Via Forbes.com, an opinion piece: The Free Market Won't Produce An Ebola Cure; So Should Government Instead? Excerpt:
The free market simply will not fund an Ebola drug through to a full license. The current work, ZMapp and the like, is all publicly funded. Which is just fine of course, that’s what we have government for, to do the things that a pure and unadorned free market won’t do. But even given that initial funding, even if it turns out that ZMapp is the perfect cure for Ebola, that free market still won’t bring the drug to a full license. Because it simply doesn’t stack up financially.
People do argue about these numbers this is true, some claiming that it really doesn’t cost $1 billion to get a drug through the licensing process. But it’s certainly north of $500 million however you cook the numbers and that’s where the problem is. Ebola has killed some 2,000 people or so in the past 40 years. Horrible deaths for all of those people but that’s not enough for that market logic.
It takes around a decade to get a drug through all of the trials required to have a fully licensed treatment. The patent will last for only another decade after the grant of that license. So, using that simple math the drug would be in patent to save perhaps (assuming it was 100% successful) some 500 lives. Given the 50-90% fatality rate of the disease, to treat perhaps 1,000 people.
To even begin to make financial sense the price of the drug once licensed would need to be of the order of $1 million per patient treated. That’s not a cost that we would likely bear inside the US and it’s most certainly not a cost that the health care systems of West Africa (where the per capita spending per year on health care is of the order of tens of dollars) could absorb.
So there’s not going to be a market orientated drug company that’s going to take a potential cure through the FDA approval process. But that leaves us with the next decision: should we therefore ask government to do that for us all collectively?
This is, as above, what government is for after all, to do for us the things that we cannot do through simple voluntary cooperation in the market. And the difficulty of this question is that the answer is not obviously yes. It would still cost that $1 billion to gain a full license. It would still cost that $1 million or so to treat a patient in that first decade. We can most certainly say that we in the rich world have a duty towards our poorer bretheren. I would incline that way myself.
But the horn of our dilemma is that even if we do say that and agree to spend the $1 billion creating an Ebola treatment would not be the most efficient contribution to health care or even human welfare in West and Central Africa.
The same sum spent on TB treatments, malaria, river blindness, many of the other myriad diseases that afflict the area, would have a much greater effect. Keep more people alive for longer, the measure of efficiency we want to use here.
And the same sum spent on building adequate public-health infrastructure and reducing poverty would indeed keep more people alive longer, without going to the trouble of finding cures for poverty-based disease.