Cancer mortality rates in the United States dropped 2.2 percent from 2016 to 2017, the largest single-year decline ever recorded according the American Cancer Society. Driven by advances in medicine and lifestyle changes, this excellent news comports with a long-term declining trend of cancer deaths, which have fallen 27 percent over the past 25 years.
Considering the news, historian Jerry Z. Muller brings up a good point: The next time presidential candidates begins offering their cheap populist attacks on the profits of pharmaceutical companies, voters should consider that the industry spends billions of those dollars funding some of the most effective life-saving advances in the world.
As the Wall Street Journal points out:
Roche, Bristol and other drug makers have spent tens of billions of dollars in recent years developing new therapies such as Zelboraf, Yervoy and new generations of the treatments. The $123 billion world-wide cancer drugs market is among the industry’s biggest and fastest growing, which has prompted companies to double down on their research and promises even more agents that could make a dent against tumors.
It’s not just cancer drugs. We’ve seen remarkable advances in early detection and treatment on a wide range of diseases, in pain management, and in mitigating the effects of once-devastating ailments. The pharmaceutical industry, which must navigate a byzantine regulatory environment, has massive research and development expenditures. Sometimes they spend billions on drugs that never end up seeing the marketplace. Somewhere around 80–90 percent of all new drugs are patented through the private sector, though the pharmaceutical industry is also one of the largest funders of university research. Why would we want to funnel those dollars away from research and towards higher taxation or punish the industry for generating a profit?
Socialist Bernie Sanders says “the answer is to get rid of the profiteering of the drug companies.” Socialist-lite Elizabeth Warren doesn’t only malign profit margins of pharma companies — which, though good, aren’t especially high compared to other industries — but also believes that the state should get into the drug-manufacturing business. The first step in controlling the means of production gets a bit tricky, though, because the American government, a massive deficit-run institution that is completely unconcerned with breaking even much less making a profit, will have only one incentive: appeasing voters. And voters are going to demand drugs under-cost and, inevitably, for “free.” Government production would whittle away those nefarious pharma profits, and with it a lot of innovation.
Now, none of this is to say it’s not some prescription drugs aren’t overpriced, or that pharmaceutical companies don’t rent-seek or evergreen, or that a disproportionate amount of the cost of new drugs isn’t being placed on the American consumer. I have no special expertise on how to solve those problems. But it is to say that the major reason pharmaceutical profits are up isn’t exploitation, as so many people seem to believe, it’s because pharmaceutical companies are doing amazing things. There are lots of opportunities for smart Americans to make lots of money developing those amazing things. Because the profit motive saves lives.