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Hippocratic Harlots

One of the few things I am actually an alarmist about is biological pandemics. Given the past 50 years of US history I have no reason to be this way, but as this Megan McArdle post illustrates, there has been a really disturbing trend happening in medicine over the last 30 years:

The first shows the rise of antibiotic resistance in various common infections.

The second shows the decline in the approval of new antibiotics.

Read the whole thing. So, our most common bacterial infections have drastically increased their resistance to our known antibiotic treatments, and the flow of new antibiotics to the market has slowed to a trickle, with few prospects going forward.

The medical profession is “guarded” by the American Medical Association and various government regulatory agencies. If any sector is the mark of the modern “mixed” economy, this is it. Furthermore, the drug sector is heavily, and I mean heavily, regulated by the FDA. Two points come to mind as I ponder this.

  1. “Market failure” arguments are all the rage among folks who despise voluntary transactions, or who simply have to scratch an itch to have the state improve things. How does the market failure argument work here? Well, when a doctor and a patient (or a vet and a farmer, etc.) agree to make use of an antibiotic to treat a disease or to prevent the occurrence of one, the benefits to each of them are pretty apparent. But, when they engage in this seemingly mutually beneficial transaction, they are imposing a cost on someone else. Who is that someone else? Future carriers of bacterial infections. With each dose of antibiotics employed the perpetrating bacteria will increase their resistance to the drug, and at some point may develop perfect resistance to it — dooming future carriers of the disease to extreme sickness or even death. But since the doctor and patient have no way of “feeling” the cost to future patients like me, they end up making far too aggressive use of antibiotics. This is what you would learn in a simple Intermediate Micro class. Of course, we typically teach this kind of market failure as a problem endemic to markets. But nothing about the medical profession is market oriented. Will folks point to this failure, and perhaps coming crisis, and say, “aha, this just goes to show you that the regulatory state is subject to massive failures!” I’ll be 7 feet tall before I ever see that day.
  2. Perhaps more important, the AMA restricts the flow of new doctors into the market, and it limits who is able to write prescriptions – in other words, M.D.s (with some small exceptions) are the gatekeepers to the administration of antibiotics, and they have a mission of “doing no harm.” Sure, patients will clamor for the administration of drugs, but that does not excuse doctors for over-prescribing them for years. And for all of the wonderful (I mean that) things that public health programs have been able to accomplish for the last 100 years, how has it come to be that this situation has been allowed to come to fruition?

No answers forthcoming from me. But this episode, as well as any other, perfectly illustrates the totally distorted view of the trust that people seem to have in regulation and their public officials, and also illustrates the fact that what people think of as “market” failures are better thought of as “cooperation thwarters” — these external problems are not endemic to market and commercial transactions, but rather anytime two people get together. I argue that the market process is superior (not perfect) at producing mutually satisfactory results without imposing costs on others, whereas other ways of engaging in transactions, such as under the watchful eye of regulators, is at least as prone to imposing costs on others. That view is not popular, and will keep you from being invited to most dinner parties.

3 Responses to “Hippocratic Harlots”

  1. Sherlock says:

    But I love dinner parties!

  2. Andrew says:

    I think you’re misdirecting anger. The majority (70%) of the antibiotic use in the United States is to promote growth in livestock. Certainly there’s some doctor-patient misuse in terms of handing out antibiotics for the flu and such, but I doubt you’d find very much, especially today. Even if 20% is not warranted, that’s still only .2*.3 = 6% of what’s dispensed.

    Your second point is also confusing to me. Suppose there was only one doctor allowed antibiotics. He’d want to maximize their effectiveness and extract monopoly rents as along as possible. Presumably his earning ability falls once people realize his antibiotic is useful. I don’t see how strict AMA gatekeeping promotes misuse.

  3. Rod says:

    For a long time now, we’ve been breeding resistant bacteria through such things as the incomplete use of antibiotics: the admonition to take your prescription until there are no further pills left is supposed to ensure that you get all the bacteria and that a small colony of surviving bacteria does not get killed.

    Malpractice and product liability lawsuits tend to discourage drug companies from producing new antibiotics, especially the ones for the new resistant strains. Call 1-800-Bad Drug.

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