The purple politics of life science innovation

America’s biopharmaceutical sector is, by any reasonable measure, the world’s most innovative and productive. The industry today has more than 3,400 drugs under clinical development, including many that are firsts of their kind. Because this research and development (R&D) pipeline is so robust, the U.S. Food and Drug Administration in the last decade-and-a-half has been able to approve more than 500 new medicines, providing new and better treatments for a wide variety of diseases. The industry also stands as a source of economic strength and competitive advantage for the United States, producing nearly $100 billion in value added and more than $50 billion in exports annually while supporting some 3.4 million jobs.

{mosads}There has long been a consensus among U.S. policymakers that the reasons the country is so successful in this field are, first, that the federal government provides robust funding for scientific research (mostly through the National Institutes of Health), and second, that America encourages vigorous private-sector innovation by providing strong intellectual property protections and a drug reimbursement system that together allow companies to earn enough revenue to reinvest in risky R&D. As a political matter, support for the U.S. way of discovering and developing new drugs thus has been neither a red-state sort of issue nor a blue-state one. It has been a bipartisan shade of purple.

But this once-happy political consensus is now under assault from left-wing populists and right-wing libertarians who, each for their own reasons, object to both the public-private policy framework and the results it produces. Against the backdrop of a vitriolic political campaign year — where purple language of a different sort tends to color policy debates — it is important to take stock of each camp’s arguments and consider what they could portend for future biomedical innovation.

Many on the left have long voiced concerns about drug prices, but a number of influential think tanks now argue it is time for decisive measures to shrink the role of private industry and expand the role of government. Led by fountainheads of left-leaning policy thought such as the Center for American Progress, the Economic Policy Institute and the Center for Economic and Policy Research — and championed most prominently on the presidential hustings by Sen. Bernie Sanders (I-Vt.) — these groups variously advocate not just for price controls on drugs, but also weaker patent protections and shorter terms of intellectual property protection for clinical test data.

Meanwhile, a vocal band on the libertarian right insists it is the government role in biomedical innovation that ought to shrink and the industry role that should expand. Motivated by antigovernment zeal and an overarching focus on fiscal discipline, this group — represented by the likes of the libertarian Cato Institute and the conservative Heritage Foundation, and given voice by elected officials such as Sen. Rand Paul (R-Ky.) — alternately discounts the legitimacy and efficacy of federal investments in life science research, and argues that the private sector can and should do most of the work.

The indictments that these two camps level against the country’s existing public-private model for biomedical innovation hinge on a few common points of contention. Take investment priorities. The populist left argues that industry, motivated by capitalist greed, invests mostly in drugs that can pay off with big profits, disregarding the cures that people need most. A weighty body of evidence may conclude that market incentives produce far more beneficial outcomes than critics contend, but never mind. The libertarian side meanwhile counters that government, guided by mindless bureaucracy, has neither the qualifications nor the incentive to allocate public resources sensibly. This ignores the fact that the National Institutes of Health (NIH) funds university research based on peer review by leading scientists in the sub-disciplines involved, but, well, never mind.

Another bone of contention is waste. Populists argue that industry pours too much money into advertising its drugs — meaning profits runneth over and prices could easily stand to be cut. In reality, industry devotes just 1.4 percent of sales to consumer advertising. Libertarians, meanwhile, see absurdity in federal research funds going to everything from the effects of alcohol on monkeys to the impact of massage on muscle health. In reality, alcoholism is a major public health concern, and there are gaps in medical science on how muscles respond to pressure at the molecular level.

Point by point, close inspection reveals the prevailing arguments on both sides are fundamentally flawed. Nonetheless, appraising the system as a whole, left-leaning populists contend government should take the lead in discovering and developing new drugs and private industry should be hemmed in, while right-leaning libertarians argue industry should lead and government ought to spend less taxpayer money on research.

Can the U.S. system be improved? Certainly — but by building on its record of success, not by tearing up its existing framework in favor of an all-public or all-private model. In fact, NIH funding needs to be ratcheted up. (It is now significantly below what it was as a share of the economy in the mid-2000s.) And industry needs to find ways to ratchet down the costs of discovering and developing new drugs, perhaps through more cooperative research models that focus on particular types of diseases. Congress also could make the U.S. tax code more supportive of high-risk research and development by expanding the R&D tax credit and by instituting an “innovation box” that lowers the corporate tax rate on profits derived from intellectual property.

But policymakers should reject the false choice between public-sector leadership and private-sector leadership. America leads the world because its system maximizes the strengths of both.

Atkinson is the founder and president of the Information Technology and Innovation Foundation (ITIF), a think tank focusing on the intersection of technological innovation and public policy. Follow him on Twitter @RobAtkinsonITIF.