Don’t Kill the Cure
Posted on July 9, 2009America leads the world in biotechnology. It has the most companies, chasing the broadest number of breakthrough cures, with the best scientists and the most innovation.
It’s a risky business, but when a biotechnology firm succeeds, everybody wins. Patients win, doctors win, hospitals win, and even the government wins.
Because it is a risky business, the best way to attract top talent is to make certain that they can reap the rewards when they succeed.
Unlike in China, where the government dictates and tightly controls research and the innovation, the free-market philosophy in America allows a hundred-thousand flowers to bloom (to paraphrase Chairman Mao). That kind of competition is essential to innovation.
Today, though, the bio-tech industry is in a little bit of trouble.
First, there is an investment drought that has starved many of these flowers of the one thing that is key to their survival, money.
As the Wall Street Journal put it late last year: “The financial crunch is shaking the foundation of global biotech industry, threatening to slow the development of new medicines and cut high-tech jobs in the U.S. and Europe. Many small biotech firms are expected to file for bankruptcy, cancel drug trials, lay off workers or sell out to large companies over the coming year, industry executives say.”
You would think that the President’s stimulus package would have addressed this drought, but it didn’t.
And worse, Congressional efforts to push health care reform could unintentionally push even more of these companies to the brink of extinction.
One problem comes with the efforts of Democrats to squeeze money from the big pharmaceutical companies. While pounding PhRma might seem like good politics to guys like Henry Waxman and President Obama, the result would likely be a reduction in research dollars that flow from Pharmaceutical companies to bio-tech firms.
Another problem come with the efforts of AARP to scale back the ability of Bio-tech firms to protect their intellectual property. Protecting intellectual property is one of the key elements of a successful free market system.
The AARP is under the mistaken belief that if all these companies would share all of their information with their competitors quicker, than we can get breakthrough medicines quicker. That looks like a good argument on its face, but it is a naïve view of how the real world of innovation, investment and incentives really works.
Without incentives, there is no investment. Without investment, there is no innovation. And without innovation, there are no breakthrough drugs that will cure diseases like Parkinson’s or Alzheimer’s.
As Congress and the White House to work on reviving the economy and pushing through health care reform, they should keep one thought in their collective mind: Don’t kill the cure. Don’t kill innovation, investment and the incentives that make America the global leader in bio-technology and best innovator of life-saving biologic drugs.