Do Firms Underinvest in Long-Term Research? Evidence from Cancer Clinical Trials
Do Firms Underinvest in Long-Term Research? Evidence from Cancer Clinical Trials
Coauthors: Benjamin J Roin and Heidi WilliamsAmerican Economic Review, (2015): 105, no. 7, 2044-2085. [PDF]
Abstract
We investigate whether private research investments are distorted away from long-term projects. Our theoretical model highlights two potential sources of this distortion: short-termism and the fixed patent term. Our empirical context is cancer research, where clinical trials — and hence, project durations — are shorter for late-stage cancer treatments relative to early-stage treatments or cancer prevention. Using newly constructed data, we document several sources of evidence that together show private research investments are distorted away from long-term projects. The value of life-years at stake appears large. We analyze three potential policy responses: surrogate (non-mortality) clinical-trial endpoints, targeted R&D subsidies, and patent design.
Awards
Winner- the Kauffman/iHEA Award for Health Care Entrepreneurship and Innovation Research
Winner- the Arrow Award for “best paper published in health economics” in 2015
Press Coverage
Why Preventing Cancer Is Not the Priority in Drug Development
New York Times, Austin Frakt, Dec 28, 2015 [PDF]What Cures Are We Missing Out On?
Bloomberg, John Tozzi, Sep 30, 2015 [PDF]Patents That Kill
The Economist, A.T., Aug 08, 2014 [PDF]Why Aren’t There More Cancer Vaccines?
Slate, Ray Fisman, Aug 26, 2013 [PDF]Slides
Slides, Do Firms Underinvest in Long-Term Research?
Ben Roin and Heidi WilliamsSeminar Slides, April 2015. [PDF]
