Pandemic Readiness requires economically inefficient choices by companies, this will never happen in a healthcare system ran by monopolies

This divergence of private incentives from public health needs widens in contexts of pandemic preparedness and response. First, forces of supply and demand mediated by price do not work well to respond either to the possibility of future pandemics or, on an emergency basis, to allocate resources and guide economic activity once the public health emergency has struck. Even in well working markets, price does a poor job of reflecting the value of being prepared for unknown future contingencies. The price mechanism does not and cannot capture the difficult-to-quantify and heavily discounted public health value of being better prepared in the uncertain event that a (corona) virus or other pathogen of a particular type will spread rapidly within economically profitable markets at some future time. Pandemic preparedness requires ‘inefficiencies’ from an economic point of view: carrying excess capacity, stockpiling equipment, and ensuring geographically spread production and distribution infrastructure that exceed market demand or for which there will never be any realized demand. It involves investing in the R&D of vaccines and treatments for pathogens that are likely to never emerge, and for diseases that are most likely to remain contained, and/or for pathogens that might mutate over time such that approved products might not work for future infections and outbreaks. Compounding these bleak economic prospects is the fact that outbreaks of infectious diseases often start with, and remain limited to, neglected regions and populations, where markets for pharmaceutical products offer limited economic potential. The 2014–2016 transnational Ebola outbreak, which affected primarily countries in West Africa, is a case in point. Coincidentally (or perhaps not), many of the promising leads on treatments for COVID-19 are based on advances made—but then stalled—in response to Ebola. Moreover, under current paradigms, pricing of any existing vaccines and drug products before the start of an outbreak is bound to grossly undervalue the preventative and therapeutic effects of such products. Once an infectious disease that threatens severe health outcomes starts spreading, it is sure to result in inelastic, and sometimes irrational, maximal market demand for treatments, regardless of individuals’ risk status and even regardless of product effectiveness. Panic increases the demand for any potential therapy dramatically, but leaves the ability to pay rather than health need or health benefit as the determinant of who gets the product in times of shortage. Infectious diseases like COVID-19 tend to spread more readily and have greater health effects on poorer communities, where purchasing power, and thus market demand, is low. But when a pandemic emerges, markets allocate resources based on who can pay the most, which reflects neither individuals’ need nor the best allocation for achieving public health goals. The tension between ability to pay and medical need is further compounded by the additional tension between individual demand and the public interest: while individuals rationally seek to maximize benefits for themselves and their loved ones, on a population level, herd response is the only method of effectively tackling pandemics, with herd immunity being the ultimate goal. Leaving the allocation of treatments to be decided by who can pay for them will inevitably lead to suboptimal results, to everyone’s detriment. This problem takes on an even greater dimension when we consider the needs of poorer countries outside of the USA, and the importance of considering not just treatment effectiveness but also accessibility to large groups of people. In addition to problems of inelastic demand confronting income constraints and capacity constraints, the rising price for any type of therapy combined with scarcity of effective treatments leads to problems of profiteering and attracts products of uncertain quality. During the period of the outbreak, as information gaps increase and, with them, irrational and even desperate individual responses, pharmaceutical companies gain the ability to charge high prices for virtually any purported treatment, regardless of its safety and efficacy profile, and with minimal risk of tort liability further down the road. While emergency conditions also include downward pressures on prices, which arise, among other things, from emergency government responses such as compulsory licensing, in the US these pressures are curbed by the dominant political belief in the power of the market and the importance of rewarding private innovation. With the ability to raise prices in a time of crisis, and with limited threat of competition due to limited capacity, market incentives might even encourage non-preparedness, untimely response, and profiteering.