NCPA - National Center for Policy Analysis

Are There "Missing" Cancer Drugs?

August 4, 2015

Policymakers have long worried that firms focus too much on short-term outcomes. This syndrome could be especially acute in sectors where the principal output is research that unfolds over a long time span. A pharmaceutical company researching new cures will be tempted to shift resources to drugs that can be developed sooner.

In "Do Firms Underinvest in Long-Term Research? Evidence from Cancer Clinical Trials," authors Eric Budish, Benjamin Roin, and Heidi Williams note that drugs to treat late-stage cancer are far more plentiful than drugs that treat early-stage cancer. They hypothesize that this discrepancy exists at least in part because pharmaceutical companies can bring late-stage cancer drugs to market more quickly.

The study authors link this to several factors:

  • Evidence can surface quickly in a clinical trial with late-stage cancer patients who have poor survival prospects without the drug, but survival gains might not become apparent for ten years or more in an early-stage cancer study with relatively healthy patients. 
  • The patent clock starts ticking from the moment a new product is patented (usually soon after it is first developed in the laboratory) rather than the moment it is approved for sale.

The authors find that R&D efforts are heavily slanted toward drugs to treat late-stage cancers, so there is a concern that research for preventative and early-stage cancer drugs is being neglected, at least in the private sector. As a result, survival rates for cancers besides leukemia and lymphoma have only improved in high mortality cases, where it is easier to turn a profit.

Source: "Are There ‘Missing' Cancer Drugs?" The American Economic Association, July 20, 2015.


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