Archive for January 23rd, 2011

Selling The Cure For The Disease They’ve Caused

According to the New York Times, the federal government, apparently unhappy with drug companies’ productivity in the last 15 years, has decided to go into business for itself:

The Obama administration has become so concerned about the slowing pace of new drugs coming out of the pharmaceutical industry that officials have decided to start a billion-dollar government drug development center to help create medicines.

The new effort comes as many large drug makers, unable to find enough new drugs, are paring back research. Promising discoveries in illnesses like depression and Parkinson’s that once would have led to clinical trials are instead going unexplored because companies have neither the will nor the resources to undertake the effort.

The Times then goes on to note that, “drug companies have typically spent twice as much on marketing as on research, a business model that is increasingly suspect.”  NIH has long been involved in basic research, but this is the first time that the government will get into the business of actually developing and conducting clinical trials of drugs.

We’ll dwell for a moment – but only for a moment – on the Times’s, and by implication, the Administration’s, utter neglect of the possibility that the FDA’s culture of risk-aversion, insistence on testing for efficacy (as opposed to just safety), and the WTO’s failure to protect intellectual property have all contributed to a risk-aversion on the part of the drug companies.

But there may be something else going on here, too.  It’s entirely possible that we’re seeing a short-term phenomenon that’s being mistaken – or portrayed – as a long-term one.   In, City Journal (“Hooray for Blockbuster Drugs“), Paul Howard argues that the development of incremental improvements is a good thing. for a variety of reasons.  It’s certainly something that the regulatory regime encourages.  But aside from that, it’s the logical filling-out of major advances that came very quickly, based on basic research that was done much earlier.

Eventually, the diminishing returns from this sort of thing, and the increasing costs and uncertain returns of marketing them, should lead one or more major drug companies to take the leap and try to productize some of the results of gene-based research.  The first efforts are likely to be more risky and more expensive, and our current policies have probably exacerbated a reluctance to take large risks in a down economy by raising those costs, both certain and uncertain.

The worst part?  Paul Howard:

Some of these investments have been overhyped, but others will eventually produce breakthrough innovations, just as the investments of the sixties and seventies did. And when they do emerge, new technologies (including much more sophisticated diagnostics) will allow doctors to choose drugs for patients most likely to benefit from them. The advent of personalized medicine will also give companies powerful new marketing and pricing leverage. The size of the market for particular drugs may shrink—and drug companies may become smaller and more nimble to exploit fast-moving scientific discoveries—but insurers and governments will find it much more difficult to ration access to targeted therapies. (Emphasis added.)

Just at the time when the new drugs have the chance to democratize medicine in a way that the Internet has democratized political debate, the government is going to step in and make sure that doesn’t happen.

The $1 billion committed to the project so far is about 2% of what drug companies already spend on R&D.  It’s hard to believe that this is a better answer than lowering regulatory costs and uncertainties.

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The Revolution Eats Its Own

We may have to wait a little longer to start breaking China’s stranglehold on the world’s supply of rare earth metals.  Something called the Western Watersheds Project has filed a lawsuit to derail a solar project in San Bernadino County, and that same lawsuit may have the effect of shutting down a spur from an existing gas pipeline that Molycorp will need to power its mine.  The offended species?  Tortoises.

Concerning Molycorp, Connor pointed to an 8.6-mile pipeline proposed to carry natural gas to Mountain Pass for power generation. The so-called Mountain Pass Lateral will, if allowed, carry gas from an existing line owned by Kern River Gas Transmission Line near the Ivanpah Solar Project. “The lateral will pass by the Ivanpah Power Plant, the area where the tortoises are to be relocated, Connor said. “They were given no consideration.”

George Kenline, San Bernardino County’s mining geologist, who issues mining permits and other relevant county permits, praises Molycorp’s new direction. Once a major polluter, Molycorp, he said, “It (Molycorp) decreases the amount of impact because it eliminated the evaporation ponds,” which were a major problem before and have been completely removed from the new project.

Ironies about, the most obvious of which is the attack on a solar project by an environmental group.  But then, there’s the fact that the Watersheds Project is seeking to derail a mining operation that has completely changed the way in which is uses water, recycling almost all of its water and getting rid of evaporation ponds.  As well as the fact that the rare earths are used extensively in high-power magnets in hybrid vehicles, electric vehicles, and wind turbines.  Environmental groups, which enjoy specially-granted standing to file these sorts of suits, are now standing in the way of the kind of change they claim will save us all from catastrophe.  Revolutions do eat their own, after all.

Molycorp may have the permits to operate the mine, but it can’t do so without natural gas.  It’s further evidence that while a strategic stockpile of rare earths might be a good idea, the real solution is clearing away the regulatory underbrush that ties down useful projects in the first place.

In the meantime, engineers are trying to create high-power magnets that don’t use rare earths at all.  This is equally big news in the longer-term, but for the moment, as in so many other similar efforts, the problem will be scaling the magnets up to useful sizes, which may take years.  In the meantime, it would be nice to know that these new magnets are competitive in their own right, and not merely because the cost of their competition is being driven up by regulation.

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Ghosts of Constitutional Debates Past – Part III

So, a couple of weeks ago, we left the Constitutional debate with William Findley’s detailed, 22-point objection to the document.  The editors of the Library of America volume include a similarly detailed, point-by-point rebuttal, by an anonymous respondent under the pseudonym “Plain Truth.”  Some of his responses are weak, others are off the mark, but other score some points, and it’s interesting to see which are which.

Two of the themes that evolved early on were the lack of a Bill of Rights, and the stability of the tension between the states and the federal government.  While the concern is among the most serious, the argument here back and forth is among the weakest, in part because of the lack of historical reference points.  The Dutch and the Swiss had federal republics, but they were small, and the great threats came from outside, not inside.  The Roman Empire – always a point of reference – was more useful is worrying about the concentration of power in the executive, a completely different mal-distribution of power.

But the question of whether or not the tension between the states and the federal government could be maintained, or would eventually either consolidate or fracture the Republic, is one that has to be conducted almost entirely in hypotheticals.  It makes for a debate that we can evaluate in retropect, but one which must have been frustrating for those who weren’t committed to one side or the other.  The federal-state split also manifests itself in odd ways.  One letter in opposition to the Constitution, a “Letter from An Old Whig,” argues that the amendment process is too cumbersome, and that either no amendments will ever pass, or the country will tear itself apart trying to pass them.

Oddly, the debate between Findley and the rebuttal on this point could be about slavery – but isn’t, at least not in the way we think of it later.  Findley objects that Congress can’t ban the slave trade until 1808, and his respondent says that he agrees this is too long, but since the matter can’t be much worse than it is now, maybe at least by then it will be better.

The question of a Bill of Rights is rebutted with much the same logic that Wilson used in his original speech defending the new Constitution: it isn’t necessary, since we assume that Congress’s powers are exclusive, while state constitutions are inclusive.  Findley’s objection isn’t that this is wrong, but that he doesn’t trust that the Framers really mean it, or that future generations will live by it.  The debate over the Banks of the United States would show there was some real risk on this point, but even that debate was carried on with the assumption of enumerated power, that the burden of proof was on the Bank’s advocates.

And for you 2nd Amendment fans – and who among us isn’t a 2nd Amendment fan – there’s the response to Findley’s worries about a standing army.  “Plain Truth” claims that a standing army shouldn’t be a concern, since every man is a member of a militia, and what standing army could pose a threat to that?  For those of you who think that guns are only for personal defense, consider that long and hard.

Two other points about the tenor of the debate stand out, as well.  There’s another letter from Cincinnatus which reads like a blog screed.  The “Old Whig’s” letter starts off professing that he really wants to be persuaded of the Constitution’s goodness, at least as an experiment.  It’s not apparent whether he’s sincere, or is the Revolutionary Era equivalent of a seminar caller.  The “Plain Truth’s” point-by-point refutation reads like an expert Fisking.  In short, this is what robust, healthy political debate looks like.

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