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Erik Kain

Erik writes about video games at Forbes and politics at Mother Jones. He's the contributor of The League though he hasn't written much here lately. He can be found occasionally composing 140 character cultural analysis on Twitter.

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9 Responses

  1. Avatar Lev says:

    I understand that pharmaceutical companies innovate a lot of stuff, but what do the insurance companies innovate, outside of new ways to deny coverage? It strikes me that they don’t add a ton of value to the system. I’m no fan of the British system, but something like Medicare for all strikes me as workable. After all, one can hardly argue that Medicare has killed Pharma. Quite the opposite, in fact.

    I’m willing to hear a more concrete version of this argument, but the Wilkinson post you pointed to is nothing but anecdotes and the slippery slope.Report

  2. Avatar richard says:

    the government is going to set the price on what it will pay for a drug. it will have a set formulary on approved drugs . if a company invests heavily in r&d and the government decides the new drug is either not effective enough to pay fpr or is just equal to existjng drugs the commpany has very little or no chance to recoup its investment. companies are going to gravitate even more thane ever to develop drugs which treat major chronic disease such as asthma, diabetes , heart disease etc. . this is where the payoff is. small specialty drugs for lesser known diseases are going to lose. research into less promising areas will be curtailed lessening the odds and chances for breakthroughs. Some areas of research which earlier may have gotten funding will get a second all of this is a drag on innovation. medicare is subsidised by the private side. it reimburses doctors at around 70% of the private rate and 80% of the private rate for hospitals. we make up the differnce. ten of the top are u.s. canda has none and the u. k. has two. there is a reason for this. the average cost to develop a new drug is approaching a billion dollars even more for biotech companies.Report

  3. Avatar richard says:

    should read ten of the top twenty pharmaceutical firms are u.s., two are u.k. and none are Canadian. sorry its getting late.Report

  4. Avatar greginak says:

    oy…okay this meme that has been going around about big pharma being destroyed and we are all going to die is silly. First not all medicine is about drugs. Yes that is a D’oh and the people who are throwing it out know that. Do pharmaceutical companies develop surgeries? Um no. Pharma is only one aspect of medicine. A lot of our medical advances come the same way we get knowledge about astronomy or archeology. Scientists study, you know, stuff and write papers. That is what they do. The NIH funds most of that. Whenever we get some sort of national health care will not affect that. Most basic research is not done by pharma but by univserities funded by the NIH.

    Pharma companies will still want to make a profit. They aren’t’ going to start making TV’s just because everybody gets health care. hmmmmmmmmmmm as a a matter of fact if 45 million more people had health care they might, just might, get prescribed more medications. Wow that sounds like, what i think are called, markets.

    Richard- Pharma already aims at big money drugs. Why do you think there are a zillion commercials for enzyte and viagra and so on. How many diseases could have been cured if pharma wasn’t’ putting out commercials and saving our hard ons.
    There is already a problem with what are called orphan diseases. Those are diseases that strike such a small population that pharma companies don’t do research. My guess is if you have an orphan disease you can’t get medical insurance since you have a preexisting condition. So a lot of those folk might like to be able get insurance.Report

  5. Avatar Jaybird says:

    Regarding innovation… what percentage of innovation comes from US companies?

    Is this percentage a little high, given what we know about the rest of the world or is it a little low?

    If it turns out that the US’s innovation “share” is high… would it be a fair question if we asked “why?”?Report

  6. Avatar richard says:

    jaybird i have searched for hard data on this and it is hard to come by. here is an excerpt from a new york times article from oct. 2006

    …. in the last 10 years, infor instance, 12 Nobel Prizes in medicine have gone to American-born scientists working in the United States, 3 have gone to foreign-born scientists working in the United States, and just 7 have gone to researchers outside the country.

    The six most important medical innovations of the last 25 years, according to a 2001 poll of physicians, were magnetic resonance imaging and computed tomography (CT scan); ACE inhibitors, used in the treatment of hypertension and congestive heart failure; balloon angioplasty; statins to lower cholesterol levels; mammography; and coronary artery bypass grafts. Balloon angioplasty came from Europe, four innovations on the list were developed in American hospitals or by American companies (although statins were based on earlier Japanese research), and mammography was first developed in Germany and then improved in the United States. Even when the initial research is done overseas, the American system leads in converting new ideas into workable commercial technologies.

    In real terms, spending on American biomedical research has doubled since 1994. By 2003, spending was up to $94.3 billion (there is no comparable number for Europe), with 57 percent of that coming from private industry. The National Institutes of Health’s current annual research budget is $28 billion, All European Union governments, in contrast, spent $3.7 billion in 2000, and since that time, Europe has not narrowed the research and development gap. America spends more on research and development over all and on drugs in particular, even though the United States has a smaller population than the core European Union countries. From 1989 to 2002, four times as much money was invested in private biotechnology companies in America than in Europe.

    Dr. Thomas Boehm of Jerini, a biomedical research company in Berlin, titled his article in The Journal of Medical Marketing in 2005 “How Can We Explain the American Dominance in Biomedical Research and Development?” (ostina.org/downloads/pdfs/bridgesvol7_BoehmArticle.pdf) Dr. Boehm argues that the research environment in the United States, compared with Europe, is wealthier, more competitive, more meritocratic and more tolerant of waste and chaos. He argues that these features lead to more medical discoveries. About 400,000 European researchers are living in the United States, usually for superior financial compensation and research facilities.

    This innovation-rich environment stems from the money spent on American health care and also from the richer and more competitive American universities. The American government could use its size, or use the law, to bargain down health care prices, as many European governments have done. In the short run, this would save money but in the longer run it would cost lives.

    Medical innovations improve health and life expectancy in all wealthy countries, not just in the United States. That is one reason American citizens do not live longer. Furthermore, the lucrative United States health care market enhances research and development abroad and not just at home.

    The gains from medical innovations are high. For instance, increases in life expectancy resulting from better treatment of cardiovascular disease from 1970 to 1990 have been conservatively estimated as bringing benefits worth more than $500 billion a year. And that is just for the United States.

    The American system also produces benefits that are hard to find in the numbers. The economist Arnold Kling in his “Crisis of Abundance: Rethinking How We Pay for Health Care” (Cato Institute, 2006) (catostore.org/index.asp?fa=ProductDetails&method=cats&scid=37&pid=1441301) argues that the expected life span need increase by only about half a year for the extra American health care spending to be cost-effective over a 20-year period. Given that many Americans walk less and eat less healthy food than most Europeans, the longevity boost from health care in the United States may be real but swamped by the results of poor lifestyle choices. In the meantime, the extra money Americans spend to treat allergy symptoms, pain, depression and discomfort contributes to personal happiness.

    The American health care system, high expenditures and all, is driving innovation for the entire world.

    Tyler Cowen is a professor of economics at George Mason University and co-writer ofa blog at http://www.marginalrevolution.com. He can be reached at tcowen@gmu.edu.Report