The Medical Research Fund

Don’t get me wrong, offering funding for research into science is always a good thing as far as I’m concerned. In this case, I question the motives and larger implications. In particular, it is not helpful to offer “the largest fund” in the world, if that fund is created by cutting the funding from many other areas of research.

Imagine I have a company that designs, manufactures and retails clothing. I have a part of my business that designs and tests those clothes, finds way to manufacture them using new methods and materials, then I have a range of retail outlets that I distribute my clothing to for me to offer consumers.

Wouldn’t it be fantastic if I didn’t need to run my own stores, but had someone else do this for me, at no cost to me, and they would sell my stuff without me really needing to do much.

Imagine if someone then came and said that anyone who bought stuff from those stores could have huge discounts coz that someone would pay for it. You’d be pretty happy as now you have a product that doesn’t cost you anything to sell, and demand is good because there is reduced obstacles to people buying it

Now what if that same someone said your stuff was so good that they would pay you money towards your design and manufacturing process. This just gets better and better!

  • You now get a reduced cost to design and manufacture
  • You get no cost retail outlets
  • You get less restrained demand as your product is “low cost”
  • And you still get paid the full amount you wanted anyway, and get to keep all the profits

Welcome to the medical pharmaceutical industry.

Agreed, there are HUGE costs involved in developing new drugs, and for every successful drug there are probably hundreds that fail. That however is factored into the costs of the ones that do work to compensate.

Medicare is a great thing, and the PBS also. These two government programs give people free access to healthcare, and significantly reduced medicines. The pharma companies get the doctors clinics and chemists handling all their “retail” at no cost (beside marketing). They get tax breaks as incentives to manufacture in certain countries, and now a new fund is being created to give them billions more to help pay for research.

I guess it could be argues that if the government is providing research funds then the pharma companies will carry a lower risk and cost for that research, and those reduced costs will be passed back to the government through lower costs to the PBS. Personally, I think that would be incredibly naïve to believe. Pharmaceutical companies are here to make money for their share holders. If they have a reduced cost for an input, the only reason they would pass that reduced cost on would be as a way to undercut a competitor for market share. If there is no competitor, which new drugs typically don’t have, then why would they sell it cheaper when they can pocket the larger profits?

Now of course, the government is actually going to make people pay a  “cover charge” just to walk into the shop, even if they don’t require actual medicines. That payment is then going towards the fund that pharma gets.

Stretched metaphors aside, I don’t think the winners here are we the people.

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