The counter-argument here is frustrating, but important. Yes, Americans pay too much compared to comparable countries for drugs. But the actual cure, control or prevention of disease is of extraordinary value to humanity. Pfizer and Moderna will make billions from their coronavirus vaccines, but they have created trillions of dollars in economic value by thawing economies, not to mention the lives saved. It is true that European countries are piggybacking on the high costs we pay for medicines, because it is the US market that drives innovation. But that doesn’t mean we’d be better off paying their prices if it meant slowing the development of new drugs. We don’t just want everyone to have health insurance in the future. We want them to be healthier, free from illness and pain that even the best health insurance can’t cure or alleviate today.
To this, progressives will note that drug companies are pumping money into ‘me too’ drugs, spending ridiculous amounts on advertising and administration, and making billions upon billions in profit. And they are right. It’s ridiculous to say that the pharmaceutical system we have now is focused on innovation. It’s focused on profit – sometimes that intersects with innovation and sometimes it doesn’t.
All too often, progressives drop their argument at that. They need to take the obvious next step: we need to combine price controls with new policies to boost drug development. That could be anything from more funding for basic research to huge prizes for discovering drugs that treat certain conditions to more public funding for drug trials. Years ago, Bernie Sanders had an interesting proposal to create a pharmaceutical pricing system in which companies could earn millions or billions for inventing drugs that cure certain conditions, and those drugs would be released immediately without exclusive patent protection. Focusing on the need to make new drugs affordable, while ignoring the need to make more of them, is like pruning a garden that you no longer water.
But this is a lesson progressives are increasingly learning. This is most evident in the area of climate. Much of the spending in the Biden agenda focuses on increasing the supply of renewable energy and advanced batteries, while building the supply of carbon-neutral transportation options. Democrats have realized that markets alone will not solve the climate crisis. And the same goes for many other things in the progressive role.
In a blog postJared Bernstein, a member of President Biden’s Council of Economic Advisers, and Ernie Tedeschi, a senior policy economist for the council, frame the Biden agenda as “an antidote to inflationary pressures” because much of it diminishes the long-term supply of the economy.
“The investment in transport, rail, public transport and ports will reduce the efficiency-sapping frictions that prevent people and goods from entering the market as quickly as they should,” they say. wrote. “Investments in child and elderly care will increase the labor supply of carers. The educational investment in pre-K and community college will ultimately translate into increased productivity as a result of a better-educated workforce.”
Such a list could go on and on. It’s not clear if it will be in the reconciliation bill, for example, but Biden has proposed a comprehensive plan to increase housing supply, in part by pushing local governments to end the foreclosure laws. And in California, that’s exactly what’s happening, as I wrote a few weeks ago. A decade ago, progressives often talked about making housing affordable, but they didn’t talk much about increasing the housing supply. Now they do. That’s progress.