Government should stay out of the medicine cabinet
of January 22 reports that the Obama administration has created a 鈥渂illion-dollar government drug development center to help create medicines鈥� as part of the federally funded National Institutes of Health.
According to the article, its rationale is to undertake research leading to the commercial development of drugs that has mysteriously lagged in the U.S. The article makes no mention of the regulatory costs drug firms face. The moving force behind this new center is NIH Director Francis Collins, famously (and embarrassingly) associated as runner-up in the Human Genome Project to Craig Ventner鈥檚 privately funded effort.
The Times marvels at Collins鈥� 鈥渁bility to conceive and create such a center in a few short months.鈥� Yet his political connections apparently run quite deep. As Thomas McQuade reminds me, Bill Clinton arranged for a face-saving event for Collins in which the human genome 鈥渞ace鈥� was declared a tie.
The intended role of this new center meshes well with Obama鈥檚 call for managing American competitiveness via government intervention. But such enthusiasms are not new or peculiarly American. Explicit government collaboration in commercial R&D with private firms has been de rigeur in Europe for many years and has been gradually accepted and implemented in America by politicians, the government run funding bureaucracy, and firms eager for special guarantees and subsidies for the past several years.
The flawed market failure arguments pertaining to 鈥渂asic research鈥� have morphed to apply to the commercial end of R&D to further 鈥渃ompetiveness in the global knowledge economy.鈥� In reality, however, this unwarranted extension of government insinuation into the private sector is just a more modern version of 1970s 鈥渋ndustrial policy鈥� and should be rejected for the same reasons.
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