PM WSDC 2021 Semi-Final (Canada vs Singapore), 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, firstly 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 otherwise wouldn’t have been developed and my third point will be about misinformation from pharma companies.
3 points of setup in this debate
- Firstly, by ‘nationalize’, 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, that nationalized space agencies such as 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 publicize what the government is researching and make regular reports on things like how the government is allocating funds, which means that our nationalized company would be very transparent.
Arg #1 Accessibility of Drugs
Characterization: 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 (Research and Development)
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 3 reasons then as to why private pharma companies are problematic:
- There’s little competition because oftentimes these firms operate in different fields even if there are multiple firms in the industry.
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 and say ‘COVID’ to this but most diseases aren’t as widespread as COVID and not every company is starting at the same time. Once a company has gotten the opportunity to entrench itself, it is much harder in the future for competition to rise up.
This is why insulin is almost exclusively produced by Nova in the US and why epinephrine is monopolized by Epipen. The reason as to why governments are better is because the government might be a monopoly but different segments of drug research can share technology in between them.
So, that looks like STEM cell research for one disease being cross applied to Cancer, whereas in the opposition’s world that would be two different firms. 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.
- You need Intellectual Property Protections like Patents to incentivize production.
This is why the 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, and since there is no competition oftentimes it becomes extremely unaffordable.
This is why Insulin is $10,000 for a month’s supply in the US, but it’s barely above production costs in Canada. It’s because, in the US, private firms and their patents make it such that there is 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.
The governments are made to seem like tyrants in these cases and 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.
- Pharmaceutical goods are inelastic, and 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.
And since companies are profit-maximizing, 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. This is the case because they have a lot of other avenues of funding for instance your taxes, whereas companies don’t have the same thing.
If they don’t get as much profit as the money they put in, it places 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’s 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 an electoral advantage?
Answer: So, firstly I think that many drugs can be developed within a four-year term (Ex: COVID Drugs)
But secondly, if you gain a significant amount of progress in one particular drug, we think even if your successors are able to continue that research, you’ll still get a lot of clouts, especially through the reports we mentioned in our model.
Arg #2 Niche Drugs
Premise: 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 may 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’ll not get recurring customers or being unlikely to develop cures for diseases that primarily affect poor people such as mesotheliomas or asbestosis.
The comparative then is:
- The government has a large voter base that cares about people such as terminal patients. People with parents and family members that suffer from these diseases and whom they want cures from. The government cares about people’s emotions more than companies do.
- 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 companies as a shareholder to develop particular forms of drugs. But, they have a vote and can pressure the government to innovate in certain fields.
- Even in the cases where these niche drugs are produced, they are marketed at insanely high prices like a hundred thousand dollars to justify the huge R&D costs of only selling to a small market. You’re unable to diffuse the costs.
However, governments have a huge market share across various 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 very niche disease.
These people matter too, even if their disease isn’t experienced by a large portion of the population, you still deserve to have treatment.
Photo by Pixabay from Pexels.
Arg #3 Misinformation by Companies
3 parts to this argument:
- 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 mechanism for investigative journalism into the government.
- 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 gives 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. This is because the state has to do things like pay for treatment and hospitals, therefore it’s more likely to invest in cures.
Companies want to get you hooked on a drug. This is why drug companies such as 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 CEO’s. On the other hand, the state has to clean up the mess when people take time off work when they get addicted 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.
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