New York Times Article Shows Pitfalls of Central Planning

The weather in Grand Cayman is so-so, which is why I’m blogging today.

“Grant System Leads Cancer Researchers to Play it Safe,” reads the title of a news story in today’s New York Times.

Some choice excerpts:

For 25 years, Eileen K. Jaffe received federal grants to run her lab. As a senior scientist at the Fox Chase Cancer Center, with a long list of published papers in prestigious journals, she is a respected, established researcher.

Then Dr. Jaffe stumbled upon results that went against textbook explanations, suggesting that it might be possible to find an entirely new class of drugs that could disable proteins that fuel cancer cells. Now she wants to find chemicals that might be developed into such drugs.

But her grant proposal was rejected out of hand by the institutes of health, not even discussed by a review panel. She had no preliminary data showing that the idea was likely to work, something reviewers always want to see, and the idea was just too unprecedented.

And this:

Take one transformative drug, for breast cancer. It was based on a discovery by Dr. Dennis Slamon of the University of California, Los Angeles, that very aggressive breast cancers often have multiple copies of a particular protein, HER-2. That led to the development of herceptin, which blocks HER-2.

Now women with excess HER-2 proteins, who once had the worst breast cancer prognoses, have prognoses that are among the best. But when Dr. Slamon wanted to start this research, his grant was turned down. He succeeded only after the grateful wife of a patient helped him get money from Revlon, the cosmetics company.

None of this would surprise Gordon Tullock. Tullock broke new ground in public choice, a part of economics that, among many other things, explains why government funds things the way it does. But he also wrote an insightful book in the mid-1960s on how to fund research, The Organization of Inquiry. Tullock pointed out that to get good research, you need to have good incentives for research, and he proposed a system of prizes for actual breakthroughs.