Why government directed and paid for pharmaceutical research will never work

There is, as we all know, a considerable campaign out there to insist that the private sector should be excised from the pharmaceutical drug development system. Groups like Global Justice Now march around insisting that it’s evil that capitalists make money here. Vastly more sensible people like the American economist Dean Baker suggest that government should both pay for and direct such research. That way that patent system - and the high costs of that first 10 years of drug deployment - could be avoided.

Our first line of defence of the current system is that changing who pays the costs doesn’t in fact change the costs themselves. If it costs $1 to $2 billion to develop and gain a licence for a new drug - which it does - then that’s what it costs to develop a new drug. Taxpayers can pay this through the prices of drugs after the capitalists have funded it or they - we - can pay it upfront under the direction of the politicians.

It’s not entirely necessary to buy into our core conviction that politcians are useless, counterproductive even, at allocating capital to think that perhaps that second system might not be all that much of an improvement upon the first and extant one.

But there’s another argument, a clinching one:

The UK government ordered the jab, under development by Valneva, in 2020. However, after rolling out vaccines by Pfizer, Moderna and AstraZeneca, it scrapped that order in September last year. Valneva said ministers had thrown it “under the bus” when the €1.4 billion deal was pulled. Shares in the company, which is listed on Nasdaq in the US as well as in Paris, fell more than 45 per cent.

Now it has emerged that the terminated agreement cost taxpayers €253.3 million (£214 million) in non-refundable payments that the government had already made. In results for 2021, Valneva revealed that revenues had risen by 216 per cent to €348.1 million, which included that €253.3 million relating to the terminated UK Covid vaccine deal.

The expense comes after the government was condemned after admitting that £10 billion of spending on PPE had been written off. Hundreds of millions were wasted on unusable equipment that had passed its expiry date, while taxpayers paid extra in the scramble for masks and gowns at the start of the pandemic. It has also been criticised for failing to stem fraud in Covid loan schemes.

Wes Streeting, the shadow health secretary, said the Valneva expense was “yet another example of wasteful and careless spending” by the government. “The Tories have already lost billions of taxpayers’ money to fraud and waste during the pandemic,” he said. “The British public are paying the price... in higher taxes.”

Yes, OK, Wes is the definition of student politics promoted beyond ability or experience but still. This is the problem with any government funded and directed development process. There will be mistakes, there will be errors. Not in the sense of damn, that was a bad decision to make, but damn, well, that one didn’t work out, did it? Because that’s how development does work out.

The entire world of R&D is to explore the universe of what can be done and see where that coincides with what we’d like to have done. It is, by definition, a process of trial and error. The error is not just an inevitable part of the process it’s an important one too.

So, wrap that all up into politics and any politician who does make such an error - recall, we’d actually like them to make error in this field, find out things that don’t work as well as those that do - will be attacked and possibly defenestrated for having done so. Which kills off that exploration mission that is the mission itself.

The capitalists shrug, say damn that one didn’t work and look around for the next mistake to make. Politics does not, will not and cannot work that way. Therefore politics isn’t the right way to manage this process.

Of course, not allowing Wes Streeting near any decision is one way to deal with this but we would remind that the National Union of Students does still exist and there’ll be another Wes along every year.

Politics never will give pharma development room to make those mistakes therefore politics cannot drive pharma development.