branches of a company naturally leads to breakthroughs. These are things like mRNA research and research into stem cells which can be cross-applied but are otherwise being hidden by companies and preventing full innovation. But second, even if we accept their claim that drugs are being developed — even drugs that are important to people’s terminal illnesses — what is crucial is that ours are made much much cheaper because they cannot set them at the same prices when companies still have profits that they need to accrue. First mover advantage may develop in only a limited set of circumstances, whereas governments are likely to invest in all of these circumstances.Governments, critically then, make it cheaper: one, because political pressure is unique; but second, because there’s no pressure to inflate.
I want to emphasise how important our arguments here were, in particular, our first, that price gouging is made possible because demand is constant. Given this relatively uncompetitive market, IP is necessary to protect information since you are scared to research into any other things, which means companies fundamentally aren’t developing.
But two additional things to add. One, there is a fiduciary responsibility which prevents companies from being able to lease out their information and invest into other areas that might be profitable. But second, patenting the process means that it is renewed to prevent further information from being determined, and this is even worse with the realisation and the development of things like patent trolls who try and hoard the market.
Why is this essential? These are things that are beneficial to people’s lives, whether they live or they die, whether they can live a pain-free life or suffer interminably. This suggests that cheap drugs and access to quality drugs are incredibly important, and we can only get that on our side when these needed drugs are being invested into in a way that is unique to our world.
POI: You say that voters judge politicians merely by where they spend money, and therefore there’s no risk from the high risks of innovation. Why, then, do politicians have an incentive to spend this money well rather than just waste it to get political benefits?
Answer: What? They spend the money, but then there are scientists who are using it, going through all of the research and all of the development. They don’t get to decide whether or not it’s wasted. There are people whose lives and careers are all based around making these quality drugs. We think they’ll do it well.
Point of Contention 3: Discrimination vs misinformation
Onto the third theme on discrimination and these poor countries. A few things to note. First of all, at the very least, Novo and other big companies simply don’t sell to you anyways if you are poor. Second, there are huge amounts of political alliances that exist which can accommodate for this, and this is why there is the removal of IP during coronavirus. Crucially, and this is where we flip their argument, this is true on both sides of the alliances, so citizens domestically as well as partners in terms of foreign relations pressure governments to provide them with access.
Companies, on the other hand, are insulated by fiduciary duty, which means that they cannot lease out drugs for people that are incredibly important because it cuts into their profits. But lastly, hoarding doesn’t actually understand the process of how development works. Once you have the production line and the factories, it is very easy to kickstart this. So it means that hoarding actually isn’t a very big problem. You can make these drugs very very quickly.
So then, our claim is on misinformation, and this gets a very minimal response. Crucially, this is about things like the opioid crisis being developed because there is an incentive to have drugs that are used over and over again and drugs that are addictive to people because there is a profit incentive that none of their regulations actually fix. What that means is that companies are trying to over-prescribe drugs to individuals, ruining their lives, making them dependent on opioids and painkillers that destroy them and covering it up in the process. This is why prescriptions for things like ADHD which have been heavily marketed in the United States have gone up 200%. This is why mental illnesses are being advertised to women, who are being told by companies that they have a low sex drive and therefore they need to seek out medicine that isn’t actually proven. This all suggests that misinformation is being used at the expense to harm the consumer in a way that we exclusively can override.
On that basis, I’m proud to propose.
Opposition 2nd Speaker: Harith Menon
Proposition’s case appears to be very US-centric because that seems to be the only example they’re interested in using when they say we can’t have regulation. I’m going to explain why we can have regulation now. They say we can’t have regulation because lobbying is going to exist into the long term. Two responses:
One, to the extent that this is true, they will probably have re-privatization as well insofar as there are wealthy billionaires who want to have these big pharma firms again if they are as profitable as they say. So if this is true, then this knife’s their world as well.
Second, they were not listening to our policy. Our specific policies are actually desirable for these companies, for instance, subsidising specific types of drugs that we want to see companies manufacture more and making sure that they’re not too expensive by subsidising consumers. These are policies we think companies will want. That’s why our regulations will work. We need to get a response. It’s too late in Third Proposition.
Even then, I’m going to ask two broad questions: first, on price; second, on innovation.
Point of Contention 1: Price
Let’s deal with price. Here I’m going to engage in their best case — let’s say it’s true we have no regulations. Here’s why we win: if we can prove that competition still exists to a sufficient degree, then all the arguments and higher prices in the world fall.
Number one, they say prices aren’t going to be high because of technology sharing. First, this is not unique to governments because, often, big pharma firms still invest in different types of technology insofar as they invest in different types of things. For instance, they manufacture completely different types of medicine and invest in things like surgery as well. Given how large these firms are by their own characterization, technology sharing still exists.
But second, my first speaker actually flips this because he tells you that under our side of the house, we have more new technology that might initially be made for non-medical purposes but over time gets repurposed for this. We give you the example of how mRNA actually became something that was used by firms for medical reasons. We had no response to this, and this is important because this means under our side of the house we have more of these types of technologies, more competition and cheaper drugs.
Crucially, here’s the weight-up. Here’s why I’m willing to lose on that ground. Let’s say you have slightly higher prices in our world. The reason this is a justified weight-up is that the opportunity cost on that side of the house is immense. There are many industries that only have government funding in the status quo and have no private alternatives, for instance, roads and education. These are usually the types of things that governments uniquely invest in. The problem is that, under the side of the house, when they choose to take government funding away from these types of things and put them into pharma companies, they conceive that the way is going to be loss-making. This means that even if prices are higher under our side of the house, at least people still have these services available to them. On their side of the house, the government stops spending on things that only the government spends on, which means people have few of these things that have no private alternatives. So that’s the weigh-up in this debate: even if we have higher prices, we’re willing to bite that bullet.
But again, they completely dropped all of our analysis on why governments are structurally unlikely to want to spend money in a way that is efficient. They say that if prices are very high and people are dying, there’s going to be massive public backlash. That might be true. The problem is that they vastly underestimate the ability of political parties to sell narratives to people. I suspect that their rhetoric will look a lot like what my first speaker told you. They will say the alternative to this is big pharma companies, which are just even worse. We heard no response to this claim. Given that governments can do that, I suspect there’s no reason for these governments to be efficient.
But secondly and more importantly, we didn’t get structural responses to our incentive analysis on how governments work. Often they don’t have an incentive to do things like lowering departmental budgets because this means you’re conceding that your particular department isn’t as good and you don’t want to have a high budget. So we need to get a response to this. All in all, I’ve proven why even if we lose on price, that’s something we’re willing to weigh up.
Point of Contention 2: Innovation
Next, on innovation. I want to point out the devastating concession they make here when they say voters are just going to judge you just by how you spend money. That’s our point. That’s exactly why they’re going to be inefficient in their world, and they’re going to have higher prices and a lack of innovation. That’s a massive concession by the second speaker. They can’t run away from it.
But to be clear there’s a mechanism in the first that they dropped. They said that companies want you to keep coming back so they have no incentive to develop drugs that can cure diseases. This misunderstands corporate incentives in two ways. Firstly, there’s no guarantee that, if I am a pharma firm, at the end of the day a consumer is going to keep on buying my specific drug. There’s a good chance that a consumer might shift to a different company where they can buy a different type of drug. So again, that’s out of the debate. But second of all, your profits will be giant if you succeed. Just think about it. It’s ridiculous for them to claim that firms have no incentive to solve problems like diabetes. If these are problems that we uniquely solve, just think about how much good press and how much money you would make. Honestly, that’s quite disingenuous.
But again, this is very uncomparative because this misses the point of what we told you. We told you that often research into these types of drugs takes years and years — it takes 12 to 15 years to even figure out a basic cure to stage one cancer for goodness sake. There’s no reason why governments are going to want to invest in this because their political opponents will take credit. The response we get is honestly quite laughable. They say voters are going to read reports, and in these reports, they’re going to state you know which politicians started funding this research. Voters don’t even read the news most of the time. I find it highly improbable they’re going to troll through some government database and read these reports. That’s why politicians have no incentive to invest in long-term research. This is important because it means on their side of the house there are fewer drugs in the long term and fewer cures to important diseases.
Point of Contention 3: Developing countries
Lastly, on our argument on the developing world. We argue that governments in the developing world are disadvantaged because of a lack of resources and a lack of talent, meaning that they aren’t going to have these drugs. We get a plethora of responses.
The first thing they say is that other countries are just going to sell it to them or give it to them. The reason this is not true is because of their own concession. Just think about it. If you’re a government and suddenly your people are dying because you just don’t have enough paracetamol, for instance, I suspect that’s why it’s very unlikely they’re going to export it by their own characterization of how governments work. These governments have no incentive to want to help these other countries because a massive domestic crisis would lose you political support. This is important because this means developing countries have no drugs whatsoever.
Let’s be clear. Even if we concede that private firms will still have very high prices, here’s the difference. At the very least, if there are high prices, as a developing country you can still buy less of this drug. This is still important because sometimes having a little bit of a drug is actually a massive benefit. For instance, take a look at like COVID. Even if you have just a few COVID vaccines, this is a massive benefit because it means you can vaccinate the people who need it the most, for instance, the elderly and the healthcare workers. That’s why we win on this ground.
Argument 3: Precedent for other industries
In order to innovate, companies need absolute assurance that they can continue to make a profit for two reasons. First, R&D is often hugely expensive. As we’ve already illustrated thus far, investing in specific types of products costs a lot of money, and that’s why companies are unlikely to do it unless they’re very sure they can operate in the long term. Second, pivoting to another business model is just very difficult. Think about how you have to completely get rid of all your factories if suddenly everything you’ve made is re-purposed and owned by the government. Think of the number of people you have to lay off and retrain if suddenly your industry is nationalised. This is why industries are only going to continue existing at the point where they are very sure that governments are not going to nationalise them.
What is the problem that is created in their world? On their side of the house, important industries that do things for the national good are worried that governments are going to nationalise them. That’s when they’re going to stop innovating.
POI: Given that these companies, as we characterise, are competing in different areas and therefore have IP protection, they’re going to be having an incentive to keep you addicted to drugs by overprescribing. Because they’re not competing with each other, they can guarantee their own individual slice of the market.
Answer: But the problem is that often different companies produce different types of drugs. They might have different chemical formulas, but they solve for the same thing. That’s why you have 19 different types of fever medicine in the status quo. So honestly I don’t think that misses the point.
Back to this argument. Why is this argument important? It means under their side of the house, important industries that do things like figure out how to purify water for profit are uniquely not going to continue innovating because they’re going to be incredibly worried that the government is going to nationalise them. This is what we saw in the 70s in the US when Carter nationalised an important steel industry, a lot of other industries that did very good things shut down because they were worried they would be nationalised. This is important because there are other industries in this debate that do social good. What we’ve uniquely proven at this point is that under our side of the house, we have far more of these industries than them.
For all these reasons, we will not dull the cutting edge. We are incredibly proud to oppose.
Proposition 3rd Speaker: Matthew Anzarouth
It was recently revealed through leaked internal reports that McKinsey advised Purdue Pharma to adjust their advertisement to “counter the emotional messaging” of parents who had lost their children to addiction. It was also revealed that since the early 2000s, Purdue Pharma was well aware of the human costs of the addictiveness of oxycontin; hundreds of thousands of people died in the 15 years that followed. EpiPens in the United States and many countries around the world are prohibitively expensive to the point where people with anaphylaxis allergies, like myself, often do not buy those EpiPens in the very first place.
We gave you a host of benefits, still unengaged with, about why economic markets have no incentive to cater to the poor, while democratic markets do because they have more political capital. We give you a host of reasons why governments can’t get away with crippling misinformation that claims hundreds of thousands of lives, and Opposition’s response is a magic bullet 30-second counter prop with regulation. Unfortunately, that’s not going to cut it.
I’m going to talk about two things: firstly, accessibility; and then, innovation.
I just want to first engage their third argument on innovation. They say other companies are now going to be afraid to innovate. Firstly, there’s a really weird slippery slope argument. It’s completely unclear why this is going to create such a significant chilling effect, especially given that these are vastly different markets and industries. It’s unclear why the government acting in one way in one industry translates into a fear the government will act in the exact same way in other industries.
But second, all our arguments suggest that nationalisation is a good thing. If this leads to universal national health care, we think that’s a good thing as well. So this argument ultimately is circular in the sense that it folds into the question of whether governments are better than private companies in other industries as well. This is a non-argument; it’s a contingent argument.
Clash 1: Accessibility
So first, on inaccessibility. Even if you believe that innovation is a relative wash, which it very very clearly is not by virtue of their failure to respond to the host of analyses we gave you, we won on accessibility.
We told you a variety of things. One, these are natural oligopolies with large players because there are high costs of speculative R&D, which only a few players in the market can be welcomed into. It’s not worth it for more players to come in if they can’t capture a significant enough portion of the market in order to justify those speculative costs. You need to wait for FDA approval, you should hire scientists, you’d have to do a bunch of speculative research. We told you these are inelastic goods where price gouging is possible. We told you there’s a segmentation of the market through the fear of patent violations so you’re not even researching or competing on the same thing.
Their response is regulation. I have three or four responses to regulation. Number one, we told you that if they don’t eliminate all established players from the market at once as we are doing on our side, there still remain entrenched companies with lobbying power. This means even if you implement regulations, there are still players who have an active incentive to roll back those regulations over time. See, for instance, the way in which Johnson & Johnson lobbies hundreds of millions to both Democrats and Republicans. Their regulations are not long-lasting.
The response in Second Opposition is, “If this is true, you’re just going to get re-privatization on proposition.” This is a ridiculous argument. Wealthy billionaires are no longer invested in the preservation of the pharma industry on our side of the house because they’ve transferred their wealth into other industries at the point where it’s been nationalised. So there’s no active incentive to peel back our policy, while there’s an active incentive to peel back theirs.
Thirdly, you can’t regulate the oligopoly in the way First Opposition says through antitrust. As Second Opposition concedes in their argument, the only reason you actually have an incentive to engage in this market is if there are high returns, given just how speculative and uncertain this research and development is. So if you regulate against oligopolies and create more competitive markets, you have no markets whatsoever. There are no players who have an incentive to actually enter the pharmaceutical industry because the profits aren’t high enough.
Fourthly, if governments on their side can subsidise the production of unprofitable drugs as per the third point of their counterprop, then our government can produce them as well as for the symmetric political capital that exists in this debate. Therefore, if their counter model is acceptable, innovation might wash in some respect — although I don’t think it does — in which case there are three remaining deadlock breakers, three reasons to vote for the proposition.
Number one, it’s unclear whether their side will be sufficient in their subsidies to create a monetary incentive to produce these drugs. Crucially, you don’t just need to make it affordable to produce these drugs, you have to make it worth the opportunity cost of all the other drugs these pharmaceutical companies could possibly be producing.
Number two, because we win on pricing. Clearly, cross-subsidization within a government that has huge pools of taxes is far larger than cross-subsidization within a company, especially if you believe that there are many different companies, which suggests they’re splitting the profits and these companies are relatively smaller, which is a precondition for you to believe any of their benefits on competition. As such, cross-subsidization under government is far bigger. That’s why you can effectively limit prices on our side.
Thirdly, on misinformation. Even if good innovation is symmetric, we prevent the worst forms of misinformation and the worst forms of creating drugs that actively claim lives. The first thing they told you here is that you can sue them, but Purdue Pharma probably knew 20 years ago that at some point it would come back to them. But even with the lawsuit that happened, they came out richer for it for the 15 years of profits they made off the suffering of hundreds of thousands of people. So even if you get regulations, that counter the massive profit incentives that these companies have.
I’ll engage with the analysis on backlash. They say there’s going to be backlash, but consumers don’t dictate what pharmaceutical companies do, even if consumers are angry. Companies have a legal fiduciary obligation to their shareholders, which is a reason why they have an active incentive to do this kind of thing to misinform and cover up information even if there’s going to be public backlash. In contrast, public backlash under a government can literally vote you out and cripple your government. Zero response from the opposition.
Their final argument is you’re not going to sell to other countries. A couple of things I want to point out. Number one, governments can prohibit on either side of the house information sharing across countries due to national security reasons. Vaccine hoarding can happen anyway as it already has. If it’s true that governments hold power over companies in all the good ways that they want them to, presumably it’s also that the government holds power over the companies in all the bad ways that they don’t want them to.
But second, governments actually do have an incentive to share these drugs for diplomatic reasons, for example, to expand influence in Africa, gain more alliances, and for the US to out-compete China and vice versa. Oftentimes, these richer countries will have an over surplus of drugs. At the very least, now other countries in poor states can research those drugs when in the status quo due to the fear of patent violations, an argument that still has gone unengaged with. By contrast, private companies have no incentive to go in unless they make it prohibitively expensive.
POI: On the one hand, you say governments have an incentive to send their drugs overseas. On the other hand, you say, “If there’s a potential risk of a shortage, then you’re going to have massive political backlash and people are going to be voted out.” What are governments going to do and why?
Answer: I literally just preempted this in two ways. One, there often is a surplus of drugs so you can do that anyway. But second, if that’s not true the biggest delta in this debate is now that other countries can research those drugs when in the status quo they can’t do the fear of patent violations. I also washed this out in a third way by explaining why private companies don’t have an incentive to go in so I rebutted this argument on all accounts.
Clash 2: Innovation
Now their argument is that governments are short-termist. This is the second thing they told you. We solve this by publishing transparently where the government is spending their money. So even if, in theory, long-term production would only pay off after an election cycle, people know in the short term that you are neglecting to research critical medicine. This Has huge political ramifications because it’s easy to paint the ruling party as greedy and self-interested while people are dying on their watch. They say but you could just say “the alternative is big pharma, so stop complaining.” That makes no sense. In our world, clearly, there’s a new paradigm where the government is perceived as responsible for this. It’s not going to be true that they’re able to advocate responsibility in that way.
Second, we told you in our second speech that pharmaceuticals are likely to be high on the list of voting issues and priorities in elections, given how dire the situation is and the need for drugs. Importantly, if one party or politician raises the issue in an election of certain drugs and certain medicines being neglected, there is a competitive political atmosphere where every other political party has an incentive to co-opt that messaging. That is why in Canada, you have vials of insulin that are sold at barely above production costs, while in the US it’s at hundreds and hundreds of dollars. This argument got no response; it’s about the race to the top that we get in politics by virtue of wanting to co-opt whatever Bernie Sanders is saying if you are Biden.
Finally, I just want to point out at the end of this speech that we have a host of arguments that still have not been engaged with: that private markets have no incentive to research drugs that are not profitable. This means no drugs for terminal illnesses that are not recurring customers. It means no drugs that affect poor people like asbestos and mesothelioma.
They never engaged our comparatives here, which are twofold: one, that poor people have lots of political capital because they’re a numerous population but little economic capital, so they can hold the government to account more than they can hold free markets to account. Secondly because of sympathy. In an economic market, the only reason to research for old people is how much money old people have. On our side, you also have to account for how their children and grandchildren are going to vote in elections when they are dying due to the government’s failure. That’s why we get far better accountability, far better innovation, and far better accessibility. On all those grounds, we’re winning this debate.
Opposition 3rd Speaker: Caleb Loh
There are two reasons why Side Proposition has already lost this debate.
The first problem with the proposition case is that they point to issues with the private sector without telling us why nationalisation necessarily is the way to solve them. If there are issues with cost, we can easily subsidise this. We don’t need to marry ourselves to any model; we can support mean tested subsidies for universal healthcare. We don’t need to say that any one of them is better, but then they simply mitigate the worst of the harms that they talk about.
If they want to tell you about misinformation, we can ban this information. When their side talks to you about oxytocin being advertised to people, we actually ban the advertisement of many of these drugs to people right now. Only two countries actually allow this direct advertisement on both sides of the house. Therefore, most of those issues are not in the debate because the excesses of the private sector can be cut out. Their case is exceptionally US-centric in this regard because they only talk about problems that exist right there when they place their case in that particular context when many other countries have already imposed those regulations.
They cannot simply say that this is an abuse of fear. On their side, they shut down a whole industry. They take away the assets of millions of people and compensate them. If they are able to do that, we can on our side impose a ban on lobbying, get rid of Citizens United and ensure that we’re at least able to impose some of the regulations that we have. Regulations implemented on our side actually take out the majority of their case, and their case falls because all of them have to do with the excesses of the private sector rather than the positive impact of nationalisation.
But secondly, we also won because our second speaker’s argument about how it sets a precedent for nationalisation in other sectors got very weak engagement. They simply say, “Why can’t we just nationalise everything?” This was their only response other than calling it a slippery slope argument. But if their side nationalises everything, then there is simply less innovation, which is what we proved to you in that second speaker’s argument that was not responded to. We’ve proven an even larger impact beyond the pharmaceutical industry that was not responded to.
So for these two reasons we already win. But I’m going to move further. Let’s talk about the two issues in this debate: firstly, the cost of pharmaceuticals; secondly, the volume and diversity that we have.
Clash 1: Cost
Firstly, on cost. They say governments have an incentive to keep the cost low. We agreed. That’s why we have all of the subsidies that we’ve talked to you about since First. Therefore, we already win. But let’s take them at their best. Let’s say we don’t have any of these policies. Let’s say we are really debating only in the United States and the United States only. Why is it that we are still better? This is because, under a monopoly, there is an incentive that that monopoly does not exist in the first place.
There is a hinge on the idea of price gouging or that there’s only one company that is able to control the prices and ensure they’re able to set it for everybody. This is unlikely for three reasons. Firstly, there are many ways to enter the market. For example, if you use food agriculture or technology, oftentimes you can transplant yourself into the pharmaceutical industry. We told you this since First; there was no response. Secondly, we told you drugs were extremely substitutable. For instance, there might be a monopoly over a company producing panadol, but there are other medicines that can help to cure headaches and fever which their site simply does not engage with this. This we told you in a Second there was absolutely no response. Finally, and here’s where I add a new layer, in fact, many medical procedures are not patented which means that you can reverse engineer those things and ensure that you’re able to develop those drugs as well. For these three reasons, it’s highly unlikely that their side’s idea of a huge monopoly able to control prices exists, which means that there is a huge amount of competition to reduce those drug prices.
In fact, we tell you that the costs are much higher in their world because of how developing countries are exceptionally hurt. Now, they can buy from MNCs on our side of the house. Do not let their side get away with saying that we have no comparative on this issue. The comparative on our side is one where MNCs are likely to sell to these poorer countries because of the huge number of people there who don’t have access to those drugs. Being able to capture that particular market means that you have a first mover advantage, particularly because MNCs often produce their facilities in those countries. For example, many of Pfizer’s production facilities are in India, and therefore it’s probably quite cheap to sell it there.
Meanwhile, on their side, the developed world actually has no incentive to sell. What are their responses? “The private sector won’t sell to the developing world.” This is untrue because if you don’t do so, then other companies will. But moreover, they tell us the developed world has an incentive to sell to the developing world because of political alliances. If this were really true, then this is obnoxious because they want diplomatic reasons. They want a huge amount of competition between China and the US to provide those things, which at the end of the day simply means that those countries are beholden to a new Cold War. In between a company and a country being able to control your resources, the latter is far more dangerous. But moreover, developed countries are quite averse to helping the developing poor because it’s seen as unnaturalistic and unpatriotic. We are putting another country’s interests first.
Therefore, at the end of this first clash, I’ve proven that the cost is far higher on their side of the house if not just in the developed country, but in the developing country as well. But let’s take them at their best. Let’s say their side actually has higher costs, and that on our side we do have things like price gouging. This is not the most important issue in this debate. Even if there’s a higher marginal cost of many of these medicines on our side of the house, under their side this comes at a huge cost because there’s a huge opportunity cost of other services where you have to buy over all these companies and attract all of the best scientists. On their side, they have to engage with the idea of worse transport services, worse healthcare services and worse education services, which they have not chosen to do so. So, if we are able to prove to you that on our side we at least have a greater breadth of medicines and a greater number and volume of drugs, then we already win this clash because, on their side, the harms are even worse.
Clash 2: Volume and diversity
This leads me onto my second argument on the idea of the volume of drugs. Notice if we prove this, we win this debate because this is a more important issue than cost alone. We have a greater incentive on our side for companies to build these drugs. This is because companies, in fact, have to attract a larger number of people. It is very unlikely, as they claim, that they will simply overprescribe or produce drugs that create a sense of reliance because you can move to another company rather than eternally rely on that particular one. The problem of the opioid epidemic as our team points out is something that’s very specific to the US rather than any other country because there’s simply a poor regulation of doctors rather than the regulation of those companies.
On the comparative, governments are very unlikely to want to develop because all the things are really long-term. Covid is an anomaly here because there was one year of an extremely urgent need for the vaccine. But in most other diseases, you don’t see the number of short-term funds that are actually needed. Governments are not rewarded for big advances in these particular fields because your research oftentimes has to be kept secret to prevent the private sector from making use of it. Therefore in the government area, there’s actually a last mover’s advantage because whoever is able to be elected at the point at which the drug is being produced is the one that’s able to take away that electoral advantage.
If the entire argument is based on the idea of voters reading these reports and seeing how the drug is being developed over time, then in fact there’s a negative incentive. Governments are likely to spend money on areas to show that they are making this progress without actually making it in any way substantial. Simply saying that they have the best scientists on their side cannot be the silver bullet of their case because oftentimes these scientists are also beholden to the political interests that are being made.
Therefore, on our side, there’s a greater incentive for a huge number of drugs to be made. At least, companies have an incentive to be able to get patents and make profits. Their mechanism of shareholders in fact works for us because these shareholders tend to remain for a long term and ensure that those drugs are produced.
But moreover, on ability. Governments are far worse at being able to develop these drugs because they have so many other competing priorities. Their new evolution in third speakers tells us, “But governments now have the ability to produce this because now they don’t have to compete with patent trolls.” The thing is, many of these governments aren’t able to do this competition because of the scant resources that they already have. Look at Cuba, how it’s trying to develop a Covid vaccine and failing under their model. On the comparative on our side, it is far easier for companies to develop. At the end of the day, many of them have non-medical origins — something we told you since our first speaker that had absolutely no response.
Therefore, on our side, we have better innovation and better costs. We will not dull the cutting edge. We are proud to oppose.