Some perspective on COVID-19 tests and sodas

Here is Paul Romer's insightful amusing comment on COVID-19 test availability.

PR is on target.
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If Virus Tests Were Sodas

Imagine a world in which the only way to get a soda is to get your doctor to write a prescription. It costs $20 per can. Your insurance company pays. The economy produces about 100,000 sodas each day.

If you lived in this world, do you think you could get people to scale up the production of soda to a level of millions of cans per day? It would be a challenge, but not because it is hard to produce and distribute soda.

The Hypothetical

Because they have to keep total costs from running out of control, insurance companies, health care providers, and government regulators have cobbled together a system that limits access to soda. One part of this system is an expensive regulatory process that has to approve:

• the ingredients in each particular brand of soda;
• the insert that comes with the soda informing patients about its risks and benefits;
• the delivery system used by the soda supplier, be it a glass bottle, an aluminum can, a paper cup, etc.

Then, everyone decides that they want more soda. Why, they ask, can’t the nation produce enough soda for everyone to have some each day?

Here’s how might things might then play out:

1. The only people who can get sodas are those already under the care of the health care system. They are not thirsty, but the insurance company covers the cost, so whatever.
2. People who are thirsty start going to the hospital just to get soda. Doctors comply with their requests for a prescription. Soda producers try to increase output, but soon run into “bottlenecks.” One vendor with an approved soda delivery system that packages a straw with a can finds that its supplier of straws can not keep up with the increased demand. This soda company explains to its unhappy customers that it has FDA approval only for a product that includes a straw from its traditional supplier. The soda company says that it is applying to the FDA for an Emergency Use Authorization (EUA) that gives it permission to bundle a can with a straw from a different vendor. As it waits, it keeps repeating its excuse: “There is a straw bottleneck!”
3. Meanwhile, researchers on university campuses discover that you do not need a straw. But these researchers have no reason to go through the laborious process of filing for an Emergency Use Authorization that allows drinking from the can. The “straw bottleneck” persists.
4. In their experiments with drinking from the can, these same university researchers realize soda is just flavored sugar water and that they could produce millions of sodas per day at a price well under $1 per can. The researchers publicize their findings. Policy wonks urge them to get going: “Produce the sodas that a thirsty nation needs.” But these do not say anything about who will pay for all these additional sodas. The researchers are good sports, but they are not idiots. They produce some token batches of soda and go back to writing papers.
5. The wonks are surprised to discover that their meetings and documents do not yield the soda supply surge they anticipate.
6. Everyone gets discouraged. The wonks conclude that even an economic system as big, as powerful, and as innovative as the one we have established in the United States cannot rise to the challenge of producing millions of sodas per day. They settle for a stretch goal of offering one soda per month to each family.

The Facts 

• Researchers affiliated with Rutgers University did discover that you do not need a swab to do an RT-PCR test for the SARS-CoV-2 virus. They even went to the trouble to get an EUA to conduct tests on saliva samples.
• No one has proposed a way to pay the researchers at Rutgers, or their peers in comparable laboratories located throughout the United States, for the tests they could supply. For now, they do them because they are good sports.
• The US economy produces 350 million 12 oz cans worth of soda each day.
• Soda producers do not need to get regulatory approval each time they innovate around some hurdle or bottleneck.
• For their efforts, soda producers receive about $45 billion dollars each year.

Lessons

If we want to use this nation’s massive capacity – much of which, by the way, is now sitting idle – to produce tens of millions of virus tests per day, there is a way to do it:

• Decide what a test should do.
• As long as labs provide tests that do what a test is supposed to do, let them worry about the details.
• Do not appeal to charity; be prepared to pay these labs twice as much as we spend on soda.