The first diagnosed case of Ebola in the United States reveals a truth people in developing countries know all too well: There is little incentive for drug manufacturers to develop vaccines and drugs for diseases that affect the poor.
The simple reality is that drug manufacturers want to make money. To that end, Columbia economist Frank Lichtenberg says companies want to know two things: the number of potential customers and their ability to pay.
“If there are a million consumers and each of them would be willing to pay $1,000 for a drug, that translates into a billion-dollar potential market,” he says.
That is in no way the Ebola market.
“The total number of cases of Ebola in the world between 1976 and 2013 were less than 2,000,” says Dr. Sue Desmond-Hellmann, the CEO of the Bill and Melinda Gates Foundation, which last month committed $50 million to address Ebola.
What the Ebola outbreak reminds us all is that millions of lives are potentially at risk and there are few incentives for private industry to treat or prevent diseases like Ebola and malaria. That has left funding vaccines and medicines to philanthropies, federal governments and entities like the World Health Organization.
Desmond-Hellmann says the spread of Ebola forces people to ask whether that system is adequate.
“This epidemic is showing us how important it is for the world to have at the ready a response for such an epidemic,” she says.
The U.S. government has invested millions on Ebola over several decades, but it could take years—and quite a bit more money—to develop effective therapies.
So how do you get more money into research and development for these diseases and other public health concerns? USC health economist Joel Hay shares one idea that's being kicked around: “If you just had a tax on every pharmaceutical product sold, that money could be used for some more of these socially desirable goals,” he says.
The thing to remember is that this is a tricky market to regulate. And it’s trickier still for our government, which has a duty to keep people safe, but must find the right incentives to keep the drug industry in the game.