Dec 162009
 

This is so stupid it’s infuriating.

Subsidized science

“Baltimore-based company Champions Biotechnology has a business tale to tell, one reminiscent of Robin Hood. But there’s no robbing of the rich in this story. Rather, Champions uses revenue from premium services offered to wealthy clients to subsidize risky—and hard-to-fund—research.”

[…]

“Champions spent $1.7 million on R&D in fiscal year 2009, and it gathers those funds through a unique business approach: Research is funded with revenue from premium oncology services, offered to a select clientele. The company creates ‘personalized tumorgrafts’ for cancer-stricken individuals, each to the tune of $100,000…”

[…]

“By R&D, Sidransky is referring to Champions’ separate bank of anonymous tumorgrafts, or mice carrying tumors—grafted from spare tissue acquired through collaborations with academic institutions.”

[…]

“Peter Houghton, director of the Children’s Cancer Center in Columbus, Ohio, considers tumorgraft models ‘very good for identifying active drugs.’ Houghton is openly skeptical, however, about applying this technology to individuals…”

[…]

“In the meantime, the company is getting kudos for its unique business model. ‘I don’t think [using premium services to fund R&D] is done in practice today, though I like the idea,’ says Stuart Barich, Oppenheimer’s managing director.”

Are we living on Bizarro World?! Where do I begin to show how completely ass-backwards the author’s understanding of economics is?

Let’s start with the title.

It’s not subsidizing.

This funding model is not subsidizing. Just what are subsidies?

subsidy

  1. a direct pecuniary aid furnished by a government to a private industrial undertaking, a charity organization, or the like.
  2. a sum paid, often in accordance with a treaty, by one government to another to secure some service in return.
  3. a grant or contribution of money.
  4. money formerly granted by the English Parliament to the crown for special needs.

Source [emphases mine]

Notice that the common understanding of subsidies is that they are grants of money from a government to another entity, usually private. This is exactly the funding model for most science and medicine in this country, made possible by the NIH and similar federal entities.

It’s not “a unique business approach”.

What Champions Biotechnology is doing is called capitalism. Profits from one venture are used to fund expensive R&D for another. That’s what “evil” drug companies do. That’s what drives innovation.

It’s not remotely similar to Robin Hood.

Robin Hood robbed from the rich (who’d confiscated wealth through gratuitous taxation and political back-scratching) and gave to the poor. In this case, the rich presumably acquired their wealth through business acumen. They willingly and with full consent part with some of their wealth in return for services rendered. The demand for these services far outpaces supply, so prices are high. The profits earned for rendering these services is reinvested in expensive R&D that benefits everyone. Advances lead to new premium services for the rich to purchase, and the cycle continues.

The Robin Hood rich in this story are government institutions. Who but the government confiscates the wealth of the people through taxation? How else do governments acquire the funds for “direct pecuniary aid”?

Has science been divorced from the free market and feeding from the government trough so long that scientists don’t recognize capitalism when they see it? I suppose I can at least be encouraged by knowing at least some think it’s a good approach. 😉

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