Why the words we use and the way we understand them matters
WHY THE WORDS WE USE AND THE WAY WE UNDERSTAND THEM MATTERS
What do you understand by the term “commodity”? To most people in the global health world it means a consumable product essential to delivering health care, like a drug or diagnostic kit. And when we read reports or grant applications we see the word commodity used all the time in this way.
But in the world of economics or business, or in our everyday lives, “commodity” has another meaning. It refers to products that are not distinguished from one supplier to another, for example electricity or petrol. When you buy electricity you don’t expect the electricity from one supplier to be better than another and there is no such thing as a premium quality option.
So, we get tricked by the language into a false conclusion. Because we call all our consumables in public health commodities, we get misled into thinking that there is no differentiation between them. Nowhere has this been more apparent than in the market for long lasting insecticide treated nets. They are treated as pretty much pure commodities, and this has an alarming consequence.
For a true commodity there is no differentiation between one product and another, so there is no reason to look for anything other than the lowest price. There is no need for product innovation and the simple economics of supply and demand determine the price. There is a process called commoditisation which is what happens when a product that used to be new and innovative becomes widely manufactured to similar performance. Think of flat screen TVs and we are all familiar with the key outcome of that; the price falls dramatically! So if you want products to get cheaper and more uniform then commoditisation is a good thing.
But what if it turns out that having all the products be the same is a bad thing ? There is an inherent danger in commoditisation that we create monocultures at risk of catastrophic failure. Well that is exactly where we are with insecticide resistance today. Because they are so effective, safe and cheap, we have become totally reliant on one kind of insecticide, the pyrethroids, and, in our drive to push down costs, we have commoditised the market for products based on that insecticide. And guess what; we ended up with resistance. We should not be surprised.
Others elsewhere will talk about the heroic struggle to create new chemistry that will dig us out of the hole of insecticide resistance, but I want to talk about the economics of those new products.
First of all they will become the differentiated non-commodity par excellence. Not only will they differ from pyrethroid based products and each other but those differences will not be the same for every situation. Some people will see dramatic differences as they move away from pyrethroids whilst others may barely notice. Worse still these differentials will vary with time as resistance waxes and wains under varying ecological pressure.
So the day of the vector control product as commodity is soon reaching an end and that calls for a whole new way of thinking about those products and their performance and price. We are all quite happy with the concept of paying a higher price for a high performance product (let us not touch on that other abused word “quality”) , but that’s because we have a view about what high performance means. We are just going to have to get used to deciding what high performance resistance breaking insecticides are worth and get used to paying it.
Perhaps we could start by calling them something other than commodities. How about differentiated goods?
( Next time I will put the record straight on the difference between quality and performance)