Working Paper: NBER ID: w19430
Authors: Eric Budish; Benjamin N. Roin; Heidi Williams
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) clinicaltrial endpoints, targeted R&D subsidies, and patent design.
Keywords: long-term research; cancer clinical trials; patent system; R&D investments; surrogate endpoints
JEL Codes: I10; O30; O34
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Commercialization lags (L19) | R&D investments (O32) |
| Survival rates (C41) | Commercialization lags (L19) |
| Surrogate endpoints (C24) | Commercialization lags (L19) |
| Commercialization lags (L19) | Private R&D investments (O32) |
| Commercialization lags (L19) | Public R&D investments (H54) |