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Moreover, innovation itself rests heavily on basic research in biology and chemistry, for which there is not a similar profit incentive. Pfizer’s vaccine is based on insights into chemistry and molecular biology developed in government and university labs worldwide over a long period of time.
“No pharmaceutical company would have the incentive to do the basic scientific discovery, because it’s not patentable,” said Amitabh Chandra, a health economist at Harvard. “A lot of basic science is not profitable. It’s just knowledge. At some point basic science becomes useful, and then the private sector can come in. But who’s going to unlock the fact that there is a 3-D printer in the cell called a ribosome, or a naturally occurring messenger RNA that is read by the ribosome to produce another protein?” he said, describing the mechanism by which the Pfizer vaccine works.
He estimates that the coronavirus crisis has cost the United States at least $16 trillion in terms of lost lives, lost quality of life, and lost economic activity. If a pandemic happens even once a century, spending something like $160 billion a year in basic research to prevent it could be justified. The National Institutes of Health budget, devoted to medical research of all types, is about a quarter of that.
The private sector’s capacity to develop innovative drugs is not necessarily something that happens because bold business executives manage their companies better than the less commercially minded public sector.
Rather, in the United States and Europe, the progress toward virus treatment and prevention reflects an interlocking set of institutions: from the state, funding for basic research, patent enforcement and safety regulation; and from industry, the ability to turn raw ideas into a marketable product.
To get safe and effective drugs, it takes both.
Thanking government intervention
Supply chain managers in the auto industry take their responsibilities seriously. One supplier’s inability to deliver a crucial part can stop an entire assembly line and cause millions of dollars in losses to the “original equipment” manufacturers, as industry insiders call carmakers.
“It is a mortal sin to shut down an O.E., and the supply base has been hardened to that,” said Jeoff Burris, an auto industry supply chain consultant based in Plymouth, Mich. “No expense is spared to keep that from happening.”
Source: The NY Times
Keyword: The Coronavirus Pandemic Is Showing Us How Capitalism Is Amazing, and Inadequate