Lesson 23: Health

  1. Zakaria: implementing smart benefits/investing in human capital is good for business. That's why companies site factories in Canada instead of Michigan.
  2. McMillan:
    1. Because of market forces, (ongoing) treatments more researched than (one-off) vaccines or cures, and afflictions of rich more researched than afflictions of poor.
      This is not because pharmaceutical companies are evil, they are just responding to incentives, and they have a duty to their shareholders to earn profits.
    2. Thabo Mbeki: Poverty is the problem, not AIDS... A higher status for women and better education come from higher economic income, which is necessary for a cure to the AIDS epidemic (and African health budgets couldn't even afford the medicines at cost).
    3. Public health is a public good: benefits others, not just the person directly. Left to the market, too little public health would be produced.
      • preventing the spread of communicable diseases
      • reducing environmental hazards (and regulating safety of products)
      • promoting healthy behaviors
      • responding to disasters
    4. Basic scientific knowledge is also a public good, which is why all governments fund some. (NIH, NSF, etc. in U.S.)
    5. Patents are a compromise solution, since there is no ideal way to both
      1. get innovation and
      2. not inhibit its use.
      The monopoly profits awarded patent-holders are especially marked in the pharmaceutical industry because demand is inelastic (insensitive to price). This is because:
      1. patients' needs are great
      2. doctors, not patients, decide
      3. insurers, not patients or doctors, pay
    6. The cost/benefit analysis of abrogating patents is pretty easy to do in the case of AIDS drugs:
      1. cost is low: because the companies were not going to sell much in Africa anyway, they are not losing much profit from having to sell for less or compete with generic drugs there.
      2. benefit is incalculable: millions of people's lives will not be lost.
      Public opinion succeeded in pushing governments and pharmaceutical companies to accept a different approach regarding patented AIDS medicines in developing countries.
    7. The cost/benefit analysis in the case of tropical diseases that do not affect rich countries is much more difficult. Poor countries cannot free-ride on the lucrative Western markets.
      Need another approach: e.g., Advance Market Mechanisms proposed by Michael Kremer. These add the pull of market incentives to the push of funding for research and development.
  3. Globalization 101 issue brief on health:
    Communicable diseases more likely to be transmitted worldwide due to:
    1. increased international travel
    2. increased trade in goods and food, and the mass production/processing/distribution of food
    3. more food workers from poor countries with lots of stomach bugs
    4. increased urbanization, due to:
      1. pull of jobs and higher wages
      2. push of subsidized agriculture in richer countries, emphasis on large plantations of export crops rather than small subsistence farms
    5. global climate change: increases in wetness in certain areas, spread of range of malaria-carrying mosquitoes
    6. big changes in land use that
      1. put people into closer contact with previously exotic animals
      2. put agricultural crops in contact with new species
      3. create many areas of standing water (e.g. construction projects)
    7. increased microbial resistance (see for example Lauren's article on pharmaceutical companies in India dumping wastes in water and allowing evolution of resistant bacteria)
    8. cuts in public health spending
    Responses to global health concerns include:
    1. surveillance
    2. immunization
    3. research
    4. improved sanitation and infrastructure
    5. intervention in setting the price of drugs
Take-home point: Health is an intrinsic good for people and also a public good, because society needs healthy people in order to function and also because some diseases can be transmitted from person to person. It is difficult to reconcile market realities with public health needs but not impossible.