A Stitch in Haste

Here's a comment I posted on Dan Drezner's blog regarding the EU response to the confirmation that avian flu has reached its fringes:

It's not just about vaccines and antivirals.

Here's the real question: Are we prepared to tell businesses to relax all their rules regarding absenteeism and tell schools, even bus drivers, not to admit coughing students?

The reason our boring old cold and flu outbreaks get as bad as they get is because we either don't want to, or can't, just stay home when we're sick. Just one guy who's used up all his sick days, or one parent who insists on sticking his sick kid on a school bus, and the pandemic lives on...

Sometimes the biggest threat to libertarian ideals is not an expansive state, but a foolish citizenry.

P.S. Are we also willing to start posting guards in restrooms to make sure people wash their hands? How about crowded subway cars — should police start screening people not just for bombs, but for the sniffles too? Ditto for air travel. How about seizing, via eminent domain, all patents and other intellectual property regarding flu vaccines and flu-prescribed antivirals?

Any thoughts?

I only semi-seriously commented in a previous post that concern (panic?) over a possible avian flu pandemic could result in the seizing of patents for flu-related vaccines and antivirals.

Now I'm deadly serious:

Sen. Chuck Schumer yesterday blasted a major international drug company for "putting profits ahead of world safety" — demanding it suspend its patent on a drug that has proved successful in fighting deadly bird flu.
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The senator wants Roche to temporarily suspend its patent on Tamiflu — since it cannot keep up with world demand — and license generic drugmakers to mass-produce it.

He gave the company one month to comply, threatening to change the law to give the federal government special powers over pharmaceutical firms in times of world health emergencies.

I guess the fact that Roche isn't an American company doesn't mean the U.S. federal government isn't allowed to exercise "special powers" over it.

In any case, here's the moral of the story: Spend billions and billions of dollars developing the only even partially effective anti-flu treatment, and have it — or at least the well-deserved profits from it — stolen by government thugs in the name of the "greater good." And then be expected to do the exact same thing tomorrow.

Schumer is obviously confusing Roche executives with the moron New Yorkers who elected him.

The very reason we had a flu vaccine crisis last year was because government made it impossible for companies to manufacture the vaccine profitably. Now they want to do the exact same thing with Tamiflu. Just for the sake of grabbing a headline.

This is quite simple: Schumer's proposal and the chilling effect it would have on pharmaceutical research will kill people. Literally. They'll give up on developing new drugs for the flu and focus instead on new and better drugs to fight erectile dysfunction, urinary incontinence and athlete's foot.

Meanwhile, an Indian pharmaceutical company, with the apparent blessing of the Indian government, is already stealing the Tamiflu formula. Think Roche or other pharmaceutical companies will be eager to do business with India in the future?

Perhaps China, with its unparalled ability to ignore intellectual property rights, will be next.

Then again, who needs a Communist dictatorship when you have Chuck Schumer?

Other thoughts at Market Power, Marginal Revolution.

UPDATE: Taiwan has also announced that it will ignore Roche's patent and manufacture illegal Tamiflu (or a "99% akin" version thereof), even after Roche announced that it will begin licensing the drug to other pharmaceutical companies. (Via Kevin, M.D.)

Competing headlines from Europe over the avian flu:

The Eurocrats take the Hitchhiker's Guide approach:

Europeans should not panic about bird flu as there is only a slight risk of humans contracting it and there is no immediate threat of a pandemic, a European Union disease prevention agency said on Wednesday.

Britain, meanwhile, thinks that attitude is for the birds:

The Government will buy enough bird flu vaccine to cover the entire UK population as soon as any pandemic emerges.

Chief Medical Officer Sir Liam Donaldson said 120 million doses -- the equivalent of two per person -- would be needed.

Isn't the whole problem with flu vaccine that it can't be manufactured in time to prevent a pandemic?

In any event, my guess is that the optimal policy is somewhere in between these two extremes. My guess is also that our government will screw up just as badly, if not worse, than its transatlantic counterparts.

More thoughts at Marginal Revolution.

Marginal Revolution revisits this Reason article about Milton Friedman's once-radical thesis that firms should abstain from engaging in "socially responsible behavior" such as donating to charities and should instead focus strictly on maximizing profits.

In the process, Tyler Cowen has a slight slip of the tongue (slip of the keyboard?):

Friedman has qualified his social responsibility claim for force and fraud, but what about negative externalities more generally (just ponder Tamiflu licensing if you want the appropriate headache)?

Huh? Developing the only pharmaceutical that is even remotely effective against avian flu is now considered a "negative externality"?

I actually see where Cowen is going in his post, but I think it's a bit too sloppy to fault the mere concept of private enterprise and private property as inflicting "negative externalities."

If I lock my apartment door on my way to work, then perhaps, technically, yes I have imposed "negative externalities" on my neighbors, who are now prevented from, for example, coming in and watching my television. But if we start defining down externalities to the point where private people and private businesses not engaging in altruistic deviation from profit maximization is an "externality," then the word no longer has any real meaning, and any or every policy proposal, no matter how anti-capitalist and anti-libertarian, is functionally and morally equivalent.

And with regards to Tamiflu specifically, I maintain my thesis that the "problem" of pharmaceutical profits is no real problem at all: If you want companies (or their investors) to do good tomorrow, then you have to let them do well today.

Roche, the maker (i.e., the inventor and owner) of Tamiflu, the only prescription drug even remotely effective against the flu (including avian flu) will no longer ship the drug to the United States:

Roche said it had halted deliveries of the drug to pharmacists in the United States and Canada until the start of the flu season over concerns that consumers could deplete stocks by hoarding the drug at home.

"Our priority is to ensure that Tamiflu is available for seasonal use and to fulfil government orders," she added.

First of all, one wonders whether there might be just a hint of an ulterior motive in Roche's actions, namely the desire to thumb its nose (or fire a warning shot) at grandstanding American hack politicians who are trying to bully the company around. Other countries have already announced, without apology, their intention to steal the Tamiflu patent. Maybe Roche is flexing what muscle it has left on the world stage by reminding nations that, yes indeed, Tamiflu is both their intellectual and their physical property.

On the other hand, how sad that Roche seems to think there's something wrong with private citizens "hoarding" flu medicine, but nothing whatsoever wrong with governments doing the exact same thing. I can't keep two doses of Tamiflu in my medicine cabinet, but the U.K. is entitled to stockpile two doses of vaccine for every person in the country? That makes no sense.

What exactly is "hoarding" anyway? Am I, at this very moment "hoarding" aspirin, or toothpaste, or instant coffee, simply because I own more than I have an immediate and urgent need of? I guess "hoarding" is the new "price gouging."

We saw last year how the U.S. government completely disrupted the flu vaccine supply, finally imposing "voluntary" rationing only to end up with an unused surplus. Do we really need to reinvent that wheel with Tamiflu or this year's flu vaccine?

Roche is the most "Atlas Shrugged" company since Microsoft and Wal-Mart. Here is a firm with a product that has urgent value and no substitutes. The response of the world has not been gratitude, but rather condemnation and thievery. Hopefully Roche will maintain the moral high ground and remain unapologetic in their control of Tamiflu. If they don't, then the chilling effect on pharmaceutical research could be staggering.

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Meanwhile, the Senate has approved spending $8 billion to stockpile flu drugs in anticipation of an avian flu outbreak in the U.S.

I ask again -- why is it "stockpiling" when the federal government buys millions of doses of Tamiflu in advance, but "hoarding" when I try to buy two?

In a previous post I asked the following:

Why is it "stockpiling" when the federal government buys millions of doses of Tamiflu in advance, but "hoarding" when I try to buy two?

Now my question is: Why is it "hoarding" if I, a private citizen, want two doses of Tamiflu, but "stockpiling" when Richard Branson, also a private citizen, wants 10,000 doses for his private airline?

In response to questions about companies hording Tamiflu, Branson said, "We've bought [Tamiflu] because our staff is on the front line."

Branson also said that despite Virgin's best efforts to protect staff and passengers, if the flu starts spreading person to person, "it will most certainly affect the airline industry."

Last time I checked, Virgin Atlantic was neither a hospital nor a pharmacy nor a government. Moreover, an airline cannot "catch the flu" the way you or I can (recent flu shot notwithstanding).

So two new questions arise:

1. Why is a private, for-profit, non-medical business allowed to hoard stockpile any prescription drugs under any circumstances in the first place?

2. Where, precisely, is the line between "stockpiling" and "hoarding" drawn? Hopefully not at the same line between intelligent policy and the Politics of Pull.

Roche, the manufacturer of the (only somewhat effective) influenza treatment Tamiflu, has notified the World Health Organization that its productive capacity for the drug — currently 115 million doses for 2006 and 300 million doses in 2007 — exceeds all the government orders placed thus far.

Which invites the question: Will governments now back off on their threats to ration the drug in attempts to prevent private "hoarding"?

Because, remember, when a government pre-emptively buys massive quantities of scarce resources that it doesn't yet need, it's called "stockpiling," but when you pre-emptively buy just enough for your own personal needs, it's called "hoarding."

Nevertheless, avian flu hysteria is still nascent, so there will be plenty of opportunities for the governments of the world (not to mention world governments such as the U.N.) to disrupt private markets for Tamiflu, vaccines and other resources.

Stay tuned...

Demand creates its own supply:

British pharmaceutical group GlaxoSmithKline (GSK) has reported a "breakthrough" in trials of a vaccine to combat a lethal strain of bird flu in humans.
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GSK said that governments could order the vaccine for the H5N1 virus for delivery and stockpiling in early 2007 if it was approved by US, European and other regulators, even though more development work had to be done.

Remind me again how the pharmaceutical companies are nothing but "greedy capitalist bastards" who sell us drugs we don't need, and at inflated prices?

[P]robably it's going to be equivalent to a flu vaccine in terms of cost — maybe four pounds a dose or so," [GSK's CEO] said.

Bravo to Glaxo's scientists, executives and investors — all of whom contributed in their way to this globally significant breakthrough. Hopefully the FDA and the rest of the world's pharmacrats won't impede the development and deployment of this vaccine.