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Donald Trump nominates RFK Jr. to be Secretary of Health and Human Services.
I am not naturally sympathetic to criticizing policy or personnel decisions on the grounds that they "embolden" the wrong people, but I am going to make an exception here. The sheer magnitude of human suffering prevented by vaccines and antibiotics is hard to comprehend. Due to complex structural and psychological reasons, the developers of these treatments capture a miniscule fraction of the total utility surplus created.
Enter the pharma skeptics: I do not know what RFK Jr.'s specific stance on vaccines is, besides "more skeptical than the liberal establishment will accept", but I do know how Twitter works. Twitter is real. It affects real events in actual reality, up to and including the US presidential election. Trans issues are getting dumped from the mainstream Democratic Party agenda because of how much it gets dunked on on Twitter.
In this Twitter thread, the entire concept of rewarding companies for treating disease is getting dunked on like it's a Lia Thomas podium. This is of course not the only example I could have pulled, but it shocked me both because of it's location (Alex Tabarrok's feed), and because of the sheer intensity of what can only be described as concentrated stupid.
But perhaps the most alarming implications are for democracy itself. RFK's endorsement likely won Trump the election, not least because it paved the way for the Rogan endorsement. Republicans won by increasing their share of the stupid vote. Indeed, no party can win a national election without winning large swaths of the stupid vote. There simply aren't enough smart people to win. Perhaps this explains the modern political environment. The decision between Democrat or Republican boils down to a decision on which party's concession to the stupid vote will do the least amount of damage.
RFK Jr provided a reasonable critique of vaccines. They are shielded for liability. Arguably the fox is guarding the hen house. So all things equal you’d expect vaccines to marginally fail the learned hand formula though not massively because reputation still matters.
That doesn’t mean vaccines are bad or even most vaccines or bad. It does mean bringing back liability seems like a reasonable step to encourage pharma companies to internalize the costs of vaccines.
Does RFK go too far? Almost certainly. But the core economic argument doesn’t seem fallacious.
The reason that vaccines need to be protected from liability is because the cost of a wrongful death lawsuit is orders of magnitude higher than the value the vaccine manufacturer can extract per life saved. Tort litigation is just a really terrible system for dealing with diffuse risks like this, especially when the expected net public good is overwhelmingly positive.
This suggests the costs of vaccines don’t equal the value form vaccines unless the courts are overvaluing wrongful deaths.
What is the argument that there is a very large positive externality?
No it doesn't, because people don't pay anywhere near the QALY value of vaccines to the vaccine company.
Let's pretend we have a vaccine for smallpox (40-50% fatality rate in babies). People/governments pay maybe $100 per dose (https://www.cdc.gov/vaccines-for-children/php/awardees/current-cdc-vaccine-price-list.html). The value of a wrongful death is $10M, so you would break even on a $100 vaccine for smallpox at one wrongful death in 100,000, while the vaccine would save 40,000 to 50,000 lives per 100,000.
I actually have to compliment @Quantumfreakonomics here, because until 15 minutes ago I thought liability was reasonable.
Why wouldn’t pharma just increase the cost of the vaccine to cover the increased cost of liability?
In the end that's exactly what would happen. Rich people would pay a lot for vaccines, poor people wouldn't get them at all, and grifters would get rich off the back of lawsuits.
Measles would go back to killing thousands of people a year in the U.S.
Is this the world you want to live in?
These concerns just seem internally silly. The only reason prices would rise a bunch is if there are a lot of vaccine related harms. If the harms are very small, then the cost for pharma would be small meaning costs would not increase much.
So what is it? Do vaccines cause a lot of damage meaning drug costs would need to increase a lot? Or do vaccines cause little harm meaning costs would rise only a little?
Neither.
Vaccines (at least the non-MRNA variety) cause little harm but the American legal system often assigns huge legal damages that are not warranted. For reference:
https://www.cnn.com/2024/05/01/business/j-and-j-talc-cancer-lawsuits-settlement/index.html
https://www.bloomberg.com/news/articles/2023-08-29/3m-to-pay-6-billion-to-resolve-vast-military-earplug-lawsuits
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