David R. Henderson  

Central Planning of Cancer Research

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New York Times Article Shows Pitfalls of Central Planning

The weather in Grand Cayman is so-so, which is why I'm blogging today.

"Grant System Leads Cancer Researchers to Play it Safe," reads the title of a news story in today's New York Times.

Some choice excerpts:

For 25 years, Eileen K. Jaffe received federal grants to run her lab. As a senior scientist at the Fox Chase Cancer Center, with a long list of published papers in prestigious journals, she is a respected, established researcher.

Then Dr. Jaffe stumbled upon results that went against textbook explanations, suggesting that it might be possible to find an entirely new class of drugs that could disable proteins that fuel cancer cells. Now she wants to find chemicals that might be developed into such drugs.

But her grant proposal was rejected out of hand by the institutes of health, not even discussed by a review panel. She had no preliminary data showing that the idea was likely to work, something reviewers always want to see, and the idea was just too unprecedented.

And this:

Take one transformative drug, for breast cancer. It was based on a discovery by Dr. Dennis Slamon of the University of California, Los Angeles, that very aggressive breast cancers often have multiple copies of a particular protein, HER-2. That led to the development of herceptin, which blocks HER-2.

Now women with excess HER-2 proteins, who once had the worst breast cancer prognoses, have prognoses that are among the best. But when Dr. Slamon wanted to start this research, his grant was turned down. He succeeded only after the grateful wife of a patient helped him get money from Revlon, the cosmetics company.

None of this would surprise Gordon Tullock. Tullock broke new ground in public choice, a part of economics that, among many other things, explains why government funds things the way it does. But he also wrote an insightful book in the mid-1960s on how to fund research, The Organization of Inquiry. Tullock pointed out that to get good research, you need to have good incentives for research, and he proposed a system of prizes for actual breakthroughs.

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COMMENTS (7 to date)
Troy Camplin writes:

You also see this in the humanities funding. In order to get funding, you have to prove that you can be completely successful without it.

I think we have our funding priorities completely backwards, anyway. We fund people to look for something, and the people we fund will, of course, look and look and look. Need more funding to keep looking. But if you paid people for finding something, you might be surprised at how much is suddenly found. Of course, you really need both.

I have a friend who used to work for a PBS station, and he said that the producers, et al were all very conservative in their choices of what to put on. They were afraid of any sort of real controversy -- and they wanted to make sure they kept both the donors and the government officials happy.

All in all, you can't expect the government to support anything that is truly risky.

Billy writes:

I always find it interesting when The New York Times prints a story like this. I imagine their response would be that either the right people aren't in place or something small needs to be tweaked. They would never suggest that the entire idea of government-funded research is flawed. That would be crazy talk.

Brent Buckner writes:

Hey, it's not bad weather for rainy season here on GCM!

Willem writes:

From my classes on industrial organization I remember that the prize model fits well if investment needed for the breakthrough is limited in time and effort and chances are predicatable. If the outcome is highly unpredictable in time and effort, it is hard to set the right price for innovation (there is Hayek again).

It looks like Tullocks' system wouldn't have gotten Eileen K. Jaffe any money up front as well. She is used to getting money up front, so probably wouldn't have followed this line of inquiry if the incentives would have been more Tullockian.

Dan Weber writes:

Does the Federal government have a monopoly on cancer funding?

I say the same thing to people who whine about pharma companies only producing drugs that are profitable to them. They're not stopping other groups from producing other drugs.

Surely there are other groups with assets willing to fund cancer research, even to set up prizes.

liberty writes:

"Does the Federal government have a monopoly on cancer funding?"

Not in this country (yet). But they do get to tax everyone, and then subsidize research, giving them a significant market advantage.

So now you know a little bit. Even if you don't know everything, you've done something worthwhile: you've expanded your knowledge. - William B. Doyle, http://www.wbdoyle.com/blog/

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