Kennedy versus the cure

Posted by Marc Hodak on May 22, 2008 under Invisible trade-offs | 4 Comments to Read

As Ted Kennedy begins his battle with cancer, we’re treated with a story about how his work in the Senate may be paying off in the form of his treatment choices:

“It’s really hard to think of anyone who’s helped biomedical research in this country or the National Institutes of Health more than he has, and hopefully he’ll get some benefit from how he’s helped others,” said Dr. Patrick Wen, clinical director of the Center for Neuro-Oncology at the Dana-Farber Cancer Institute in Boston.

Personally, I would consider it somewhat vindictive to wish upon Ted Kennedy the fruits of his health care policies. The good news is that Kennedy, like nearly all sufferers, will have no idea which of dozens or hundreds of treatments for his condition don’t exist today because of the costs of regulations that Kennedy supported over the last several decades (see below the fold).

I also hope that Dr. Wen is much better at connecting the dots in his research than he is between his last statement and this one:

Economics comes into play, as well. Simply put, the market for brain cancer drugs pales, compared with that for other malignancies, with only 9,000 people a year in the United States diagnosed with the kind of cancer that has beset Kennedy.

“Because the numbers are relatively small,” Wen said, “the incentive to develop drugs for brain tumors is less than for breast cancer or prostate cancer.”

In a world where every last market niche is saturated by the products of entrepreneurship, why wouldn’t more companies invest tens or hundreds of millions of dollars in the development of an effective brain cancer treatment that thousands of patients like Kennedy would pay dearly to have? Because the minimum, fixed cost of getting through the FDA process is at least a half billion dollars.

Most of that cost is associated with regulatory hurdles and delays created by the FDA. But, one might ask, doesn’t the FDA prevent drug developers from making and selling dangerous drugs? Yes, Ted Kennedy’s constituents believe that only government intervention will prevent Merck or J&J from killing their patients.

Economists have been talking for decades about reining in the FDA in order to spur a faster pace of innovation. Politicians have chosen to ignore them. Some have, in fact, ceaseless worked to expand FDA authority. And despite the regulatory straight-jacket in which our treatment industry exists, certain lawyers in Congress have refused to allow this overkill to shield the industry from the inherent liability risks of treatment innovations. And, as if the FDA was not bogged down enough in trying to keep up with explosive biotech growth, certain Senators have tried to layer on additional responsibilities in a moralistic crusade against smoking. The senior Senator from Massachusetts has been involved in all of these policies, plus direct efforts to crimp the profits of drug makers at every turn, further undermining their ability to innovate.

This brings us to the question of why someone like Dr. Wen, and many others like him, would consider the dear Senator as such a savior? Because Kennedy sends them money:

Throughout his 45 years in the Senate, Kennedy has been a stalwart defender of biomedical research, arguing for increases in the NIH budget.

Doctors are trained to see what is there. If they see a blockage, they will fix it to prevent a heart attack. If they see an aneurysm, they will fix it to avoid a hemorrhage. Congress has created a blockage in our health care economics, and that has driven funding from the private market away from health care solutions. Congress is the source of that hemorrhage. On the other hand, Congress taxes all of us, and uses some of those tax dollars for some central planning on health care, which creates opportunity costs of its own. Certain members of congress are now looking for ways to nationalize our health care, which will do no wonders.

No one knows the cost in innovation that Congress has imposed on all of us, or all the treatments we don’t have because of their retardation. Well, almost nobody.