Why sign up generics manufacturers for a drug you’ve only just got patent and approval for?

More importantly, why would you sign up generics manufacturers to make a drug that you can charge $84,000 a course of treatment for? Which is exactly what Gilead, the makers of Sovaldi, the $84,000 a course treatment for Hepatitis C have just done:

Multinational American drug maker Gilead Sciences was set to join hands with at least five Indian generic pharmaceutical companies and allow them to manufacture and sell cheaper versions of its new hepatitis C medicines – sofosbuvir and ledipasvir – in 90 countries, four people in the know told Business Standard.

Clearly, someone is being either terribly clever here or terribly stupid. So which is it?

It is, of course, being clever. NICE has approved Sovaldi for use in the UK, the FDA has in the US. Gilead has some short number of years (usually, about ten) to squeeze that drug for the billion dollars or so it cost to develop. So, obviously, they’re going to charge what the market will bear. $84,000 looks like a lot, is a lot, but it’s about the same price as other current treatments and is markedly more effective. So, that’s the price they set.

But to then go and licence to generics manufacturers to sell in 90 odd countries looks most odd: won’t this undercut sales? No, no, it won’t: for the generics manufacturers only get the rights to sell in countries where there’s no way at all that anyone would pay $84,000 for a course of treatment. For yes, there are poor countries out there and poor countries, rightly, don’t try to spend that sort of money on treating one patient. They can save tens, hundreds, thousands of lives by spending the same amount on, say, a vaccination campaign.

Thus, at full market price there would be no sales: at generics prices there will be some and thus some revenue to Gilead.

But that then leads to, well, isn’t it unfair on us? We’ve got to stump up $84,000 a treatment and poor people pay a groat a pill. True, but why is this unfair? Aren’t we rich people supposed to be tendering to the ill and sick of the world?

Further, this isn’t particularly to do with the way that the patent system works. Imagine that all health care research was done by the state instead. It would still be us rich world people paying for all of that research from our taxes, wouldn’t it? On the simple grounds that poor people don’t have incomes to pay tax upon to fund medical research. So whatever the structure is the end result will be the same. We rich people will pay to get the drugs designed and through the approval process. The poor will then get them. Whether we pay in advance in taxation or later through the price of the patented drug doesn’t make much difference, does it?

And yes, for all that the NHS is The Wonder of the World and all the rest, we in the UK are indeed rich world people and that’s why we’re being charged this arm and a leg for this drug. And, given that we pay for the NHS through taxation it really makes absolutely no damn difference at all, what the patent or research structure is?

Whatever answer Scotland gives, the question is flawed

Broadly speaking, I’m indifferent to the outcome of the Scottish referendum. Not because I’m uninterested, but because the debate seems to be motivated by entirely the wrong intentions.  Whilst tonnes of ink have been spilled as to whether there would be greater benefits to Scotland to remain in the Union or leave, far less has been said on the subject of whether the far larger remainder of the UK would benefit.

As an Englishman, I see few material benefits to the UK of Scotland’s presence in the Union. Ridding ourselves of the Barnett formula, some broken banks and Scotland’s over-represented, lefty MPs would all be substantial benefits for me.

I’m tempted to argue that, if the Scots do vote ‘no’, it would be sensible to politely but firmly ask them to leave anyway. On the other hand, Scottish independence might well impose some serious costs and risks in the short to medium term which means that one should be cautious about advocating Scottish independence.

If the Scots do vote ‘no’, they are virtually guaranteed ‘Devo Max’, which might offer the benefit of forcing some sense of fiscal responsibility onto Scotland and, if the West Lothian question were adequately dealt with, have some political benefits as well. Sadly, I fear that it may simply mean greater plundering of the few productive parts of the UK economy in order to provide further subsidies to the unproductive parts—thus worsening the situation of all concerned. If this sounds very self-interested, one can hardly accuse the Scots of lacking in that quality.

From a Scottish perspective, the outlook seems entirely ridden with paradox. Many Scots seem to believe that, by voting Yes, they will help secure greater public spending. However, the reverse seems actually to be the case—an independent Scotland would face serious fiscal challenges which would probably mean very significant fiscal consolidation, especially in the absence of a central bank.

Given the welfarist nature of Scotland’s public discourse, the likely outcome would seem to be tax rises and economic malaise. Of course, if an independent Scotland did significantly cut public spending, it would likely be beneficial to Scottish performance—but that is not what many in Scotland seem to desire. The same could be said of the deregulation necessary to move Scotland closer to being a ‘Nordic’ economy.

On the other hand, Scotland has hardly prospered within a Union that has—with the support of the Scottish electorate—imposed high levels of taxation, regulation and welfare spending in both Scotland and the UK.

If the Scottish independence movement were imbued with the doctrines of Smith, Hume and the Scottish Enlightenment, one might have rather more faith than an independent Scotland might flourish under a less burdensome government. However, we can hardly have much optimism for a Scotland that seeks to leave the centrally-planned mess that is the UK economy in order to pursue a greater level of central-planning, taxation and expenditure.

Indeed, the most unedifying spectacle of the Scottish referendum has been the sight of politicians of all stripes falling over themselves to offer the greatest amounts of cash to sway voters. If either the Yes or No campaigns offered real liberty to the people of Scotland (or the rest of the UK), we might have a more optimistic future.

Similarly, the greater devolution that might be on offer to the rest of the UK is all well and good, but only if it means genuine devolution of powers to the individual and not simply shifting power from bureaucrats in Whitehall to bureaucrats in town halls.

Karl Popper, in The Open Society and its Enemies, enjoined us to consider that what matters is not ‘who governs?’ but ‘what are the proper functions of government?’. Whilst the two are intertwined, it is the latter question, not the former which is key. The Scottish referendum debate has ignored this distinction. It is predicated on the belief that there is a substantive choice between government from London or government from Edinburgh that will determine whether the individuals who live in Scotland flourish or not.

This is a false dilemma. What matters is liberty and the restraint of government to its proper functions. Until Scotland, either as part of the UK or independent, rediscovers this, its future looks bleak indeed.

Owen Jones and this democracy thing again

Owen Jones has decided to take on this Transatlantic Trade and Investment Partnership thing. You know, the treaty that says that governments must live up to the contracts they sign, further, that it won’t be the courts controlled by governments that decide whether they have or not?

Marshaling his arguments Jones tells us that:

And if our political elite won’t budge, then it’s up to the rest of us to organise. Criticisms of the EU have been surrendered to the xenophobic right for too long: a democratic People’s Europe has to be built. But TTIP is also a reminder of the constant threat from those in power. When they steal chunks of our democracy away from us, we may find that it is far from easy to win them back.

The argument is not that the TTIP or that arbitration set up are themselves anti-democratic. Rather, that they might curb the ability of the electorate to vote for something in the future. On the grounds that a government might have signed a contract. For example, a contract that asks a private company to provide some medical service or other. That contract stating that if the contract is cancelled then there will be some compensation to be paid. Jones and his ilk are arguing that the payment of such compensation will make renationalisation more expensive and that thus this is a denial of democracy.

Hmm, well, we might recall this also said by Jones:

The Aids crisis was building; more than half the population believed homosexuality was “always wrong”, peaking at 64% in 1987 when just 11% opted for “not wrong at all”; and later that decade the homophobic legislation, section 28, was introduced.

Jones is, of course, against that section 28 stuff even though it was obviously democratic. He opposes it on the grounds that some things are more important than the will of the majority. But once that principle has been conceded we’ve then got to decide what are those things that are more important than that majority will?

And the TTIP is saying, essentially, that the rule of law is more important than whatever it is the howling mob wants this week. That’s certainly something that we would agree with around here.

There really are areas of life that have to be protected from democracy. You can argue, to your taste, as to whether the teaching about homosexuality in schools, the holding of governments to contracts they have freely signed, are such or not. But once we’ve the basic principle, that democracy is not the sole and over riding factor then we’ve got to have all of those arguments individually.

It’s the ineffable smugness that gets us

We’re all aware of the manner in which the supermarkets have been one of the evil bugbears of our times. The manner in which the upper middle class commentariat has been outraged, outraged we tell you, at the manner in which anyone has the effrontery to offer the working classes cheap and convenient food. doesn’t everyone realise that they should be buying at the butcher and greengrocer so as to subsidise the desires of the upper middle class commentariat?

Which brings us to this lovely piece claiming that the age of the supermarket is now over and ain’t that a good thing?

 In my street, the light thunk of plastic boxes as they’re unloaded from the supermarket delivery vans is now as familiar, if not quite so uplifting, as the sound of my beloved’s key in the door. Those who use the internet for grocery shopping do it for reasons of convenience, certainly. But we also know we spend less online, buying only what we need, choosing necessities with a ruthlessness that often abandoned us in-store. What we used to spend on impulse buys – or some of it – then goes on a decent wedge of Lincolnshire Poacher, a couple of fillets of haddock or some good beef, sold to us by smiling, helpful, talkative people whose names we may know, and whose businesses matter both to them and us.

The people who run our supermarkets, obsessed as they are with “price matching” and “meal deals”, seem not to have noticed this. Or perhaps they have merely accepted there is no real way to respond to it. Small, local supermarkets are good and useful should you run out of stock cubes or Persil of a Tuesday evening. But even their expansion is finite. For the rest, there is no short-term solution. We have become suspicious: of their mawkish advertising, of their treatment of farmers, of their desperate bids to package up things that really don’t need packaging up at all (I mean this literally and metaphorically, versions of “restaurant-style” dishes being every bit as phoney and wasteful as apples wrapped in too much plastic). Modern life, we feel, is isolating enough without self-service check-outs. They want to own us, but we aren’t having it. Suddenly, the over-lit aisles of Tesco have never looked more bleak. Or more empty.

The problem with this is as follows. I’ve always said that supermarkets were horrible things and look, now people agree with me! That means I was right! But, no, sadly, it doesn’t. It means that you might (assuming we accept the idea that the supermarkets are falling out of favour) be right now but it means that you were wrong before. Not in your personal taste of course: but in your projection of your personal taste to others.

And the point of emphasising this is that this is why we have markets. So that the consumer can decide for themselves how, in this instance, they wish to purchase their comestibles. If technology has changed so that internet delivery is now better all well and good. If it’s simply consumer taste that has, equally well and good. The entire point of having competitors in a market is so that the consumer can, with each and every groat and pfennig they spend, intimate which of the possible offerings they prefer. On the grounds of price, taste, convenience, technology or any other differentiator.

If the supermarkets do go down (something we rather suspect won’t actually happen) then it will not prove that those who campaigned against them in the past were right. It will prove that they were wrong: and further that their attempts to impose their views on others will always be wrong. For the very fact that supermarkets succeeded as a technology for however long it was or will be shows that they were wrong: and that they fail (as any and every technology eventually does) at some point will again show that that market process is the method of dealing with such matters. For, as is now being said, when the technology or consumer desires change then the market reacts and replaces the less favoured with the more. What else could you possibly want from a system of socio-economic organisation?

Friends of the Earth takes a baby step forward: when will they take the big one?

Tears in heaven etc as Friends of the Earth finally agrees with scientific opinion on nuclear power. Yes, they’ve admitted that actually it’s rather safe. Which it is: deaths caused by power generation per terrawatt produced are lower than any other method of electricity generation. Yes, really, more people fall of roofs installing solar than die from radiation from power plants.

Which is good, that’s a baby step forward. Even George Monbiot changed his mind on this when Fukushima showed that no one at all is killed by radiation even when three plants meltdown after a very large earthquake indeed and the associated tsunami (which in itself killed tens of thousands).

So, what’s the remaining problem?

When the presenter asked him to explain the group’s opposition to nuclear power stations he got this reply: “The biggest risk of nuclear power is that it takes far too long to build, it’s far too costly, and distorts the national grid by creating an old model of centralised power generation.”

Well, certain of us think that centralised power generation is just fine: we might even say that we’re rather fond of the idea of being able to turn the lights on without having to check our watch to see if we’re able to.

But the next, and larger, step in this is that we need to examine why nuclear is so expensive, takes so long to build?

That would be because the hippies have been screaming blue bloody murder about the radiation problem all these decades. So, now that we can all agree that the radiation isn’t a problem the hippies will, at least we can hope they will, stop that screaming and we can dial back the public inquiries, the planning appeals and the monstrously overdone safety regulations so that we can have cheap, as well as that safe, nuclear power generation.

Well, in a rational world we would but that ain’t our one, is it?