In Defense of COVID Billionaires
People love to hate billionaires. And they really love to hate large pharmaceutical companies.
But at the very least, the last year has complicated the popular narrative that drug manufacturers and businessmen are selfish profit-taking parasites, hoarding wealth at the expense of the sick. Faced with the challenge of the novel coronavirus, big pharmaceutical companies didn’t just beat their record for developing a new vaccine. They utterly demolished it. Multiple vaccines have been created and tested in under a year. The previous record was set in the 1960s by the mumps vaccine, which took five times longer.
The fact that there were numerous firms racing toward many different vaccines wasn’t wasteful; it was crucial redundancy on a difficult high-stakes problem where time was of the essence. And one reason so many were able to spin up COVID response efforts quickly is that they were already sitting on giant piles of cash, enormous, expensive labs, and offices full of well-paid scientists, engineers, and strategists.
This is how pharmaceutical firms work: They laboriously develop and test new drugs, then sell them at a profit. The money they make is reinvested into more research—the leading firms plow about a quarter of their total sales into R&D—and, crucially, profits attract more capital.
In 2019, the top 10 pharmaceutical companies invested over $82 billion in research and development, according to the drug data firm Evaluate. If you include the whole industry, that number is closer to $150 billion. Compare that to the total budget of the National Institutes of Health, which was $39 billion the same year. When the threat posed by COVID-19 became clear, Pfizer, Gilead, Moderna, and others dropped ongoing research projects and diverted billions to solving the puzzle of the pandemic.
The simple fact is that major medical discoveries take a mind-blowing amount of time and money. Sometimes the latter can compensate for the former, but not entirely. The greatest achievement of 2020 would not have been possible in an environment where many more regulations constrained the industry, its growth, or its capacity to generate profit. No amount of government cash or prodding could have produced the innovation we witnessed in 2020 if the capacity and institutional knowledge about rapid development wasn’t already there.
And that’s exactly what the pharmaceutical companies have been trying to tell us for ages. “The argument of the industry for a long time has been ‘we’re innovative, you’ve got to pay up for innovation,'” Dan Mahony, co-head of health care for Polar Capital, told the Financial
Article from Latest – Reason.com