Eric Cantor Hawks Medical Industrial Policy

There is no reason that government medical research shouldn’t receive the same critical scrutiny as any other program.
February 7, 2013 • Commentary
This article appeared in Bloomberg​.com on February 7, 2013.

Few government programs seem as sacrosanct as funding for medical research. Despite continuing U.S. budget constraints, both Democrats and Republicans regularly pledge to increase funding for the National Institutes of Health and other government medical research.

This week, Eric Cantor, the second‐​ranking House Republican, called for continued government funding for such research.

“There is an appropriate and necessary role for the federal government to ensure funding for basic medical research,” Cantor declared, suggesting that federal funds used for social‐​science research should be shifted to medical programs instead.

There is no doubt that funding medical research is popular. Polls show that a strong majority of U.S. voters support such programs. Yet there is no reason that government medical research shouldn’t receive the same critical scrutiny as any other program.

First, are the benefits of such programs worth the cost? Terence Kealey, vice chancellor of the University of Buckingham and author of The Economic Laws of Scientific Research, says that a review of historical evidence shows little correlation between the amount of money governments spend on scientific research and the returns from such investment. Kealey’s research involved the full range of scientific research, including medical research.

Research Value

At the same time, empirical studies suggest that the rate of return on publicly financed research is much lower than that of research financed by the private sector. While the private sector may be more focused on applied research, and the government is more effective at basic research, the distinction between those categories is rapidly disappearing.

Second, we should ask whether government funding of medical research is really necessary. There is no proof that the private sector is incapable of financing medical research, either for profit or as charity. While private companies undoubtedly have an incentive to fund research that they believe will ultimately prove profitable, even “orphan” drugs — one of the least profitable lines of research as they are designed for a small number of people with rare disorders — have found funding through the Bill and Melinda Gates Foundation and other charities.

Currently 60 percent to 70 percent of medical research is privately paid for, but research from the Organization for Economic Cooperation and Development suggests that government‐ funded research can displace or crowd out private financing that might otherwise occur. That is, if private companies believe governments will pay for research, they may simply withdraw their own money. Thus, government funding in this area doesn’t result in more research, just a different funding stream.

No evidence shows that government bureaucrats have either the qualifications or the incentives to make better decisions than private individuals and organizations about what research should be funded. After all, government involvement in research inevitably injects politics into scientific questions.

If a disease affects a favored political constituency or can mobilize a telegenic celebrity spokesman, it is likely to receive boatloads of money. If not, it is likely to be relegated to the back of the scientific bus.

For years, government researchers neglected diseases that primarily affected women, and few women were included in broader studies. Research on AIDS, despite a growing death toll, initially went unfunded until gay activists were able to bring political pressure to bear on Congress.

Politicized Choices

Even former NIH Director Elias Zerhouni has warned that congressional mandates to spend money on specific diseases have undermined the agencies’ research.

Cantor’s statement itself suggested the politicization of government research through his desire to transfer funds from research that he doesn’t like (social science) to research that he favors (medical).

Similarly, researchers are far more likely to receive government grants if they belong to the scientific “club,” a good‐​old‐​boys network of researchers. For example, an analysis of NIH grants found that black research scientists were 10 percent less likely to receive research funding than a white scientist from a similar institution and with the same research credentials.

Some researchers worry they can have their grants cut for challenging the scientific consensus or for reaching conclusions that are politically controversial. This is dangerous, because a willingness to rethink current theories is a key to scientific advancement.

Moreover, government funding of medical research inevitably entangles the government in difficult moral issues. Recall the bitter and polarized debate over government funding for stem‐ cell research. Other issues that have stirred up recent political controversy include the use of animals for testing, Centers for Disease Control and Prevention research into gun violence, and NIH research on sexual practices. We even saw President Barack Obama’s choice for NIH director, Francis Collins, attacked for being an evangelical Christian.

Private funding, on the other hand, avoids such moral and philosophical quandaries by allowing individual donors or corporate shareholders to exercise their personal consciences.

An industrial policy for medical research is still an industrial policy — and likely to have the same inefficiencies and unintended consequences. Or as Kealey put it, “Scientists may love government money, and politicians may love the power its expenditure confers upon them, but society is impoverished by the transaction.”

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