cynical joe - I agree that there are expenditures involved in drug making that do not include R&D. The limited time and artificially shrunken markets that pharma manufacturers have to recover their unique costs will tend to increase the need for a quick ramp up of adoption and heavy usage during the available monopoly period. Thus getting drugs to market when they have a longer period left on their patents and increasing the number of first world consumers who share the R&D costs would naturally tend to reduce the need for frenetic advertising campaigns and detail reps shoving new medicines down doctors' throats.

If you can recover your costs and make a good return on investment without the use of these mechanisms, spending money on them becomes unnecessary expense and will be dialed back. What I believe is a recurrent theme is that the government imposes a market distortion and the market response to work around the distortion is perceived as market failure and a new cry for government intervention is raised. It's much better, in my view, to cure the underlying distortions (as much as practical anyway).

Bill S - The problem in the east bloc (among many others, of course) was that they had the gall to imagine that they understood what was a necessary profession and what was useless and could be cut. Distribution, sales, and marketing were always underfunded or virtually nonexistent in those worlds. The similarity that I perceive is in the idea that outsiders working through coercive government will know better than those fools who are wasting money on these frivolities despite having spent their entire careers in the business. They're doing these expenditures specifically because they've spent a lot of time on the problems and they think this is the best solution given the external realities of a hide-bound FDA and 1st world free riders.

Moving on to Iraq, how, exactly, was this regime change on the cheap going to work? Nancy Pelosi, who shared a similar sentiment a few months ago never bothered to lay out her Iraq improvement plan. Please share yours.

TML
I understand how markets work and why Communism failed. There are problems with the way the Pharma market works, and I would be extremely reluctant to meddle with it, but the problem still bears thinking about.

I don't have any alternative scenario for regime change in Iraq, but that doesn't mean that one doesn't exist. I was just saying that $87 billion and 12000 lives (or whatever) was supposed to buy us a secular democracy in the heart of the Middle East. If all we (you) get is an islamic republic, can we get some of our money back?

The 12,000 lives count for nothing and how much does Iraq actually benefit from the 87 billion? Dyncorp garnered an untendered contract for 800 million over two years to train Iraqi police at a camp in Jordan. How much of the 87 billion is repatriated? Bremmer legalised foreign ownership of all Iraqi sectors except insurance,(of particular interest to him) banking and oil. Corporate America will make a tidy profit with the 'liberation' of Iraq regardless of whether democracy was ever on the cards.

Regime change for $87 billion most of which will be repatriated is a hell of a deal for the price of US security. War is even profitable for Canadian companies (Quebec based of course) with SNC Lavalin getting a juicy $450 million contract to look after the Johnny Canucks in Afghanistan.

TML: It would be interesting to see the a graph of the rate of increase (to american consumers) of drug prices, r&d costs, and sales&marketing costs. My hunch is that drug prices have risen much higher than inflation the last few years and sales costs would be increasing faster than research costs. This isn't inherently bad, but I think its unfair to american drug buyers and unfair of pharma to blame countries that NEGOTIATE the price of drugs in their countries.

Hey BruceR,

Superb coverage on the Baghdad SAM situation. (And thanks especially for translating the PM article.) One other factor you might point out is that the proximity fuzed hand-helds depend on a fast-mover flying into the debris cloud at a good rate. (I've seen a film of a forward-quarter stinger shot on a low-flying drone that scared me badly.) The same missile from a rear aspect, or against a larger slow-flying target does not produce satisfactory damage--the warhead is simply too small. I'm not sure the equation changes markedly with newer versions.

This is also reminiscent of the Israeli experience with SA-7s. Extending the tailpipes of A-4s reduced damage significantly (often just required replacing the tailpipe), and the kill rate against larger aircraft was close to zero. I still think they'd have a good opportunity for a propaganda victory by crippling a passenger airliner--but a cargo plane doesn't have the same impact.

Interesting PM article, Bruce. I'm wondering if this guy was able to get his hands on so many missiles so easily how many must now be in the hands of people with strong connections to the former government's military.

Bruce: I think it is worth noting that the Iraqi quoted in the Paris Match article would likely prefer to give the impression that he had no connection to Ba'athists, and that there weren't any "spotters" to help pinpoint the target. I think it is safe to assume that a certain amount of orchestration took place, since they presumably don't have a journalist along with every attack. I really like the part about firing 18 bullets on a convoy and burning 18 tanker trucks. These sharpshooters could put Jed Clampett to shame.

Bill S - I don't think that there's anything wrong with trying to change the current rules on the pharma market. The problem arises when you ignore the prior distorting acts of national and sub-national governments worldwide and consider the present state a 'free market'. If you do, you're falling into a trap created by false framing. It does bear thinking about and changes should be made. The trick is to not get caught up in a dream world where a highly distorted market can only be corrected via government regulation and/or takeover.

Regarding Iraq, I don't know what the better scenario is. From pre-war analysis, most people who were anti-war believed we would be in far greater trouble than we actually are. They thought the whole ME would be in flames, the Shiites would be revolting, the Kurds would be seceding, and the Sunni's would be suicide bombing. Casualties would have at least one more zero on them than they currently do and we would be in the middle of an oil crisis as the ME shut down exports to the US. Vis-a-vis the anti-war predictions prior, this *is* the better scenario.

About 3 months after I bought my last car, I discovered that the fair value was about $750 less than I ended up negotiating the deal at. Should I go back to my dealer and ask for my money back? I feel your refund request is in about the same league. We've done it the best we knew how and survived the inevitable screwups that occur in any war. We have a good shot at winning the peace and I'm not so sure that a theocracy is what's going to emerge in Iraq.

Desmond Jones - The 12,000 dead in this endeavor do not count for nothing. Nor do the several hundred that are not being tortured and killed every month by Saddam's security services count for nothing either. I read how the advancing troops marveled that every public building had its own cells and torture chambers. Be fair and count both the cost and the benefit.

As for the rebuilding contracts, how do you expect them to be parceled out? I hope and expect that as competent Iraqi contractors demonstrate their expertise that more and more contracts will go to them. Companies like Bechtel, KBR, and Dyncorp are used over and over because they are known quantities. Establishing relationships and trust takes time. Outside military forces never know who the local good guys are in the beginning. I'd like to hear your plan for weeding out Baath infiltrators into the contracting process when you don't have a US GC between the government and the actual workers.

cynical joe - Pfizer and every other pharma firm has an obligation to its shareholders to provide a good rate of return on their money. That means that their global market is the relevant market, not the US one. The controlled sectors are engaging in free riding and it's quite likely that as they go on, they squeeze harder than before. The need for return will always inflate costs in the noncontrolled sector of the market. It's like a balloon. The harder you squeeze on one end, the more it inflates on the other.

According to recent reports, Saddam was looking for a deal on the eve of war. It would have been cheaper to buy him off with $20-$30 billion and maybe throw in the Governorship of California for good measure.

Just because the ultra-lefties were out to lunch doesn't mean the neo-cons were right. In fact , so far they've been dead wrong.It looks more and more like an Egyptian style friendly dictatorship or an Iranian style Islamic republic.

Value for money? I don't think so.

Bruce good work on the whole MANPAD story. Other people have the bits and pieces, but nobody else I have seen has the full story

Bill S - This assumes that any deal done with Saddam would have been worth the paper it was printed on. Isn't the whole point of UNSC 1441 that over a decade worth of deals weren't adhered to?

The US was going through considerable expense, both in cash and in international favors. If Saddam would have played rope a dope with the invasion force 'till the heat of summer made invasion a technical nightmare, what would the cost have been? There would have been a price in cash, military readiness and US stature.

I think that the full cost would have ended up being higher overall and we'd have ended up invading anyway.

Rick, I wouldn't trust that whole article as anything more than what a mid-level Iraqi guerrilla leader wants the West to believe, perhaps amended by translation. (I think mine's pretty good, but I don't know the reporter's fluency in Arabic.)

Two things you can say about the Paris Match team. I've got a fair bit of faith in the writer's ability as a war correspondent... it's not everyone who can identify a BKC on sight. The photographer went loaded for bear, and knew what he was doing too... you can't shoot that SAM launch shot without high speed film, and you don't get a second chance at it... but he also had an extremely powerful zoom, undoubtedly on a separate camera body, to get those wounded aircraft shots. Considering he must have been getting pulled toward the getaway car by his minder even as he was shooting (no way he was shooting supported, ie, off a tripod for instance), it was a slick piece of combat photography, that he'd obviously thought through thoroughly in advance. (Never mind the obvious risks if the whole group had been caught.) The SAM team may have been amateurish, but their publicizers were pros.

"The SAM team may have been amateurish, but their publicizers were pros."

That comment has such generalized application to so many anti-western armed groups that it bears thinking on. If the professionalism is more on the psych/prop side than the actual arms side, does it make sense to shift resources to hit the most effective part of their operations? And how would one go about doing that anyway?

From time to time we read statements by coalition spokesmen about the improving intelligence we are getting from Iraqis on planned attacks against occupation forces.

I was thinking of that as I read about the battle earlier today around Samarra (http://www.washingtonpost.com/wp-dyn/artic...3170-2003Nov30.html). It just sounded to me as if the Americans had been tipped off. Guerillas haven't offered themselves in such numbers since May to my knowledge, and lately have been hitting mostly softer targets. Both convoys engaged today reportedly had M1-As with. News reports may be misleading, and I may be misinterpreting the ones I've read, but it almost sounds as if the guerillas were expecting to find one thing and ran into something else instead.

"It looks more and more like an Egyptian style friendly dictatorship or an Iranian style Islamic republic".

Where's the evidence that this administration ever intended anything else? And why would a 'democracy' in Iraq, by anyones count, a far greater expense, in point of fact serve US policy any better? Enlighten us. How much of the $87 million will actually stay in Iraq?

TML - How will the 12,000 dead be historically relevant?

"Nor do the several hundred that are not being tortured and killed every month by Saddam's security services count for nothing either". What is your source? (and please don't quote Instantman).

How does Bechtel sort out the Ba'athist? They use Chalabi's cronies.

Joseph, I suspect the 72 deaths this month might even have been the high water mark in the near term. There's evidence the easily available arms are beginning to dry up, and if were an Iraqi resistance fighter looking at this table, I'd start saving my powder (or at least my TNT) for post-June now.

In addition to the one guerilla leader's interview we have, we also have the recent change in tactics, with the third and fourth successful fatal small arms attacks this weekend against Western parties who were essentially travelling alone. The Americans are spread too thin to protect everybody, and this takes advantage of that while spreading them even further, but it also allows them to use still-plentiful bullets, instead of heavier weapons and explosives that will be more valuable in six months. If American losses ever reach November's again under those conditions, I'll be as surprised as anyone.

I'm not sure, either, that the use of M1s in convoy duties is at all sustainable in the long term on a widespread basis.