Investment Incentives for Cancer Research

A newly published study co-authored by MIT economists claims that drug companies "underinvest" in long-term research to develop new cancer-fighting drugs because of the time and cost involved. The study, published in American Economic Review and reported in Drug Discovery & Development, estimates that the underinvestment in longer-term drugs potentially caused a loss of 890,000 life-years among people diagnosed with cancer in 2003 alone and suggests three policy adjustments that could result in more long-term research on anti-cancer drugs (http://www.dddmag.com/news/2015/07/study-firms-underinvest-long-term-cancer-research?et_cid=4697679&et_rid=45505806&type=cta).
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According to MIT economist Heidi Williams, co-author of the article, "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." Drugs for treating late-stage cancers cost less to develop than those for earlier-stage cancers, because they extend people's lives for shorter periods of time, clinical trials for them get accomplished faster and give pharmaceutical companies more time to control patented drugs.

Williams and her co-authors -- Eric Budish, an economist at the University of Chicago's Booth School of Business, and Benjamin Roin, an assistant professor at the MIT Sloan School of Management -- analyzed four decades of data from the National Cancer Institute and the Food and Drug Administration (FDA) and encompassed more than 200 subcategories of cancers at various stages. The researchers established that the tendency toward short-term drug research was largely because of the shorter time required for clinical trials by showing that they use "surrogate endpoints, biomarkers that stand as proxies for eventual outcomes and help estimate how effective the drugs will be."

To provide incentives for the development of long-term cancer drugs, Budish, Roin, and Williams suggest three new policy approaches. The first is continued use of surrogate endpoints or more research to establish their validity. The second is more public funding of research and development for anti-cancer drugs, "since such funding is free of short-term, private-sector shareholder pressure to produce returns." Only six cancer drugs are preventative in nature, and all have come about because of public funding or surrogate endpoints. The third potential new policy would be to change the terms of drug patents, "which typically run from the time of patent filing, to run from the time when the drug hits the market." Thus, the FDA could grant exemptions that increase drug patents to compensate for the time the R&D process consumes.

Another organization reached the conclusion that strategies for cancer research needed some revision. Change That Cares®, a 501(c) (3) non profit whose purpose is to raise money for the benefit of organizations involved in cancer and HIV research activities, said in its December 2014 newsletter, "On December 4, 2014, National Cancer Institute (NCI) reported its funding levels for 2014. This included information on success rates for R01 and R21 funding - at 15 and 12%, respectively. Funding patterns since 2011 were also included, showing very little change over the 4 years. Generally speaking, scientists who submit these grant proposals must stay funded in order to do their work, this means that 8 out of 10 must try and try again. Clearly it is time to think of new ways of funding cancer research" (http://changethatcares.org/?p=178).