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
Slides
Slides, Do Firms Underinvest in Long-Term Research?
Ben Roin and Heidi WilliamsSeminar Slides, April 2015. [PDF]
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]
