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Saturday, March 24, 2012

India's cure for cancer

Just read a piece by Matthew Herper in Forbes, in which I can't quite tell if he is "for" or "against" India's patent court's decision that a generic can go ahead and produce a Bayer cancer drug, which would otherwise cost $69,000 for a year of treatment for a patient.  The generic's price comes to $176 per year.  This is why we need a better plan for distributing pharmaceuticals.  If you look at any economics textbook, you'll find that the supply/demand/price curve (I should look this up) for a monopoly fixes optimal production at a point that results in an undersupply.  I.e. in order to maximize monopoly profits, price is set at a place where some consumers who would like access to the good simply don't buy it because they can't afford it.  That's fine for widgets and consumer electronics, but is it really even ethical when we are talking about pharmaceuticals?  Wouldn't it be better for a government -- or ALL the governments of the world -- to simply step in and pay the drug company its expected return on the monopoly, and then put the patent straight into the public domain?  The drug company still gets its billions, but now the patient access problem is solved -- more people get the drug -- and lives are saved.  Obviously, the devil is in the details -- how does one determine the true "value" of such a patent?  Maybe one has to permit it to exist for a few years.  Maybe one has to take into account the possibility that it is invalid at the outset and that a generic will successfully challenge it.

One thing that truly confuses me about the article is the following statement:  "Even for mass-market drugs, it is increasingly the reality in the U.S. that the patient doesn’t pay. Insured patients can get $160 worth of branded Lipitor for $4, with maker Pfizer picking up the rest of the co-payment. Meanwhile, Pfizer is negotiating with health plans to convince them to buy its Lipitor over the $120-a-month generic version."  There's no support or explanation for this statement, so it's probably just sloppiness.  It seems to assume that Lipitor is somehow "worth" $160 a month, and that by offering it for $4, drug companies are losing $116 on every single prescription.  I can't imagine how or why that would be the case.   And one also wonders why the generic drug is $120 a month, when it is presumably also being sold for $4.

Note that he says it's "insured" patients who get the drug for $4, and that Pfizer picks up the copayment. This sounds too specific to actually be wrong, so I am left wondering exactly what sort or pricing scam is at work here.  Seems likely that the truth is that it costs less than $4 for Pfizer to make the stuff, so it "generously" lets pharmacies dispense it for $4 -- unless you are not insured, in which case Pfizer will be happy to charge you its $160 price.  Is it really the case that an uninsured patient has to pay $120 or $160 a month for Lipitor or its generic equivalent?  If so, that's pretty outrageous. 

Mark Levin's Ameritopia

On a whim, picked up an audio version of Ameritopia: The Unmaking of America.  I have listened to almost one full CD, and I think I will continue, if only out of morbid curiosity.  So far, it is awful -- redundant, pedantic, conclusory, and lacking in any specifics.  Maybe that's because I'm still mired in the "introductory" portion of the book.

The main reason I haven't given up is because I went on to Amazon to see what "readers" are saying.  It's got 1534 reviews total, of which 1163 are five star.  There are 309 one-star reviews, and about 20 each of the others options (2, 3, 4).  All of the serious one-star reviews seem to bear out my initial impression, but all of these have been voted mostly "unhelpful." As a consequence, the "most helpful critical review" is:

165 of 214 people found the following review helpful
3.0 out of 5 stars Don't Hate... Congratulate, January 17, 2012
This review is from: Ameritopia: The Unmaking of America (Hardcover)
Mark is a good guy from Philly. Mr.Levine is a successful lawyer and accomplished author... Sure he is passionate and at times a bit offensive... but he loves America and speaks his mind. Please make your own determination about his book.

Even if you oppose Mr.Levine's political views you would be hard pressed to give the book 1 star as so many have. It's obvious that the poor reviews were an attempt at a personal attack.

The book was well written and does not deserve such rude reviews.

---

In other words, a Levin fan has posted a 3-star review that says nothing, and as a result, there is basically no "helpful" critical review for the reader to look at.   If you look at the one-star reviews, in addition to the unhelpful votes, there are also comments, picking apart the reviews, mostly on trivialities.

Anyway, I'll update this as I go along.  Apparently he has some good background on various economists and philosophers (starting with Montesquieu and Locke).  At this point, I'm still slogging through the prefatory material, which I've described above, and which I'll note here includes quote after quote from various historical figures, including the aforementioned Locke and Montesquieu, as well as de Toqueville, Popper, Lincoln, Hayek, Jefferson, Madison, etc.

From what I can tell, his core idea is that "utopianism" is a dangerous ideology.  I didn't realize that was the debate, but apparently it is.  And I'm sure he can come up with many examples -- the Soviet Union, Communist China, Cambodia, you name it, although he hasn't yet.   But he seems to think that's what America has become.  And he seems to think that Reagan was the last non-Utopian President.  He describes a sort of "master-mind" mentality -- this idea that leaders happen to "know" what's best for everyone, and what a threat to liberty that is.  He is rehashing the traditional "liberty vs. equality" republican vs. democrat debate which might be the only thing I remember from high school -- that republican platforms tend to focus on liberty for all (i.e. no gun control, no taxes, but no abortion), whereas democrats focus on equality (progressive taxes, etc.).  Interesting that he mentioned "progressive taxation" as a "threat" to liberty (I can't remember the list, but he threw it in along with some other things that more arguably were).

Let's see, I'm being a bit random here, but I will say that he provided a nice reminder of just how limited the founders thought the federal government was supposed to be.  I.e. I think he was reading from Madison's Federalist 50-something, where he said that the purpose of the national government should be focused on external matters -- foreign policy and military requirements.  Whereas the bulk of the powers of the government were reserved to the people and the states.

It's a good quote, and a good reminder, but it's kind of hard to blame the repudiation of that dogma on anything that has occurred in the recent past.  There has been a steady rise in federal power since shortly after the founding, and a meteoric rise in the 20th century.  We can't go back, sorry.

He also quotes Thurgood Marshall who apparently said something in defense of viewing the Constitution as a living document -- i.e. Marshall said that he didn't think that the founders were blessed with any particularly profound insight, especially since they lived in a society that tolerated slavery, and we had to wait several generations before people finally had enough and ended slavery with a bloody civil war.  Levin admits that slavery was a blight, and I think he says that most of the founders were against it, and then asserts that we might well have slavery today if it had not been for the Constitution. Rather weird argument, which seems to have drifted away from Marshall's original point.

As an aside, I have to say that Marshall's original point is pretty weak, given the alternative, which seems to be to permit 9 super-annuated lawyers with past political connections to forgotten regimes to decide anew in every case what the Constitution means, or even what a given statute means. That's not to say that nobody competent is ever appointed to the Court, but the bottom line is that those people -- especially when acting as a body -- are not particularly well qualified to be the final word on many of the issues that they handle.  A good recent suggestion -- in the Atlantic, and also in a Law Review somewhere -- is to give them 18 year terms, and then let them take a seat on another Federal Court if they want.  There is nothing special about any of them, and they have all been party to some pretty ludicrous decisionmaking.  And 18 years is a long time -- it's the average term for a Supreme Court Justice.

Ok, back to Levin.  He calls the utopian politicians "master-minds," which I guess is how he thinks they view themselves, i.e. like Plato's guardians (I haven't gotten to his section on Plato yet, but apparently he is against Plato, along with Marx and Engels).  These are people who think they know what's best, and can't leave well enough alone.  And of course, the "towering intellect" (he said "towering," I can't remember if it was intellect or something else) Adam Smith said just leave everything alone and it will turn out great.  Hmmm.  I haven't gotten to his section on Smith yet, but that's a vast oversimplification, for sure.   I'll withhold judgment until I read that.  But I'm quite sure that Smith was deeply concerned about the tendency of capitalists to exploit laborers in a purely capitalist society.

I don't think he has named Obama yet, or even Hilary Clinton.

But as I think I've intimated before, the problem with U.S. society -- the "unmaking of America," to use Levin's phrase -- is emphatically NOT utopian leaders, but legislators who vote with absolutely no regard for the public interest.  In other words, in listening to Levin, I only WISH we had just few utopians in Congress, who were actually guided by some vision of what's best for the people.  Instead, we have people who are only interested in themselves and how they will do in the next election -- which depends not on what they've done for the people, but on how much money they can get from lobbyists, which will in turn be used to convince the voters that they have done a good job.  Which turns out to be a much better formula for reelection than actually DOING good job.

A true "utopian" would be immune to the lobbying interests -- if we ONLY had pure utopians in government, we might actually be able to achieve something like Plato's Republic.  But we don't, and we never will, so we'll never know.

I'm sure that the "utopianism" that he is talking about includes the idea of universal health care (including individual mandates), but ObamaCare, in the end, was written by the corporations, for the corporations, and is probably more dystopian than utopian at this point.  As mentioned before, it featured insufficient attempts to control costs, and actual giveaways to the insurance companies and drug companies that are keeping health care costs high.  A truly "utopian" health care reform would have reined in costs WHILE providing universal coverage. But that would not have been possible in the American dystopia.

I assume he'll come back to his statement about how "progressive tax rates" (among other things) exemplify the utopian ideal.  I'll be eager to hear what he says.  I'll also be listening for anything that might be relevant to -- or even rebut -- my "skimmer" theory, outlined in previous posts -- that there is nothing wrong with taxing the incomes of those who are skimming off the gigantic cash flows that slosh back and forth throughout corporate America, without actually doing anything good for the public (incompetent CEOs with ridiculous pay and pension packages are the most obvious example, but, as previously discussed, there are many, many more -- including competent CEOs with ridiculous benefits).

I can only take this in small doses though.

--

Ok, I wrote and published all that, but then it occurred to me to see if there were any reviews of this book in any respectable publications.  It doesn't appear to have been reviewed in NYT or Washingtonpost.  But it was reviewed by Conor Friedersdorf in the Atlantic just a few days ago.  He notes that there haven't been any reviews in any mainstream publications (as is the fate of most conservative bestsellers), and he is responding to a challenge by Law Professor Hugh Hewitt to read the book.  He read the whole book, and has mostly the same impressions I did, although I think his review meanders a bit and is short on specifics.

But Friedersdorf hits the nail on the head when he says "I cannot argue with a mistrust of utopianism."  His basic point is that Levin doesn't even understand what utopianism is, and spends time criticizing the imaginary utopias of Marx, Engels, More, and Plato, without understanding that they are wholly imaginary.  He (Levin) seems to equate utopianism with statism, but (per Friedersdorfer), that's not the case, because George the III was statist but not utopian.  And of course, Ayn Rand created a "utopia" in Atlas Shrugged that meets none of Levin's definitions, and Levin is dead wrong in calling FDR and Obama utopians. This might just be a definitional quibble and Friedersdorf probably spends too much time on it.  But all in all, he comes to the same conclusion I do -- that it might be useful to hear the summaries of the great philosophers (since much of what Levin does is block quote them) -- but that anything "original" that Levin says is probably misguided:

"Mark Levin has good taste in political philosophers. Locke? Montesquieu? The Framers? Tocqueville? All awesome. Summarizing them for chapters on end, often using cumbersome block quotes, it's inevitable that he managed to squeeze in some great insights that they had. If Levin adds anything beyond that to justify buying his book, rather than a Locke CliffsNotes, its his brief discussion of spontaneous orders, but they're much more adeptly described by Hayek. Is there any original insight in Ameritopia that would justify its purchase price? There is not. He manages to list a lot of problematic things about the United States, including the budget deficit, excessive regulations, and the gradual erosion of enumerated powers as a lodestar. But he is unpersuasive in pinning these problems on utopianism, which he cannot even adequately define. And for reasons discussed here and here, he is totally lacking in perspective when he attempts to assess what in American life represents the most dire present threat to liberty and the constitutional order."


Saturday, March 3, 2012

Health Care -- The Price Problem

Today's Washington Post underscores the biggest problem with the Obama Care healthcare reform deal -- it simply failed to address the most glaring problem with our healthcare system -- out of control prices, especially when compared to other countries.  The idea of providing universal healthcare without addressing prices -- not to mention cutting deals with insurers and pharma to ensure prices stay high -- should have been a non-starter from the get-go. 

In the article, Ezra Klein points out:

"In 2009, Americans spent $7,960 per person on health care. Our neighbors in Canada spent $4,808. The Germans spent $4,218. The French, $3,978. If we had the per-person costs of any of those countries, America’s deficits would vanish."

Obama is justly criticized in Noam Scheiber's "The Escape Artists: How Obama's Team Fumbled the Recovery" for narrowly focusing on healthcare reform when his true focus should have been economic recovery.  What a missed opportunity!  If he had focused on these figures as a basis for healthcare reform he might have gotten a broader segment of the public behind him, and might have been able to push through a reform that did something meaningful about these prices. 

He would have been aiding the economy AND pushing healthcare reform through at the same time.  If he had done that, he would have gone down in history as the greatest president ever.