With the Ebola virus confined to impoverished states in
Africa until 2014, drug companies had little financial incentive to develop a
vaccine. “A profit-driven industry does not invest in products for markets that
cannot pay,” Margaret Chan, the director general of the World Health
Organization, said in late 2014.[1]
At the time, at least 13,567 people were known to have contracted the virus in
the outbreak, with nearly 5,000 people dead. It cannot be said that the
profit-motive in a market economy is efficient in this case.
As a few cases made their way to the U.S. and E.U. in the
Fall of 2014, elected officials quickly felt the fear among their respective
constituents. As a result, the U.S. sent troops to West Africa to help contain
the illness. In short, money began entering the equation in significant amounts
as soon as the people in developed countries perceived themselves as being at
risk. Doubtless public funds went to drug companies for expedited research
toward a viable vaccine. The arrow here goes from governments to private
companies in the marketplace, rather than coming out of the “efficient market
hypothesis.” In other words, relying on private companies and the market
mechanism, moreover, may be suboptimal in the field of medicine.
The implication for the Affordable Care Act, or “Obamacare,”
is that the president erred in caving into the health-insurers lobbyist on
including a public option. Relying on private insurance companies may be
suboptimal, though admittedly they are not drug companies. Even so, if the
market mechanism itself is deficient in the case of a vaccine, then perhaps the
healthcare industry, including health insurance, ought to rely chiefly on
government rather than the private sector.
1.Rick
Gladstone, “Ebola
Cure Delayed by Drug Industry’s Drive for Profit, W.H.O. Leader Says,” The New York Times, November 3, 2014.
