Arnold Kling  

Rational Decisions and Pharmaceutical Regulation

Future of Education... From Galbraith to Spitzer...

Today's Washington Post contains another op-ed piece by a physician, and of course he is in favor of price controls on prescription drugs.

The pharmaceutical industry will intone its familiar mantra: The cost of drugs is a relatively small percentage of total health care costs; innovation requires investment; research-based companies need to realize an adequate return on investment; and companies often establish access programs for destitute patients. But these arguments are invalidated by the sheer magnitude of the pricing decisions, which constitute a formidable barrier to the flow of innovation from the research arena to public benefit.

My response to the last such op-ed piece still holds.

Meanwhile, Alexander Combs actually makes a constructive suggestion, which is to lower the cost of bringing drugs to market.

All new drugs sold in the U.S. must undergo a series of rigorous clinical trials in order to gain approval for sale. The pharmaceutical companies must prove not only safety, but efficacy as well. This process typically takes seven to ten years and can cost upwards of $900 million dollars per drug.

Although safe and effective medicine is a noble aim, there are unseen costs to this policy—costs which can greatly overwhelm the benefits. For every new treatment awaiting approval there are untold numbers of people who may die simply because they were denied access to it.

Combs makes his comments in light of research into decision-making done using MRI imaging to determine when people are acting rationally and when they are acting emotionally. This sort of brain science or cognitive science relates to my forecast about the future of education in the previous post.

For Discussion. Imagine a science-fiction world in which a warning light tells us when we are making decisions emotionally rather than rationally. What consequences would this have?

COMMENTS (4 to date)
Mcwop writes:

It would be nice if the doctor had some numbers to go along with his claims. Numbers such as how much the drug cost to develop, and predicted sales market. Yes, $15,000 is expensive, but if the drug cost $x billion to create, and has a small patient market of 10,000 people (the good doctor admits: "Although the new drugs help only a minority of patients"), then I expect the price to be high.

Brad Hutchings writes:

Great question Arnold. I have a boxer-mix dog who has always had a natural proclivity to bark and has a deep, loud voice that caries. Since I live in a condo and the neighbors are packed in, I control his barking with a Citronella collar. If he barks, he gets a spray of orange juice in the face. He knows when he has the collar on, and it's very rare that it goes off. A friend of mine has a boxer-mix and a boxer. If the boxer is wearing her Citronella collar and the mix isn't, the mix will run up to the boxer, bark in her ear, and set off the boxer's collar. A neighbor has two large dogs who were annoying the neighborhood with their barking. I suggested the Citronella collars for the dogs. Turns out that one of them actually likes it, so that dog gets a shock collar.

So given how it all works with dogs, I imagine the emotion warning lights will shut many people up, create a source of mischief for some, and create a source of enjoyment for some others. But don't get discouraged Arnold. Each time one of these physicians barks, it's an opportunity to present rational thinking on the issue. One day, you'll land a major forum and most will stop barking because they won't get a pass on it.

Lawrance George Lux writes:

It is a return to the concept of basic values: What precise critierea is used to suggest emotional decisions are less valuable, than are rational decisions? It sounds good, but would you still marry the one you have married? Would you have gone to work for a Mortgage lender, rather than a New York brokerage firm? Would I still have resisted what I felt was wrong, knowing what later life was expected to bring? Rationalization always defeats the noble, while emotions lead to resistence to injustice and discrimination. Can any society, and most especially civilization, live without both. lgl

Brad Hutchings writes:

Arnold, This is really an interesting question! It's one of those that I could spend a week evaluating everything anyone says and wondering how things would be if the bells went off.

For example, news bite in CA... Safeway (large grocery chain) is being sued by the State Attorney General for selling cigarettes to minors. His office claims that "32% - 42% of their sales are to minors". The local Los Angeles DIstrict chimes in with this gem about the whole Cigarette retail industry: "more than 50% the sales to minors come from stores within 1000 feet of schools". Clearly, the figures are used to whip up an emotional response. But looking at the latter figure, I doubt it is even calculable from any data available -- a gross misinterpretation of some data at best.

To add to lgl's point though... there would be no "Badger" series of commercials for MasterCard if the sirens went off.

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