The price of immortality

Posted by Marc Hodak on March 15, 2007 under Futurama | Be the First to Comment

Actually, I’m just referring to the price of cancer drugs, as mentioned in today’s WSJ, which drugs unfortunately do not yet offer the prospect of immortality. The point of the article’s protagonist, Morgan Stanley biotech analyst Steven Harr, is that if the drug companies price their breakthroughs too high, they will face a political backlash that could undermine their long-term profitability. So, he says, they need to limit how much they earn from their breakthroughs by moderating their prices.

Setting aside the key assumption behind this claim, i.e., that the drug companies can forestall regulation by pre-emptively pricing below what the market can bear, I think this article presents a glimpse into what I believe will be the most important social debate of all time, the coming war over who will be allowed to afford immortality.

As I see it, it’s just a matter of time before the totality of human health problems becomes treatable. We will eventually, perhaps a long time from now, get to the point where even the poorest person will have access to these treatments. Between now and then, however, one thing needs to happen: the life-extending treatments need to be developed.

Their pace of development will be faster or slower depending on the rewards of development and overall economic growth. There will inevitably be a phase-in period, which could last several generations, where those treatments will not be universally available at market prices, so they will need to be rationed or heavily subsidized.

The key question, and this is where the mega-debate will happen, will be over the means of rationing or level of subsidization during this transition period. Market-based rationing without subsidization means that the treatments will go to the richest. It will also mean that those developing the treatments will have the maximum incentive to develop more, faster, and that the overall economy will grow more quickly, all of which hastens the day when the full set of treatments exist and are universally available.

In the meantime, will society accept the idea that Bill Gate’s kids or grandkids get to live forever but yours and mine may not? Of course, if we ration these treatments on any other basis, or tax everyone so that they are universally available more quickly, then the market will suffer. Either the drug company incentives or resources for further development won’t be there (which is the effect of the policy described in today’s article), or the economy as a whole will suffer from trying to afford the unaffordable–universal access to expensive innovations.

That’s going to be the big debate.