Sunday, March 27, 2011

The US Government neglects a once-great industrial sector--pharma. Where exactly, are the jobs we need going to come from? To say nothing of the cures?

The Export-Import Bank of the United States is holding a conference in Washington DC this week, and what's notable about the agenda is the absence of any representation of the pharma/medical device sectors on the list of speakers.   One would surmise, therefore, that the medical sector just isn't that important to export-minded economic planners.   Instead the speakers are heavy with diplomats, reps from tech companies, from construction companies--and, of course, well-connected DC-based lobbyists.

Indeed, it's easy to see why the pharma sector was overlooked.  In 2009, according to the International Trade Administration's Office of Health and Consumer Goods, pharmaceutical exports from the US were about $46 billion, and imports were $82.5 billion; thus the US has a negative pharma trade balance of $35.5 billion.   Not so long ago, the US pharma sector was a huge net exporter, but decades of political attacks on the pharma industry, combined with restrictive legislation, have taken their toll.  This decline in US pharma competitiveness is measurable and quantifiable, as Michael Milken noted recently.

We should worry about the decline of any US industry, of course, but surely we should worry in particular about the decline of the medical industry, for the simple reason that medicine is a key variable as to whether or not we keep our health  Admittedly, the rest of the world is making medicine, but overseas firms are making mostly generics--copies of extant medicines.  In other words, the rest of the world is mostly not innovating, it is instead free-riding, and so that's why we are suffering a Serious Medicine Crash.   In the long run, we will have to find a way to recapitalize the medical sector, and we probably will, because demand for medicine is always strong.  That renascent pharma sector just might not be in the US, that's all.

In the words of Serious Medicine strategist Jeremy Shane:

One of the fastest ways to reduce costs for American consumers and increase use of American technology would be to export the fruits of our drug research and diagnostics.  The larger the population to which new drugs or genetic or diagnostic tests are distributed, the faster we will learn which drugs work best for which groups of people, and the greater the opportunity for US-based innovators to realize value from great science and US based manufacturing of new therapies.

But none of these economic opportunities seem to be of interest to the Obama administration.  Having enacted a new healthcare finance scheme at enormous fiscal and political cost, the Obamans don't seem interested in revisiting any facet of the healthcare issue.  Indeed, to the extent that the the drying up of the drug pipeline means that government agencies spend less on healthcare--no matter what the longterm consequence to public health--the Obamans might even be happy to see the medical sector wither away.   That's speculative, of course, but we know from the Ex-Im speakers' roster that nobody in Washington is doing anything to change the faltering status quo.


  1. Nice post. The current 'red meat' strategy is to demonize the pharmaceutical industry as a nefarious and avaricious cabal, rather than a source of healing for all of us. Remind me, where are tomorrow's cures going to come from?

  2. There are no "shovel ready" jobs in the pharma sector - those shovels belonging to the union members who canvass for BHO and "help" voters in nursing homes fill out their absentee or mail-in ballots.

  3. New jobs?
    Creation of new jobs requires leadership. Sorry Albert Schweitzer, but we haven’t produced enough in the last 40 years except RR. And that is why our world and its systems are so screwed up. Guess we’ll have to wait for China and India to get up to speed to fill America’s void. Or maybe, just maybe we 'lard can' Americans will turn off the TV, get off of our butts and go vote come November and in local aka School Board & Library elections.

  4. You make good points of course. This kind of thing is strangling businesses, killing innovation, and murdering human beings and it can be counted on to do more of this in the future. Alas, pointing this out to the people guilty of doing it won't make a whiff of a difference.

    Why? Because in their minds, what they are seeking to create is a perfect society. In this perfect society there will be no more poverty, war, disease, hunger, or unhappiness. Of course in order to accomplish this great mission all that exists now must be swept away. All jobs will be swept away. All businesses will be run out of existence. All of the people who can't fit into this brave new world must be cast aside (everyone dies anyway so who cares?). To this mentality, this is just collateral collateral damage, regrettable but necessary to fashion their new world of total happiness and perfection. From this point of view nobody should care about the lost jobs, the destroyed businesses, or the dead or crippled because there are so many more offsetting values to be gained by achieving utopia. Millions in the past century were murdered outright by these same kinds of people in Germany, Italy, Russia, China, Cambodia, Cuba, and Korea, so why should we expect their American counterparts to care any more about the "little people" whose lives will be crushed out of existence in order to usher in utopia? Not a chance.

    Of course normal people will be appalled at the loss of money, jobs, and lives, but normal people are generally already opposed to these things. What we need to do is attack the utopian socialist vision if we are to slow the bastards down and stop them from destroying our civilization. Showing them the dead bodies won't phase them any more than it did with the Nazis, Soviets, or the Khmer Rouge. The question is how to get them to abandon their passion for annihilation of everything in society, good and bad. Showing them that it is happening will likely encourage them more than stop them. Showing them that they can't succeed at wiping us all out is probably a more profitable scheme if you ask me.