Blood Money

NYTimes: Around the world, scientists are racing to develop and mass produce reliable antibody tests that public health experts say are a crucial element in ending the coronavirus lockdowns that are causing economic devastation. But that effort is being hamstrung, scientists say, by a shortage of the blood samples containing antibodies to Covid-19, the disease caused by the virus, that are needed to validate the tests.

Recognizing a rare opportunity, some companies are seeking to cash in on the shortages, soliciting blood donations and selling samples at rich markups in a practice that has been condemned by medical professionals as, at the very least, unethical.

“I’ve never seen these prices before,” said Dr. Joe Fitchett, the medical director of Mologic, one of the British test manufacturers that was offered the blood samples. “It’s money being made from people’s suffering.”

I am reminded of Walter Williams who asks his students whether it is wrong to profit from the misfortune of others:

But I caution them with some examples. An orthopedist profits from your misfortune of having broken your leg skiing. When there’s news of a pending ice storm, I doubt whether it saddens the hearts of those in the collision repair business. I also tell my students that I profit from their misfortune — their ignorance of economic theory.

A price is a signal wrapped up in an incentive so if you want a strong signal and a strong incentive you need to let prices rise. The prices in this case don’t even seem that high:

From March 31 to April 22, prices asked by Cantor BioConnect for its cheapest samples — always sold by the milliliter, the equivalent of less than a quarter of a teaspoon — rose more than 40 percent, to $500 from $350.

Bear in mind the costs of collecting the sample, including nurse time and PPE. Some samples which are especially rich in antibodies, do sell for prices that are well above cost which is not surprising as those samples are in high demand as they may offer a cure.

Do the firms willing and able to pay the highest prices necessarily have the best science? No, not necessarily, but on balance the decentralized allocation process offered by markets and civil society will likely be far more effective than centralized, political allocation. We also know from field experiments around the world that higher prices for blood increase supply, a key consideration.

As Hayek said the moral rules of the tribe which appear natural to us–like don’t profit from misery–cannot maintain a civilization so we struggle between what we think is right and what actually works to prevent misery.

There can be no doubt that our innate moral emotions and instincts were acquired in the hundreds of thousand years—probably half a million years—in which Homo sapiens lived in small hunting and gathering groups and developed a physiological constitution which governed his innate instincts. These instincts are still very strong in us. Yet civilization developed by our gradually learning cultural rules which were trans­mitted by teaching and which served largely to restrain and suppress some of those natural instincts.


The companies complaining about the “unethical” price increase are really just negotiating.

So all those DeVos paid protestors were really out to make a quick buck. From both ends. They are smart for people who like to wear American flag jackets.

I haven't received by DeVos money. Since you seem involved with the scheme, could you please send me my well-deserved stipend quickly, please?

I love this entire outfit much! Her hair appears seriously astounding now.

Assess our post on Hair Loss

So that is it. Shylock wants his pound of flesh. We have become monsters preying on each other.

Modern civilization depends on the price system. We have become heroes, overcoming our atavistic impulses enough to maintain the modern economy.

Of course the testing companies are free to solicit and obtain their own samples. No mention from the testing companies that they expect to profit from the development of a vaccine or treatment using the blodd samples.

Well, didn't you see Alex calling for tax hikes on everyone given everyone benefits from COVID-19 related research which gets the economy back to normal.

Oh, wait, since 1980, economies are no longer zero sum: high profits reduce costs allowing lower taxes and lower wages and much better living standards. The homeless and hungry today are far better off than the hunter gatherers of 1491 because they have cheap burner phones to call 911.

Keep on whistling past the graveyard.
Keep on corroding your soul.
You don't even have to believe in anything to see and feel the impacts on your well-being, and on those around you.
People may choose their own paths, but doing so in ignorance of what options and impacts may be is to foreclose your potential.
Good luck with that.

I also believe in markets. But I worry about collusion (market failure). In the market for blood, I would be concerned about schemes to increase prices, such as collusion among participants limiting supply, not among those doing the bleeding (too many with too disparate interests) but those collecting from the bleeders (not that many and with a common interest). Markets are like that: with many there is the magic of markets, with a few there is market failure. I don't believe our hosts see it that way (at least one of them). But oil! Yes, the market in oil provides for redemption of markets with only a few participants. I was taught that decades ago when I studied economics as an undergraduate. Cartels fail because of markets (a/k/a greed). Greed is good: it keeps markets honest. Well, that's what I was taught. Is blood thicker than oil?

I'm confused counsellor, are you saying you do or you do not believe in OPEC and the DeBeers cartels?

As for this: "I am reminded of Walter Williams who asks his students whether it is wrong to profit from the misfortune of others: But I caution them with some examples. An orthopedist profits from your misfortune of having broken your leg skiing" - this reminds me of a certain Greek island, that had a slippery spiral stairway, where drunk foreign students on summer break would routinely slip and fall at night and break something. Said spiral stairway was near a Greek orthopedics clinic, and the rumor was--this actually made it into a tourbook guide along the lines of the "Let's Go" or some such hipster guidebook--that the Greek unethical doctor of said clinic paid Greek hooligans to push drunk students down the stairs at night so he could have more business in the morning. I saw the same scam--and almost fell for it, literally--with some small sand traps obscuring stairs at a five star hotel--I think it was the Hilton--facing the public beach at Cancun, Mexico. Watch your step, literally, if and when we ever have crowded public beaches open again --remember that?--for this type free market externality scam.

@myself - just to clarify my first sentence to rayward, I'm asking him if he believes in the enduring viability of DeBeers or OPEC, which indeed should have been dissolved by now, due to cheating and greed by members as rayward says, or have greatly diminished power? The Economist magazine predicted the demise of DeBeers in the mid-1980s I recall, and yet, forty years later, it's still around, or is it? Quick Google search: DeBeers it is argues doesn't have monopoly power anymore since they control only 40% of the diamond market not 80% like in the 1950s (debatable whether 40% is not market power however; I recall from the law school I failed that 33% is usually the threshold for market power), see:

Cantor BioConnect is not going on eBay and paying market prices to get the samples. They are being donated in good faith, right? And not to Cantor BioConnect, but to local hospitals and the Red Cross. So there is a bit of alchemy going on here, as a freely donated sample transmogrifies into a commercial product on the open market. There is a story there to be told.

+1. Alex sees the problem the wrong way, so that it disappears. The problem is with the people who voluntary give their blood, who are misinformed of what will happen to their blood
(like the woman who decided finally not to give her blood after the reporter told her hoe expensive it would be re-sold to hospitals and researchers).

Would this not lead to the cobra effect?

Basically some enterprising people would get themselves and others infected and continue to re-infect to collect the money causing a lot of problems along the way. Society doesn't necessarily come out ahead in this arrangement.

It’s a valid point for those who insist on a weirdly rationalist vision in which emotion is some kind of aberration or defect. But the libertarian eye-roll doesn’t take us anywhere in embracing the fact that disgust is a major factor in our choice and political behaviour. When prices are driven up by absurd enthusiasm for a product, I don’t hear the “Actually...” crowd weighing in to reference demand curves.

"A price is a signal wrapped up in an incentive "

A price is something printed from a money printing machine.

As much as I think I might like to board the libertarian train, I cannot escape the conclusion that the comatose would naturally earn their keep as sexual surrogates, so perhaps Hayek's point is made and I am too tribal to escape my own moralizing.

It does strike me as ironic that Hayek places the source of our morality as descendent from, "the hundreds of thousand years—probably half a million years—in which Homo sapiens lived in small hunting and gathering groups".

If morality did indeed spring from the natural shaping forces of our most primal social beginnings, I am reminded of folksy witticism I am fond of repeating, "Never tear down a fence if you don't know why it was put up."

Strawmanning that consent doesn't matter isn't going to convince anyone.

Maybe, but the non-libertarians are not in need to convince anyone, since they have already convinced 99% of the population. And I say this as soon with a lot of empathy for libertarianism.

If someone in UK survived this disease only with hospital intervention paid for by the rest of society, is it too much to ask that they donate some blood when healthy enough to do so? Wouldn't need a private company to collect and sell it. What evidence is there that price is the best way to allocate it? I can imagine some billionaire purchasing some large stock of what was available to store for their own family's use if they were to get sick rather than to use for research for a cure. This market seems broken rather than efficient. would be much more helpful if Alex clearlystated his point in his first paragraph.
Story-telling and narrative-building are unnecessary for the audience here.

"soliciting blood donations and selling samples"

It sounds like the original manufacturer of the blood isn't being allowed to share in the money being made here.

There is no excuse for this ...David Cantor should be ashamed of himself.

Why do we worry about these events in the moment of crisis? They seem easy enough to be addressed in a reactive manner. Review cases after, and determine how high the profit margin was. Confiscate excess and assess punitive fines for the most egregious cases. Look at the overall risk, if others lost money trying to fill shortages, use excesses to cover some of those losses. If everyone made money, distribute among all tax-payers.

The counter-argument is that this raises uncertainty among producers during the shortage. That's not particularly bad, as it should raise uncertainty the most among the least justified acts, leaving more room for the justified. It's at least better than a lot of red-tape during a crisis. And if the post-fact insurance side (covering losses of those who helped to fill shortages but then failed in the long term to recoup capital costs, etc.) lowers risk for the beneficial behavior, it's overall a good trade-off.

Thinking through the ethical base here.. the adage of "don't profit from other's misery" is fairly useless compared to better rules. "Don't abuse power" covers the negative consequences better. Charging a high rate to fund expansion of production would not generally be considered an abuse of power. But sabotaging supply (by cornering a market) would.

Semen is readily available worldwide at a few moment's notice, yet donor sperm is in short supply and artificial insemination has a ridiculously high price tag.

A bag of saline solution costs hundreds of dollars.

Countless other examples.

Why is anyone still capable of being surprised at artificially elevated costs for absolutely anything medical-related?

I am getting the virus, at these prices I be rich!

If you are going to argue for the price system, go all in:

"If my blood donation could help save someone’s life who is older or more vulnerable,' said Ms. Jenkins, 42, of Shoreline, Wash., 'it would be crazy not to want to help do that.'

"But what she did not know at the time was that the company, Cantor BioConnect, was selling those donations to laboratories and test manufacturers at sometimes exorbitant prices: from $350 up to $40,000 for a rare sample from a single donor."

What is unethical is the lack of transparency and honesty. If you are going to sell someone's blood, disclose that fact up-front and negotiate with the person whose blood you are seeking. It has been legal in the U.S. for some time to pay people for blood plasma so I don't think there is anything untoward about paying covid-19 survivors for their blood. Misleading people about the nature of their "donation" is unethical and possibly fraudulent, though.

If someone wants to genuinely donate their blood, the American Red Cross is taking donations.

I hope your doctor tells you it will take more money than you have to keep you alive.


I understand your point on incentivizing a behavior that will yield benefits in the fight against COVID-19 but fundamentally, can it not be argued that raising prices for blood samples with antibodies is only but an economic band-aid for a deeper issue of absent civic engagement.

I'd be curious to see data if this pricing scheme would be less ineffective in countries or jurisdictions with strong communal feelings, or national fervor, or overall, more robust civic engagement.

Although these are obviously more difficult to create in the modern world, I think a modern version of this might exist in some evolved form in some pockets around the world.

Efforts like deliberative democracy seem to be a better response to the systemic issues where we're trying to improve a decentralized response to a pandemic or other threats.

What are your thoughts on this?

It's dumb to complain about people complaining about price spikes. They're doing exactly what the market needs them to do: point out a big new market opportunity, a huge spike in demand that supply is struggling to meet. This should cause a flood of new supply to enter the market.

The people complaining about price gouging are signal boosting the information represented by the high prices. If the market is functioning the price should be driven down as new supply enters the market.

If the price is NOT driven down, that does suggest some sort of market dysfunctionality(or maybe that the cost of supplying the good has shifted up a lot).

People SHOULD complain loudly when huge profits are happening, it revs up competition, increases supply, drives down cost.

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