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Tuesday, November 23, 2004

Some Notes on Medical Innovation (with links)

It's too late at night to write anything coherent about the vast problem of how to fund medical research, so I'm going to try brain-dumping some notes that I hope to develop in future posts. When reading this blog entry, just pretend that each paragraph is a Powerpoint slide.

Dean Baker has proposed establishing an NIH agency to commercialize drugs that would then be made available for free to the public. Dennis Kucinich has introduced a (sketchy) bill.

What is this supposed to accomplish? Lower drug prices. Medical innovation determined by social priorities rather than profit.

It's true there's a conflict between social priorities and profit. An example is that new uses for off-patent drugs may not be profitable to research. Also unprofitable are drugs for poor people such as anti-malarial drugs for the third world. Hollis provides other examples. Kucinich and Baker also think socially unworthy "lifestyle" drugs are researched instead of cures for deadly diseases. This last is the kind of ascetic position I'd expect from vegetarian like Kucinich.

But the proposed agency will also face a conflict: whether to fund research that leads to lower drug prices or more innovative research. An example is "me-too" drugs which lower prices but don't offer much benefit. Baker endorses this kind of research. "New uses for old drugs" could be very valuable medically but won't lower prices, since the drugs are already off patent. Baker and Kucinich don't seem interested in this.

How is the agency supposed to develop new drugs? Presumably by funding clinical and applied research instead of academic research. That's what Baker says and it's probably an accurate-enough description. But this is an oversimplication. See this debate between an industry blogger and an academic blogger about the role played by the government, academia, and industry in developing new drugs.

The present regime (Bayh-Dole Act of 1986) developed precisely because academic research wasn't being commercialized. You don't get tenure for saving lives! (Or for developing drugs or transferring knowledge to industry). So the law gave patent rights to government-funded research to the researchers (often academics). Most universities now actively try to patent and license their research. See GAO, MIT study, Sampat survey.

"Principal-agent problem"--NIH doesn't want to do it. "Phase III clinical trials" -- the final and most expensive stage of developing a new drug -- are boring. High-powered researchers don't want to do it, since it's mainly a management task (recruiting patients and collecting data). Academics and the NIH probably don't want to do it: they want to discover new proteins and such -- make exciting new breakthroughs. That's why industry needs to be bribed to do it. That's why Bayh-Dole bribes universities and academics to do it. If we give tens of billions of new dollars to the NIH, why should we expect it to be spent on clinical/applied research? It will just be spent on the kind of academic research that scientists enjoy and value. Baker and Kucinich have given no thought to this problem.

The current system of medical research is vast and complicated, developed over 100s of years, and enshrined in the Constitution (patents). The old-fashioned conservative position -- respect for the wisdom embodied in traditional practices -- has a lot to be said for it. A few hundred million or a billion for a pilot program is a good idea, but we ought to be cautious before tinkering with a complicated system that's working pretty well.


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