22 April 2019

Disaster in the antiobiotics market

Jeremy Farrar writes: 
There is no viable route to market for new antibiotics, however valuable they may be to society. A disaster is unfolding in the antibiotics market, Jeremy Farrar, 'Financial Times, 21 April
Incentives matter, which is why we urgently need to overhaul the ways in which healthcare is currently managed. Typically, the rewards to companies developing a drug are directly proportional to sales of that drug. Antibiotics are typically prescribed only for short periods: days and weeks,
Private investors backing such [drug development] companies counted on revenues being buoyed either by growing need for their products or by governments responding to calls to fix the market. 
What would it take to 'fix the market'? My suggestion, more radical than it should be, is that we reward anybody who improves society's health, including drug companies, in ways that correlate to their success in improving society's well-being. This could be done by (1) explicitly targeting 'improved societal well-being', and (2) setting up a system that supplies incentives for people and companies to do just that. We are getting to the stage where step 1 is a possibility. Quality Adjusted Life Years are one attempt to measure well-being. Step 2 is more difficult. My suggestion is that we apply the Social Policy Bond concept to health and that, at a national level, governments issue Health Bonds, which would reward those who bring about improvements in the long-term health of a country's citizens. For less developed countries, funds for the backing of Health Bonds could come from philanthropists, NGOs or rich countries.

'Anybody who improves society's health', I say above, because worthwhile improvements can originate in people and companies whose remit does not explicitly extend to health. A factory opening in a region of high unemployment, for example, might do a lot to improve the well-being of people living nearby. Under our current system, the factory would reap little reward for such a positive externality. Under a Health Bond regime, though, investors in the bonds would have an incentive to help an otherwise hesitant company to get their factory up and running. At all times, Health Bonds would encourage people to focus on the outcome we want to achieve - improved health - rather than the fortunes of drug companies, doctors, hospitals or other surrogate endpoints.

16 April 2019

Make votes matter

Make Votes Matter, is the title of a leaflet being distributed in the streets of the UK. It is the name of a 'cross-party campaign to introduce Proportional Representation to the House of Commons'. Currently, UK General Elections use the First Past the Post voting system, which has the merit of being immediately comprehensible, but the apparent disadvantage of under-representing small parties whose votes are widely distributed, and wasting the votes of people who oppose the occupiers of  'safe' constituencies. There's a lot more to be said for and against PR and FPTP. I suppose it's understandable, though regrettable that, in today's politics, people think their Member of Parliament cannot be expected to represent them if s/he is from a party they oppose. There's little magnanimity in party politics these days.

I actually don't think the differences between PR and FPTP are worth bothering about. We'd still be voting about things that don't really matter: for Members for Parliament, for their party, for what they say in their manifesto. For people, parties, promises, image, ideology, sound-bites and slogans, rather than meaningful goals. About those goals, I believe, there's far more scope for consensus than about all the paraphernalia that characterise current election campaigns. Politicians rarely do what they say they will do; still more rarely can they be held to account for what transpires to our economy, society or environment. But their campaigning and subsequent activities, as well as consuming great gouts of brainpower, sow the seeds of division: the 'narcissism of small differences'.

I advocate refocusing our attention on goals, and the inevitable trade-offs between them, rather than political parties or the voting systems. I think we should be choosing between outcomes that are verifiable and meaningful to all of us, rather than allow our policymaking to be steered by interest groups - be they billionaires, corporations or government agencies - which are the only bodies that have the resources and motivation to understand our arcane, protracted, policymaking mechanisms. You might almost think that the obscurantism of our political systems is a ploy to keep ordinary people away from positions of power. A political system focused on social and environmental outcomes would represent a threat to the political hierarchy but, I believe, it's necessary for reasons of both efficiency and buy-in.

What would such a system look like? A Social Policy Bond regime would be one such system. It would set broad, long-range targets about which there is almost universal agreement. At the national level it could target better health, universal literacy, a cleaner environment. At the global level it could target conflict reduction, and the prevention and alleviation of disasters, whether natural or man made. Political debate would be about the exact definition of these goals rather than, as now, the supposed means of achieving them or peripheral issues such as institutional structures and funding arrangements. There would be healthy debate, under a bond regime, about priorities and time frames, but the way the bonds work would mean that there need be little discussion of who shall achieve society's goals or how those goals shall be achieved. The market for the bonds would ensure that they are always be held by the most efficient operators. And efficiency is a moving target: what is efficient today or in one part of the world today might be highly inefficient in future years or in a different region. Long-term goals will most probably require an array of diverse, adaptive approaches for their achievement - exactly the sort of approaches that government, or any single ordinary organisation, is incapable of encouraging, but that a Social Policy Bonds regime would stimulate. The bonds would lead to the creation of a new type of organisation, whose structure, composition and activities would be entirely subordinate to its goal, which would be exactly the same as that of the society that set it; a stark contrast with today's organisations, which have their own goals, independent of, and sometimes in direct conflict with, those of ordinary citizens.

09 April 2019

What should we target?

Policymakers rarely use explicit targets and still more rarely do they use them in a coherent manner. Take two high-level targets: the inflation rate, targeted by the UK, and the less-than-two degrees Celsius warming targeted by the Paris Agreement. Near explicit and implicit targets – de facto targets – are more common. National governments routinely target economic growth. As well as these macro-targets, there is a proliferation of  micro-targets: in the UK, waiting times at hospital Accident and Emergency departments, for instance. 
What do all these targets have in common? One is that they are set by people who are not charged with achieving them, and will be little affected whether they are achieved or not. Another is that they have little directly to do with social or environmental well-being. There might be a strong correlation between, for instance, GDP and material prosperity; there is likely to be a strong correlation between the two-degrees Celsius target and plant, animal and human well-being. But it's my view that, because there is no direct link, these targets fail to achieve societal buy-in. The two degrees target is too abstract. If more than two degrees leads to unacceptable depredations, why not aim directly to reduce the severity of those depredations? That would be a goal with which people other than scientists and policymakers could identify.

The implicit GDP target is also rapidly becoming discredited. It says nothing about the distribution of the gains from economic growth, and with the dramatic divergence between incomes of those at the top of the scale from all others, risks becoming as detached from social well-being as are indices of share prices – and for much the same reason.

If anything, the micro-targets are worse. Again, they are set by people who have little direct interest in seeing them achieved. As well, they are very easily manipulated or gamed, leading to perverse outcomes, none of which benefit people, and some of which worsen well-being.

Where does that lead us? Most components of social well-being are not explicily targeted. Sadly, as society grows more complex and diverse, unless things are explicitly targeted they tend to fall through the cracks. The environment has throughout recent history has suffered this fate, as have other essential, but similarly unquantifiable determinants of well-being such as social cohesion. In smaller societies, these elements of The Commons would be the subject of informal arrangements, often arrived at after a long evolutionary process.

That won’t work in today’s highly aggregated and increasingly diverse societies. People in positions of power are increasingly detached from everyday concerns – the things that microtargets or, more importantly, the market, fail to capture. Unlike in traditional societies, when things are neglected by the people who lead today’s societies they are ignored. Political discourse and resources get channelled into the few things that are targeted, including economic growth, and away from those elements that escape the market or some other form of quantification. As well as the environment, and these include some important components of mental and physical health. They aren’t targeted directly, so attract fewer resources than they should.

But, given that a return to traditional societies is not going to happen, targets based on aggregate numbers are essential. So: what should we target? My thinking is that we need to target broad social and environmental goals whose achievement would be inextricably linked to improved social well-being and generate buy-in. Economic growth doesn’t cut it; nor does the two degrees target. So what would qualify? Alleviation of poverty, improved physical and mental health, reduced impact of adverse climatic events on human, animal and plant life: these are all broad, meaningful goals, whose achievement would be both meaningful to all, and generate the buy-in sadly lacking when we target GDP, two degrees, or hospital waiting times. I am more ambitious even than such targets would indicate though. If, as I hope, we begin to target genuine, verifiable, meaningful outcomes, why stop at national goals? A Social Policy Bond regime, not having to specify how our goals shall be achieved, or who shall achieve them, could and should aim for global goals. I suggest that we explicitly target for reduction the adverse effects of both natural disasters and violent political conflict.