Dean Baker on Drug Research

He writes,

It is not difficult to envision alternative mechanisms to pay for the research currently being incentivized with patent monopolies. Several economists have proposed a patent buyout system, where the government would buy out patents and place them in the public domain. A simpler method, however, would be to have direct public funding. The government already spends more than $30 billion a year to finance biomedical research through the National Institutes of Health (NIH). It would probably be necessary to increase this amount by $50-$60 billion a year in order to replace the funding currently supported through patent monopolies.

This additional funding could probably best be channeled through a mechanism other than NIH, with private companies bidding for major contracts to support research in a variety of areas. By having a relatively limited number of prime contractors, who could then contract out as they please, we would avoid having a situation of the government micromanaging research. The contracts could then be renewed and/or expanded, depending on the company’s track record. The conditions of getting the funding would be both that all patents are placed in the public domain and also that all research findings are made publicly available on the Internet as soon as practical.

I agree that we should think outside of the patent box when it comes to medical research. In fact, in my essay for the growth forum, I also chose to propose an alternative to the patent system.

3 thoughts on “Dean Baker on Drug Research

  1. Is Mr. Baker’s suggestion any different than how it is done at the Department of Defense?

  2. I for one do not have any wish to expand any more than is the present situation the federal government’s ability to distribute money to such as it might determine worthy of subsidy (oh, pardon me, “investment.”)

    Stimulus, bail out, TARP, HARP, federal student loans, ACA health insurance, Cash for Clunkers, QE-infinity, energy loans/guarantees, agriculture subsidies (sugar? ethanol? tobacco, really? still? yes.)

    What does the federal government do better (that is, more efficiently and effectively and economically) than private industry and private investment? US patent law merely provides incentives for private industry to innovate. It does not determine which inventive expression will warrant commercialization and which will prove a commercial failure. The market does that. Whyever would we want to substitute in the federal government?

    The U.S. patent system has worked wonderfully since 1790. As with Chesterton’s Fence, perhaps one should ask why it was established and how it’s deficient before deciding it should be removed.

  3. What I find striking about his proposal, is that in principle it’s no different than NIH. Funds are channeled to independent investigators (PI’s) who in turn disburse to contractors (research assistants, postdocs, science supply companies, etc). There’s no reason except public choice/lobbying why the NIH couldn’t insist on public domain of all results and immediate publication. I see no reason to believe that a replacement agency subject to the same pressures would not turn out to act in the same manner.

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