Why Government Can’t Do Pharma R&D

Megan McArdle has been a great voice in the national health care debate.  I’ve been reading her regularly.  This is a particularly good point in regards to why we don’t want the government doing pharmaceutical research, as the left has been arguing it ought to do if their national health program destroys medical innovation:

There is no country in which government has outperformed the market at the production of basic needs (distribution is a different question that we can fight about later).  The only industry that’s even vaguely hopeful is defense, and I hope I don’t need to persuade progressives that if our pharmaceutical industry starts looking like our defense industry, we’re screwed.  It’s usually dominated by a few major contractors who are deeply intertwined with the people who buy from them, it’s wildly expensive, everyone thinks it’s horribly inefficient and produces a lot of products we don’t need because they’re the pet project of some congressman, and the rest of the world free rides off of our hog-wild spending.  You don’t like me too drugs?  Wait until the pet company of some powerful committee member wastes billions of dollars chasing a never-never cure for cancer rather than a promising antidepressant that could produce a 20% improvement over existing treatments in large classes of patients.

This! Government pharma R&D won’t work, because drugs will be developed based on political considerations rather than what’s going to give us a lot of return for our R&D dollar.

One thought on “Why Government Can’t Do Pharma R&D”

  1. Well the .gov already funds a ton of research through NIH and its associated agencies. I agree that they should not take over what the pharma industry already does, but I think its important to recognize that they already do fund a lot of research. Especially into the basic sciences and into things that may not have an immediate payoff.

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