Thursday, May 22, 2014

Should the FDA grant "orphan status" incentives to companies that research treatments for rare diseases?

The other day I received the following question from an old high school friend:

"Hey Doris! Hope you're doing superbly and having an excellent start to summer. Not so quick question: in class today (actually right now, but you know class --> Facebook) we learned that the FDA grants "orphan status" to diseases that affect less than a certain percentage of the population, giving companies that invest in therapies tax cuts, grants, and other benefits. I'm curious how ethically as a libertarian you (or your libertarian friends) would resolve this issue or what alternate solutions pop into your mind, seeing as from a purely amoral stance relying completely on the free market would leave such individuals completely at risk."

This was my reply:

Hey *****! I am doing superbly, and once my summer starts, it will be even more excellent. Hope the same is true for you. I have 3 comments: one moral, one pragmatic, and one economic.
  1. Sometimes, people get sick and die. This is unfortunate, but it is nobody’s fault, and to a libertarian it is not an issue that needs “resolving”. Remember that libertarianism is merely a political ethic, not a complete moral worldview; it’s much better at telling us what not to do as governments than telling us the most moral course of action as individuals. As a generally good person, I agree with you that we should try our best to help one another, but I also recognize failing to do so is not the same as inflicting damage ourselves. To a libertarian, healthcare is not a right, and doctors are under no obligation to sell or provide even those cures or therapies which we have already discovered. So if the existence of a treatment does not impose an obligation to provide it, surely the potential existence of a treatment does not impose an obligation to research, test or create it (much less, an obligation so paramount as to justify the use of violent force necessary to collect the tax money needed to offer a grant). Even if the market had no alternative solutions, there is nothing immoral about a company’s failure to cure a sick person.
  2. That said, the market may have alternatives; I am unconvinced that “relying completely on the free market would leave such individuals completely at risk.” It is often profitable to invest in products that are of interest even to only a very small group of customers. It is also often profitable to reap positive PR from the appearance of generosity towards those unlucky few. Take this example: many Native Americans, by a random fact of genetics, have ridiculously wide feet – so wide, in fact, that most regular sneakers will not fit them. For years, they were just out of luck, and had to either wear their traditional shoes or go to a craftsman to have them custom made or wear another type of footwear. But a few years ago, Nike unveiled a line of shoes targeted specifically for native Americans, sold at an affordable price (read/listen more about it here:

    If you don’t trust profit incentives, non-profits are another alternative. If enough people like you feel providing treatment for rare diseases is morally important, they can found, fund, volunteer or work for organizations dedicated to accomplishing them, using either the methods you outlined above (conditional offers to companies) or another way they find more effective. If you fear such organizations would not survive without the government foisting it upon us, however, perhaps the consensus behind whatever conception of morality motivates you to support the “orphan status” program is not strong enough to render it a legitimate use of government in the first place.
  3.  Economically, I worry that the policies you outlined may have hidden costs on those who are sick with more typical, run-of-the-mill diseases. Healthcare, including the health research investment that may lead to new treatments, is a scarce resource; no matter which policies we pursue, not every sick person can have as much investment into the treatment of their disease as they might want or be able to benefit from. It is thus not a question of whether some diseases get less funds than they could use, but of how to allocate whatever funds which are available for investment.
    Companies will want to ensure this is done in the most profitable way possible. Social planners and concerned onlookers, at least the utilitarian ones, will want to ensure it is done in the way that does the greatest good for the greatest number. My view is that in a competitive market free from outside intervention, these ways are generally one and the same, and I don’t see why this would be an exception. If companies choose to eschew some diseases in favor of others, it means there are more people who stand to both pay for and benefit from those treatments they choose to provide.

    The trouble with the tax cuts and benefits you outline is that they divorce the incentive to maximize profit from the incentive to maximize the amount of treatment you provide. This enables – and in fact expressly encourages – companies to make more profit by treating fewer people, diverting resources away from places where they could have been used to do more good and save more lives and heal more boo-boo’s, so to speak. Basically I think you just end up shuffling around treatment from one disease to another in a morally arbitrary and economically inefficient way. However harsh it seems, and however much we might sympathize with those who lose the health lottery, refusing to waste resources chasing after cures for extremely rare diseases may make the world a happier and healthier place overall. If that’s true, you should oppose the FDA policies even if you disagree with the first two arguments I outlined.


To this, my friend wrote a very polite reply with little of substance attacking my position, except for this excerpt:

"It is interesting to read how you separated libertarianism as a "political ethic" from a "moral worldview"; to me, the two are near indistinguishable, but I can appreciate how from your perspective the idea of having the right to choose is completely separate from the choices that are made, and therefore this divided perspective can be defended."
I replied as follows:

Feel free to ignore this if you’re less of a philosophy dork than me, but I’d just like to clarify the “political ethic” vs. “moral worldview” bit, because it could be interpreted in a way that makes libertarianism seem amoral or callous. Libertarianism is not “completely separate” from morality. We do make moral judgments. However, these judgments are two things: limited, and consistent.

First, the consistent part. Libertarianism insists on applying the same moral standard to all individuals. The moral obligations of people running a company are the same as those of everyone else. You insinuate that companies, or at least society, has a moral obligation to help sick people. But if they do, why don’t you personally also have this obligation? You might say you lack the resources they have at their disposal, and that’s true as it relates to discovering new medicine. But you do have the resources needed to help other people from dying, don’t you? There are people starving in Africa, or dying from easily preventable/treatable diseases, or from drought. In your very city, there are homeless people dying from exposure. Many of those lives could be saved with just a bit more philanthropy – and for the most part, we don’t bother. We have the opportunity to save lives every day, and every day we decide against it to some extent. Even those who do donate to charity often forego the opportunity to give more. Remember Mr. Frechette’s analogy about the train tracks and the car and donating to the poor? Anyone who doesn’t live the lifestyle of a monk or nun who gives everything they have to charity, anyone who enjoys even the smallest luxury with funds that could have gone elsewhere, has at some point prioritized their personal profit over the potential to save lives. Is this wrong? Is it right?

Libertarians say no and no: it is morally neutral. This is where the “limited” part of our moral outlook comes in; we reserve judgment, at least publicly and in the name of libertarianism, on those areas of morality which are subjective and arbitrary and debatable. Morality has layers – what we call a “hierarchy of wrongs” – and libertarianism only deals with the most basic and fundamental of those wrongs. In this application, just because helping the sick, poor and unlucky is good – which almost every libertarian I know would agree with you about – does not mean failing to do so is bad. And as I describe here, a behavior needs to be pretty heinously bad for we libertarians to think compulsion is a justified means of stopping it.

Finally, you don’t need to know much about economics to understand the concept behind the last point. Imagine sick patients as the people in line for an organ donation, and companies as the ones who decide who gets what organ. Anyone with an ounce of empathy in them feels sorry for those who are too far down the list to get their organ in time. But would it be less sad, or morally preferable, to give those people an organ at the expense of someone who was near the top of the list? Arbitrarily reshuffling the deck to re-determine who lives and who dies does not improve outcomes from a moral standpoint, especially if it means fewer live and more die due to the inefficiency of investing in treatments for rare diseases.

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