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Sadly, on at least one key front, the indications are not good. That front is the development of vaccines against virulent biological weapons of mass destruction like anthrax and smallpox. Thanks to acts last year, and proposals currently pending before Congress and the administration, government policy is undermining the profit motive in medical research, discouraging the private sector from bringing its vast resources and expertise to bear. The government's first wrong step came when it decided it would pay only commodity prices for doses of the smallpox vaccine, leaving us with an insufficient supply on hand for all our citizens. Since the government has set itself up as the largest purchaser and distributor of vaccine in the country, low prices send a market signal that vaccine production is a low national priority. It further compounded this error when it threatened to seize the patents for Cipro, the anti-anthrax drug, forcing its manufacturer to agree to sell millions of tablets to the government at a loss. Both actions displayed a shocking misunderstanding of how profit causes the private sector to create and distribute the amazing new drugs we have come to expect. Patents protect investments in risky and uncertain ventures by giving creators of innovative products a 20-year monopoly on their sale. Threats like the one levied against Bayer send chills up the spines of the executives who make investment decisions, because they can no longer be sure that their property will be protected from seizure by private or government competitors. It's the same effect we see in third-world countries which have little to no investment because they lack the rule of law — when property rights are insecure, people hoard what they have rather than plan for tomorrow. The question of what role markets will play in the war on bioterrorism was reiterated recently when Rockefeller University Professor Vincent Fischetti revealed new, patented technologies for detecting and killing anthrax. These technologies could also be used to fight other bacteria, like the one that causes staph infections. Press reports said Fischetti and his colleagues are currently talking with several unnamed pharmaceutical companies to develop vaccines and other uses. All of these markets would be worth billions of dollars, providing a clear financial incentive to improve public health — if the government lets the market work. Unfortunately, the signs do not look good. Current proposals to change Medicaid and Medicare would discourage development of products like these. Prices for new drugs would be capped, and new procedures to limit which drugs qualify for the government-approved drug list pharmacies and doctors must use would add years to the time until patients could benefit. In the meantime, tens of thousand of people die each year from staph-related infections in nursing homes and hospitals. And who knows what the future will bring with biological warfare? The much-touted McCain-Schumer bill, which, if passed, would make it easier for generic drug companies to challenge the validity of new drug patents, will also inhibit private-sector research and development. Pharmaceutical firms and venture capitalists will be less likely to reap the returns on their investments under this bill because of the reduced patent life and increased litigation costs. If this bill becomes law, only some of the valuable uses from work like Fischetti's will be funded and be used to improve public health. Finally, there are those in Congress who would tax drug companies for any revenues they make by investing in Fischetti's work because a small portion of his basic research over the past three decades was funded by a government agency. Rather than looking at the necessity of the private investment or its multiplier effect in terms of jobs, scientific knowledge and tax receipts, critics such as Congressman Bernie Sanders want to allow the government the right to seize any patent or impose price controls on drugs that can be traced to any government funding. When similar regulations were enforced in the past, it simply led private companies and venture capitalists to avoid partnering with government labs like the plagues Fischetti seeks to kill. All these proposals are gathering steam in the waning days of this Congress. They continue to be pushed by Republicans and Democrats alike precisely because they — and many Americans — believe it is immoral to mix medicine into the marketplace. But Fischetti's pathbreaking work, its private sector early stage funding sources, its reliance on patents to protect intellectual property, and its use of venture capitalists and drug companies to invest in the research and development required to determine if the work has widespread clinical (and commercial) value is the way in which the vast majority medical innovations are developed. In fact, undermining the profit motive in medical research will slowly reduce medical innovation to rubble and expose America to the threat of bioterrorism in the years of ahead. That would be immoral indeed. — Robert M. Goldberg is a senior fellow at the Manhattan Institute. |
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ast week's increase in the terrorist threat status level reminded Americans
that, one year after 9/11, we remain in danger. No one can doubt that
we are now better prepared to combat and prevent most terrorist acts —
car bombings, hijackings, and the like. Can we say the same about bioterrorism?
