2/22/2008

Subsidizing Fat Cats

Malaria is becoming an ever increasing concern. Where, decades ago, viruses like West Nile and Malaria were somewhat contained to Africa, today these diseases are becoming more and more widespread. This article talks about a new treatment for Malaria. Many Africans that are using older remedies to treat Malaria are finding that they are becoming resistant to the effects. A new remedy has come on the market that is less prone to resistance. It is a little too expensive, however, for the average African. A possible plan has been proposed to subsidize the cost to Africans. However, some people are against the plan. They feel that since there are so few suppliers the subsidy will end up going straight to profits.

I tend to side with those against the subsidy. Unless there is some way for the subsidy donors to demand that the suppliers charge a lower price for the treatment, there is no guarantee the treatment will get to Africans at a lower price. Especially where there are so few suppliers, the suppliers have, in essence, a monopoly on the market.

7 comments:

Gavin said...

Clearly Africa has more problems than malaria. I think rather than subsidize the ACT's the Gates Foundation should build a facility in Africa that can manufacture several medications. Then subsidize education and wages to involve African labor. This will help on some level to avoid pricing abuse. Jobs, social responsibility, and accountability are better long term solutions for Africa.

Dr. Tufte said...

Malaria "policy" is perhaps the most immoral on the planet.

There is an easy way to fight malaria: DDT. It's cheap. It works. And, there is little evidence that there is a tolerance problem.

DDT, of course, was banned in the 60's. We now know that the underlying science behind that ban was weak or non-existent.

What's worse, is that other currently used anti-mosquito insecticides (like pyrethrins) are far more hazardous.

Without DDT, what we have is an essentially infinitely-sized reservoir of parasites. The approach of using ACT, or quinines for that matter, is to the equivalent of trying to staple together a solution after the damage has been done.

Malaria is, quite simply, the biggest public health problem in the world. But ... we hear very little about in the U.S. because the solution is dismissed as an article of faith that cannot be challenged, so it is easier just to avoid talking about it.

Bitsy said...

Subsidizing should work to bring down prices in a competitive market. Unfortunately the suppliers of ACT form more of a monopoly than a free market. I can understand the need for additional controls in order to get price relief to the malaria victims.

Also, I hadn't heard about DDT being banned without good scientific evidence. That is very interesting.

Trinity said...

Dr. Tufte said it's easier to avoid talking about the problem of malaria. I, personally, don't feel that's a very good response to any problem. I also don't think malaria is the problem in this case. The problem is getting the treatments, whether it's malaria, aids, river blindness, or small pox, while being fair to the companies that spent millions or billions developing the treatment.

Does it really matter who the subsidy goes to if the people that need the drug are still able to get it? The drug companies SHOULD get the excess profit; they invented it.

Reagan said...

Dr. Tufte said that Malaria "policy" is perhaps the most immoral on the planet. I have to say I was not well informed on malaria treatments before I read this post. Because of my curiosity and interest I spent a fair amount of time reading articles and other studies on malaria, current treatments, and previous methods of pest eradication. From a humane and economic standpoint I find it ridiculous to argue whether or not a subsidy should determine if someone gets malaria treatments? I believe that we should start by looking at the most simple solution and work from there. The most simple and economic solution is DDT, which is banned over most of the world. I don't think people can argue against the fact that the environmental movement sometimes is self serving and is there only for the environmental movement. It looses focus on the value of human life in some situations and is unwilling to look at small trade offs that might benefit humanity more than it harms the environment. In economics we sometimes look at trade offs to compare benefits and costs and in this situation it should be no different. Because of Dr. Tufte's comments on DDT I researched the more recent scientific evidence against the use of DDT and the evidence of its carcinogenic effects has become weaker. The opinion today is that it might increases the chances of cancer but there is not a strong correlation. It might have lead to the decline in the Bald Eagle population but it can't be proven with certainty. So in my opinion the most economic and feasible way to battle malaria right now is the most simple answer, DDT. We can start eradicating mosquitoes with DDT because the benefits outweigh the costs or we can continue with corporations, philanthropists, and governments trying to figure out what's best while millions die.

TheFindlay said...

Dr. Tufte
I want to know if you pulled those drug names and dates out of your head or if you had to surf around to get such examples. I thought it was interesting to hear you state that “Malaria is, quite simply, the biggest public health problem in the world.” I have barely even heard of Malaria and know none of the symptoms. I don’t think it has any thing to do with an article of faith. Darfur is that way and we care, in my opinion, more than we do for them. Isn’t AIDS the biggest problem in Africa and heart disease the biggest worldwide?

Dr. Tufte said...

-1 on Reagan for a spelling error.

thefindlay: I have some extra knowledge about malaria, but most economists are familiar with the problem.