Economist Heidi Williams, Genius Award Winner, On Invisible Drug Industry Incentives

Last week, as she was sitting in her office at MIT, 34-year-old economist Heidi Williams got an unexpected phone call. It was from the John D. and Catherine T. MacArthur Foundation, telling her that she had just been awarded a so-called “Genius Award” — a no-strings-attached $625,000 grant that celebrates “the creative potential” of its fellows.

Williams, an assistant professor of economics at MIT, researches how invisible economic incentives affect the kind of cures that the medical industry produces. Her research has found that researchers are more likely to develop cures for late-stage cancer patients than early-stage patients, for instance, and that intellectual property law can limit innovation in genome research.

Radio Boston’s Anthony Brooks spoke with Williams about her research and her award (the interview airs in an upcoming show). Their conversation, edited:

AB: Tell us how you got the news about this award, and your reaction to it.

HW: I got a phone call from an area code that I recognized as a Chicago number. And I was just completely speechless when I answered the phone and talked to them. I’m very early in my career, and I was just completely overwhelmed to hear that I had received a fellowship.

Talk to me about these invisible economic incentives that affect the cures that the medical industry produces. Can you explain how this works?

Researchers working on drug treatments often come up with a lot of ideas, but if you talk to them, many of those ideas just never reach patients. Sometimes you hear anecdotes about the reason why those products never got developed — because of misaligned incentives in the patent systems or because of misaligned incentives in the policy system more generally. I try to explain why some promising scientific leads never get developed into new drugs or medical technologies that consumers or patients actually have access to.

Why are there incentives for late-stage cancer treatment for example, but few for early-stage cancer, or even cancer prevention? What incentives control that?

When new drugs come to market in the U.S., they need to show the U.S. government evidence that the drugs are safe and effective by showing evidence that the drug improves survival. When you need to show that a drug improves survival for patients that are very sick and will die relatively quickly, you can show that in a randomized clinical trial much more quickly than if you need to show evidence that a drug improves the survival of patients that have a longer life expectancy.

Longer clinical trials take more time and cost more money, but also, biotech and pharmaceutical companies almost always file for patent protection before they start their clinical trials. And so every additional amount of time that they’re spending in clinical trials is less time that they have for their patent to actually be generating profits for them once their drug is on the market.

So does this mean…is the bottom line here that the market isn’t necessarily giving us what we need?

Nothing in our work...suggests that private firms are doing anything wrong…but they’re responding to systems that fail to provide incentives for these technologies that we estimate would be very socially valuable...[H]ow could we re-design public policies to better align incentives facing private firms with the social contributions that we think those inventions would be able to make?

What does your research suggest about how that would work – about ways to correct the problem, to re-align those incentives?

There’s a strong case for public subsidies as a way of leveraging private investment in producing new drug development. And you could target public subsidies through the NIH for example, towards funding the kinds of clinical trials that are unlikely to be funded by private firms because of this distortion that we identify.

You’re just 34 — this is still early in your career. What does this vote of confidence by the MacArthur foundation mean to you?

I’m very humbled by their willingness to make this investment in me, and to help me try to continue to do the work that I want to do. My research is very data-intensive, and involves taking risks…many of which never work out. For every paper that I have that we successfully learned something from, there are many papers that I spent a lot of time trying to write where I wasn’t able to find the right way of analyzing the data to be able to shed light on the question that I was interested in. This vote of confidence from the foundation gives me the freedom to say, I can continue to take on these high-risk projects even if they’re taking a long time and don’t always work out, because it seems like they are hopefully producing something that’s socially valuable. And I’m really excited to continue to do that work.


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