At The New Ledger, Ben Domenech has written a very insightful post on markets and state-funded innovation.
The truth, as anyone knowledgeable within the system will tell you, is that private companies just don’t do basic research. They do productization research, and only for well-known medical conditions that have a lot of commercial value to solve. The government funds nearly everything else, whether it’s done by government scientists or by academic scientists whose work is funded overwhelmingly by government grants.
It’s just simple math: if you have a condition that has a relatively small number of patients, there’s just no market incentive to sink a great deal of time and money into researching it. This is why you’ll usually find that 100% — not a majority, the entirety — of the research into a cure is done either via taxpayer-funded grants to academic researchers or, more frequently, it’s entirely found on the NIH campus.
But Domenech goes on to make another important point.
While I consider myself a pro-market and pro-consumer conservative, specialized medical research is one area where government funding is still needed. And to be honest, I see no inconsistency between holding that view and also holding the view that a government takeover of our health insurance system is a bad idea.
Michael Shellenberger and Ted Nordhaus have called for a new environmental politics that emphasizes innovation over regulation. One wonders if the same argument can be made with regards to healthcare. In 2006, S. Jay Olshansky, Daniel Perry, Richard A. Miller, and Robert N. Butler wrote an essay on “The Longevity Divided” for The Scientist. In it, they describe the costs of age-related illnesses in lost productivity and health spending.
Take, for instance, the impact of just one age-related disorder, Alzheimer disease (AD). For no other reason than the inevitable shifting demographics, the number of Americans stricken with AD will rise from 4 million today to as many as 16 million by midcentury. This means that more people in the United States will have AD by 2050 than the entire current population of the Netherlands. Globally, AD prevalence is expected to rise to 45 million by 2050, with three of every four patients with AD living in a developing nation. The US economic toll is currently $80-$100 billion, but by 2050 more than $1 trillion will be spent annually on AD and related dementias. The impact of this single disease will be catastrophic, and this is just one example.
Cardiovascular disease, diabetes, cancer, and other age-related problems account for billions of dollars siphoned away for “sick care.”
To sharply reduce these costs, they propose “a modest deceleration in the rate of aging sufficient to delay all aging-related diseases and disorders by about seven years.” This delay would yield greater gains than eliminating cancer or heart disease, and it can be purchased at relatively modest cost: a $3 billion annual investment in biogerontological research funding. As conservatives frame alternatives to Obamacare, this should be part of the agenda.