| This isn't just paying for the R&D on remdesivir itself. It's paying for all of the other antivirals which were developed and then failed clinical trials, and all the other antivirals that turned out to be largely useless because (like SARS, MERS, and Ebola) there was never a large-scale outbreak. If you require remdesivir to be sold at cost, then any company developing antivirals will reason out: Scenario A: There's a huge pandemic and massive demand, but the drug can only be sold at cost, so we break even. Scenario B: The drug fails clinical trials. We lose a bunch of money. Scenario C: The drug works, but no pandemic ever happens. We lose a bunch of money. .... and then no one will develop antivirals, because on average, you can only come out behind. As to why the government can't do everything itself, I'll quote Paul Graham on venture investing, which (like drug development) is a highly technical, winner-take-all business where most projects fail: "Why not just have the government, or some large almost-government organization like Fannie Mae, do the venture investing instead of private funds? I'll tell you why that wouldn't work. Because then you're asking government or almost-government employees to do the one thing they are least able to do: take risks. As anyone who has worked for the government knows, the important thing is not to make the right choices, but to make choices that can be justified later if they fail. If there is a safe option, that's the one a bureaucrat will choose. But that is exactly the wrong way to do venture investing. The nature of the business means that you want to make terribly risky choices, if the upside looks good enough." |
Expensive projects for the public good with no mandate to turn a profit.
If you're part of a government agency whose entire purpose is to develop and research new drugs, you're not going to be unduly risk averse. You're going to be doing your job, trying new things, working on getting new, effective, efficient treatments and cures developed, tested, and released to the public.
Personally, I don't know to what extent I believe that pharmaceutical companies have actively suppressed research on cures for diseases, in favour of life-long treatments, but the incentives definitely support the theory. Publicly-run pharmaceutical research would also be much more likely to do a proper, thorough investigation of the kinds of treatments that can come out of well-known natural/easily-synthesized substances (as opposed to the existing pharmaceutical industry, which is incentivized to do research into things that require more specialized expertise & equipment, so the people who want the drugs must but them from them).