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Eric Cantor Hawks Medical Industrial Policy

February 7, 2013 in Economics, Politics & Elections

By Michael D. Tanner

Michael D. Tanner

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.

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, …read more
Source: OP-EDS  

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