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In These Times - April 20, 2020

"The public health crisis now hammering America reveals how vital it is to invest in researchbeforeit is desperately needed. But that’s not how market logic works. Instead of directing attention to what will protect the largest number of people from the greatest harm, capitalism steers innovation toward the largest profit in the shortest amount of time."

... So how did the United States, dubbed “the greatest engine of innovation that has ever existed” by New York Times pundit Thomas L. Friedman, end up so sorely unprepared?

Perhaps one clue lies in Texas, where a potentially effective vaccine has been stalled since 2016. Dr. Peter Jay Hotez and his team at Texas Children’s Hospital Center for Vaccine Development created a potential vaccine for one deadly strain of coronavirus four years ago—which Hotez believes could be effective against the strain we face now—but the project stalled after the team struggled to secure funding for human trials. Even the looming crisis did not guarantee additional money. Commenting on the effort to resume development, Hotez told NBC News on March 5, “We’ve had some conversations with big pharma companies in recent weeks about our vaccine, and literally one said, ‘Well, we’re holding back to see if this thing comes back year after year.’ ” Under this logic, vaccines for recurring seasonal illnesses, like the flu, are the more attractive investment. Unlike rarer or less-understood diseases, they promise a client base that can be mined again and again.

The evidence for Dimon and Friedman’s grand claims about capitalism is presumed obvious. Had the West never abandoned feudal and mercantilist systems for capitalism, there would never have been an industrial revolution, nor the technological progress we enjoy today: powerful pocket-sized computers, self-parking cars, robots that vacuum and mop, drugs that reverse overdoses and fend off HIV, maps that predict hurricane routes. The staunchest defenders of the status quo would tell you that a socioeconomic system any less individualistic could never have produced any of it. Without the pressure of competition and promise of riches, they say, no one in their right mind would invest time in useful discoveries. But what if this perspective fundamentally misunderstands the elements that drive innovation? What if innovation actually happens in spite of capitalism?

Innovation is not synonymous with mere “invention.” Rather, innovation describes a process—the stages of developing an existing discovery, moving it into production and disseminating it to a wider audience. Three ingredients seem necessary for innovation to flourish: ample resources (like education and equipment), free and creative minds, and the free sharing of information to expand the universe of people able to build on discoveries. Together, these ingredients make a powerful recipe for maximizing innovative output. Yet, American capitalism obstructs each of them. Taking a closer look at what actually drives innovation helps explain how we got to such a bleak place, and the transformation we need to push our research institutions ahead of societal needs.


President Ronald Reagan once said the best minds are not in government, and if any were, business would steal them away. (He also famously quipped, “The most terrifying words in the English language are: ‘I’m from the government and I’m here to help.’ ”) The idea that private firms are better than the government at solving problems persists despite our long history of innovation through public institutions—and despite the dire consequences caused by this mistaken fetishization of private innovation.

A significant amount of “basic research” for new drugs comes from government labs, university departments and nonprofit organizations—basic research being a technical term for the research done without a practical end in mind (beyond a greater understanding of the unknown). Basic research is timeconsuming, but it is essential for innovation. A 2011 study found that, in the 40 years prior, at least 153 Food and Drug Administration (FDA)-approved drugs were discovered with support from public research, while a 2018 study found that “[National Institutes of Health (NIH)] funding was associated directly or indirectly with every drug approved from 2010–2016,” including through basic research. Noting the robust budget for basic research at the NIH, the researchers concluded, “Any reduction in this funding that slows the pace of this research could significantly delay the emergence of new drugs in the future.”

Unfortunately, America’s rush toward privatization has come at the cost of public investment. The Information Technology & Innovation Foundation reports that America’s state and federal spending on university research has slipped dramatically since 2011. Between 2011 and 2018, U.S. spending on R&D fell 11%, from $165.6 billion to $147.3 billion. In fact, every proposed Trump administration budget has requested deep cuts to public research institutions. President Donald Trump’s budget proposal for fiscal year 2018, for instance, asked Congress for a $1.2 billion cut to the Centers for Disease Control and Prevention (CDC), including a $136 million blow to funding for public health preparedness and response. That same year, the CDC curtailed its work against global disease outbreak by 80%.

The public health crisis now hammering America reveals how vital it is to invest in research before it is desperately needed. But that’s not how market logic works. Instead of directing attention to what will protect the largest number of people from the greatest harm, capitalism steers innovation toward the largest profit in the shortest amount of time.

“Many vaccines used to be produced in the public sector; now the majority are produced in the private sector,” Dana Brown, director of the Next System Project at The Democracy Collaborative, explains. “Big Pharma is not well set up to bring a vaccine into the market: Vaccine development and production is a long, risky process requiring patient capital and sustained interest. Big Pharma focuses on short-term gains and maximizing shareholder value—there’s little, if any, gain for shareholders when companies invest in vaccine development.”

What’s more, only four major vaccine producers exist worldwide (Pfizer, Merck, GlaxoSmithKline [GSK] and Sanofi), down from 26 in the United States alone in 1967. “Limiting access to vaccines through high prices and monopolies is terrible public health policy,” Brown says. “A number of companies reported losing money on Ebola or SARS vaccines programs, which might make them hesitant to invest again—and their track record shows it. In recent years, GSK made commitments to Ebola vaccine development and later pulled out. Sanofi did the same with Zika, and Novartis, a pharmaceutical company in Switzerland, dumped its whole vaccine development unit in 2014.” ...
See full report at In These Times