Firms 'underinvest' in long-term cancer research

An example of why we need both private and "public" (ie. government) work.

Public Release: 28-Jul-2015
Firms 'underinvest' in long-term cancer research
Tweaks to the R&D pipeline could create new drugs and greater social benefit.
Massachusetts Institute of Technology

Pharmaceutical firms "underinvest" in long-term research to develop new cancer-fighting drugs due to the greater time and cost required to conduct such research, according to a newly published study co-authored by MIT economists.

Specifically, drugs to treat late-stage cancers are less costly to develop than drugs for earlier-stage cancers, partly because the late-stage drugs extend people's lives for shorter durations of time. This means that the clinical trials for such drugs get wrapped up more quickly, too -- and provide drug manufacturers more time to control patented drugs in the marketplace.

"There is a pattern where we get more investment in drugs that take a short time to complete, and less investment in drugs that take a longer time to complete," says MIT economist Heidi Williams, co-author of a new paper in the American Economic Review that details the findings of the study.

The social cost is significant: The researchers estimate that the lack of investment in longer-term drugs resulted in a loss of 890,000 life-years among people diagnosed with cancer in the year 2003 alone. The paper also suggests three policy adjustments that might produce more long-term research on anti-cancer drugs.

The finding "doesn't mean that the private firms are doing anything wrong," Williams adds, given the incentives they face. However, she observes, "The public sector is more willing to invest in these long-term projects than is the private sector," suggesting that new policies could produce more types of drugs for patients.