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You could say that about any industry. "The thing is, the S&P 500 is clearly hugely profitable, so why doesn't the government invest in a wide shotgun approach

by NavinF 3y ago

You could say that about any industry. "The thing is, the S&P 500 is clearly hugely profitable, so why doesn't the government invest in a wide shotgun approach to fund half (or more) of the entire S&P 500 and in return take half (or more) of the profits to either keep as revenue or reinvest in the S&P 500 or in other stock indexes?" Gov't investment in any industry just because it's profitable is a bad idea for obvious reasons.

swores 3y ago
Sure, except that investing in the S&P is just artificially inflating the economy as a whole, whereas my suggestion isn't intended to be "this is my advice for the most profitable use of a government $", it's a suggestion for boosting a small part of the economy to speed up the development / progress of new drugs as a societal benefit. People who defend the huge profit amounts of pharma companies (which ultimately come from consumers needing healthcare, paying either directly or through insurance) say it's fair because of the huge amount they invest to create the drugs, if the government does most of the investing then they can take most of the profits to subsidise free pills for their population. Seems to me like a more direct benefit (in addition to potential economic benefits of boosting investment levels in a high-exporting industry too) than just the government buying S&P500 index funds.
- mlrtime 3y ago
  Look what happens to University tuition when the government gets involved with funding. Not saying it would be the same model but I have doubts this could completely take over R&D funding.
- ejb999 3y ago
  define 'hugely profitable' - PFE is one of the biggest, their stock is at about the same price it was 25 years ago, so inflation already made you lose 50% of your money - with dividends maybe you broke even for a 25 year investment. I would not call that hugely profitable. Why don't we go after the actual 'hugely profitable' companies if that is the goal.
insane_dreamer 3y ago
I see Pharma more like energy utilities in that they provide an essential service that citizens cannot live without. Therefore maybe they should be regulated like utilities (which are private, or can be private, but their margins are capped and set by the government).
- nradov 3y ago
  And yet the human race managed to survive for millennia with no pharmaceutical industry at all. The industry as we know it has only existed for about 100 years. While it has been helpful in extending lifespans and improving quality of life, it is nowhere as important as utilities like electricity and water.
  - bart_spoon 3y ago
    The human race also survived without electricity for just as long…
SilasX 3y ago
Not ... sure that's the best reductio, since many governments do make broad-based equity investments, via Sovereign Wealth Funds, and it does bolster their long-term financial outlook. To bring it back to the specifics of the original argument, and refine it a bit, the relevant point is, "If these are such easy profits from doing nothing, why doesn't the government get in on it?" Alternatively, why don't the universities themselves develop drugs to the point of FDA approval and mass marketing? The unfortunate answer is: it's not actually easy profits. It's highly speculative and difficult work to turn a drug from "supported by university research" to "ready to market to the public". Sometimes universities do try to cover some of that ground though.

by NavinF 3y ago

swores 3y ago

Sure, except that investing in the S&P is just artificially inflating the economy as a whole, whereas my suggestion isn't intended to be "this is my advice for the most profitable use of a government $", it's a suggestion for boosting a small part of the economy to speed up the development / progress of new drugs as a societal benefit. People who defend the huge profit amounts of pharma companies (which ultimately come from consumers needing healthcare, paying either directly or through insurance) say it's fair because of the huge amount they invest to create the drugs, if the government does most of the investing then they can take most of the profits to subsidise free pills for their population. Seems to me like a more direct benefit (in addition to potential economic benefits of boosting investment levels in a high-exporting industry too) than just the government buying S&P500 index funds.

mlrtime 3y ago
Look what happens to University tuition when the government gets involved with funding. Not saying it would be the same model but I have doubts this could completely take over R&D funding.
ejb999 3y ago
define 'hugely profitable' - PFE is one of the biggest, their stock is at about the same price it was 25 years ago, so inflation already made you lose 50% of your money - with dividends maybe you broke even for a 25 year investment. I would not call that hugely profitable. Why don't we go after the actual 'hugely profitable' companies if that is the goal.

insane_dreamer 3y ago

I see Pharma more like energy utilities in that they provide an essential service that citizens cannot live without. Therefore maybe they should be regulated like utilities (which are private, or can be private, but their margins are capped and set by the government).

nradov 3y ago
And yet the human race managed to survive for millennia with no pharmaceutical industry at all. The industry as we know it has only existed for about 100 years. While it has been helpful in extending lifespans and improving quality of life, it is nowhere as important as utilities like electricity and water.
- bart_spoon 3y ago
  The human race also survived without electricity for just as long…

SilasX 3y ago

Not ... sure that's the best reductio, since many governments do make broad-based equity investments, via Sovereign Wealth Funds, and it does bolster their long-term financial outlook. To bring it back to the specifics of the original argument, and refine it a bit, the relevant point is, "If these are such easy profits from doing nothing, why doesn't the government get in on it?" Alternatively, why don't the universities themselves develop drugs to the point of FDA approval and mass marketing? The unfortunate answer is: it's not actually easy profits. It's highly speculative and difficult work to turn a drug from "supported by university research" to "ready to market to the public". Sometimes universities do try to cover some of that ground though.