Innovation suffers with ill economy
MASSACHUSETTS IS blessed to be home to the greatest concentration of world-class hospitals, universities, and biopharmaceutical companies in the world. But a stagnating economy and looming federal debts will fundamentally alter our innovation ecosystem. How the Bay State adapts to change will have important implications for our local economy, and for medical innovation in the United States and globally.
Right now, the Bay State innovation economy is an enormous strength for our region and has provided great benefits to the nation and the world. Hospitals such as Mass. General and the Brigham regularly lead the rankings for patient care and innovative research. Universities such as Harvard and MIT attract the best professors and students from around the world. Leading local biotech companies such as
Yet all this innovation depends in large part on public spending. For hospitals, a lot of patient care is ultimately paid for by government programs such as Medicare and Medicaid. Academic research at hospitals and universities is overwhelmingly paid for by government grants. And the highly innovative (and expensive) new drugs developed by Bay State biotech and pharma companies? They again are largely financed by government coverage for patient treatments. In an era of belt-tightening and more modest economic growth, our region’s leadership in fostering innovation is at risk.
Entrepreneurship demands a laser focus on the needs of the customer. For much of the last half century, a key customer for our biomedical innovation, whether directly or indirectly, has been government. From here on, we will need to focus more on a new customer: the individuals, corporations, and institutions inside and outside of the United States capable of financing and supporting the enormous investments required to bring an important discovery from an academic laboratory to the marketplace.
We will have to fundamentally reorganize the research-and-development enterprise in Massachusetts. Universities and hospitals will need to focus more on research that can measurably improve human health in a reasonable time frame - not just at some distant point in the future. They will also need to reduce the barriers separating their discoveries from the companies that can develop them and bring them to market; preserving the separation between world-class research institutions and private companies produces higher costs because of administrative barriers and duplicative investments.
Government regulations will have to adapt, too. We need faster, more standard processes for transferring intellectual property; buying, selling, and sharing patent rights is too cumbersome right now. Also, the US Food and Drug Administration has imposed ever-greater burdens on the approval of drugs for prevalent chronic disorders such as obesity and diabetes. The length and cost of required clinical trials has been significantly increased; and the tolerance for any potential side effects has significantly decreased. Industry is already responding by reducing investment in treatments for these disorders, and instead focusing on severe diseases with no current treatments.
Finally, academic institutions and innovative biotech and pharmaceutical companies will also need to expand their horizons. They must look for solutions to diseases and medical issues that may be more prevalent outside the United States. An increased focus on the customer who is able to pay for innovation (what are the medical needs in China or Brazil?) will be crucial.
The United States is still the world’s most innovative economy, and within biomedicine the Bay State is the most successful ecosystem. As the US government steps back, only a greater focus on other consumers - domestic and foreign - who can finance the extraordinary cost of biomedical innovation in the future can ensure the continued vibrancy of our innovation ecosystem.
Dr. Christoph Westphal, an occasional Globe contributor, is a partner at Longwood Founders Fund and a medical entrepreneur based in Boston. Follow him on Twitter @drcwestphal.