Since nationalization is in the news these days, I’ve been thinking a bit about a different kind of nationalization — specifically, the kind that happens when you’ve got a single buyer for a product, aka “monopsony”.
This is what the defense industry is today, an industry that has only a single client.
I’ve been noodling on what the health care industry would look like if the U.S. government moved to a single-payer system, and I think it’s probably something similar to what the defense industry has turned in to.
I don’t see this as necessarily a bad change. You’d still have a “market” system, in the sense that the U.S. government would constitute the entirety of the market. The government would put out an RFP, say, for a cancer treatment. The pharmaceutical industry would respond with various candidates and proposals.
As for competition, well, the race with the Soviets was pretty competitive. Isn’t the struggle against disease a compelling and urgent enough challenge to spur innovation?
Just some thoughts …
2 Responses to “Towards the Pharma-Industrial Complex?”
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very interesting. So much defense spending is driven by congressmen’s desire for pork in their district. I wonder what the relative procurement competitions would be. Would congressmen with biotech research facilities in their district angle for contracts? Would the contracting process become so complex that a few companies would make it their core competency and devour everyone else?
Of course, this hasn’t happened in europe. but they don’t have quite the appetite for government-sponsored corruption that we do.
Hahahaha … good point.
A big difference is that Big Pharma still has an international market. You wouldn’t sell an MX missile to the Soviets, but you’d sell a cancer treatment to the Russians.
The main reason why I could see this working is that the single payer would define the market priorities. So, potentially, you could create some kind of a “research priorities” board that would identify a hot list of diseases that needed a treatment. They’d then create an incentive package to get companies to work on those treatments. This solves a big problem in the current industry — namely, that companies only really have an incentive to work on treatments for “mass market” afflictions … it’s how you get 3 pills for ED, but limited R&D for conditions that afflict smaller numbers of people.