Some weeks are better than others.
Last week I discovered that I was suddenly “unprofitable”. In this case “Market Failure” occurred when a product that saves lives was no longer profitable to produce. Unfortunately, one of the lives this product saves is my own.
To many people, the market is the place you can rely on to get almost anything –from life’s basic to most exotic needs. Most people talk about the market in theoretical terms – often with the attitude “I don’t know how it works but it’s the best system we’ve got.” Most of us assume the market will ultimately serve society’s best interests, even though they recognize there are a few glitches and collateral damage. I have often explained to my students that the market only produces what is profitable.
The last thing you want to require is an unprofitable item. In my case I have Parkinson’s disease, and lately this condition has started to bizarrely interfere with my blood pressure. I’m told that the response is autonomic, out of my control. It’s like an immune response that we usually welcome as a defense from outside threats. But as with the case of allergies to peanuts or immune responses to the bite of the seemingly harmless honeybee, the protective immune response can be fatal.
As a result of the interaction between Parkinson’s and blood pressure my systolic variation (the upper number) can rocket from less than 70 to 200-plus in the time it takes to eat lunch. Parkinson’s is pushing the number down, and the cardiac response is pushing it up. My cardiologist suggests that the upper number is a stroke risk, and the lower number could put one at risk of shutting down. Neither seems desirable since I’m quite happily still pursuing happiness.
Though I take many prescriptions for Parkinson’s, treatment of blood pressure brings new medicines into play – in this case calcium inhibiters. I take one if my blood pressure exceeds 150, which to date has worked just great, however, I just discovered that the drug is no longer produced and there are no substitutes generic or otherwise. I have about 30 pills left. You see, not only is this drug unprofitable, but I am also apparently unprofitable as collateral damage.
It’s not that we’ve lost the ability to make this product – the market has just determined that it can’t be sold at a profit.
Some might argue “there is too much regulation.” Some might explain that the market is not large enough for the medicine, so economies of scale in production don’t exist and therefore the cost exceeds the price. You might get an explanation that if the company sets the price appropriately to generate a profit there will be no demand, or strangely it will discriminate against the poor, so by making it unavailable there is equity between the rich and poor.
All of these address how the price might be changed to make the drug profitable, but are of no value to someone who knows a product is unavailable at any price. These explanations address the economics and market conditions of a product, but ignore the moral issues. The market is not designed to address morality.
The big question that remains – “is society obligated to produce something at a loss that could save lives?”
The market has no answer to this question, though to many people the market somehow has moral content – the “Darwinian survival of the fittest” approach. But in this case we allow the market to determine who lives and who dies. Others might take the position that in the long run the market will produce whatever is needed. This is looking past the short run, which is the time frame within which people die. Some might say that each individual is responsible to find a way to get what they need. When you need more firewood this might apply, but exactly how do you make controlled release isradipine in your kitchen? If you know please give me the recipe.
As an economist, I know we too often fail to make the distinction in policy decisions between “market” and “moral” – leaving the moral discussion to the crude application of things like Darwinism or personal initiative.
I have added drama to this discussion, and luckily I am in competent hands with my physician’s approach to finding substitutes. I also avoid eating too many sausages, and carefully keep my exercise regimen going so that the 50 pounds I lost do not reappear.
These comments are really in deference to the thousands of people who have cancer, heart disease, and other ailments where we know how to treat their conditions, yet do not produce medicines or the required healthcare systems because they are not profitable. To them the market is not theoretical.
The search for the Holy Grail is hollow if you think it is just a silver goblet. That search ignores our moral sense of right and wrong.