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Jan 12

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Incentives for Scientific Research Are Changing

The research community has historically shown a strong bias toward work that would ultimately create a profitable product or solution.  As a result, many solvable problems without a ready and lucrative market get little attention.  This is a frequent complaint amongst those with obscure illnesses.  The research funding has simply not been there.

The increase of contests is changing the payback model for research companies.  In contrast to an investment in research being repaid through ultimate sales of resulting products, contest money provides a more reliable and faster return (or in some cases, the only real possibility of a return).  Contests offered by private donors and various interest groups are being offered to solve all sorts of issues.  The prize money is making the effort worthwhile, with some awards in the tens of millions.  For instance, finding a single dose sterilization for dogs and cats would make you eligible to receive the $25 million Michelson Prize in Reproductive Biology.  Even the US government has gotten on board.  In 2011 President Obama signed the America Competes Act, which allows government agencies to offer up to $50 million in prizes for scientific competitions.   In the case of research that would not lead to products with prospects for significant commercial success, contests can provide a viable incentive to justify a research firm’s time and resources.

About the author

Richard Russell

Richard is a Consultant at Fulcrum Inquiry, an accounting and economics consulting firm that performs economic damages analysis involving commercial litigation, financial investigations, business valuations, and forensic accounting.

Permanent link to this article: http://betweenthenumbers.net/2013/01/incentives-for-scientific-research-are-changing/

1 comment

  1. Daniel Nolte

    A relatively simple method of the government giving rewards to the pharmaceutical industry for lifesaving but otherwise uneconomical research would involve rewarding bonus years to a drug patent of the winner’s choice.

    Most drug companies have at least one blockbuster drug nearing the end of its patent. The ability to add one or two years to the patent expiration date of such a blockbuster drug is worth many millions of dollars to these firms, all without a direct taxpayer cost. Of course there is an indirect cost, as always, but the societal imperative of the earlier availability of a generic version of a baldness tonic or an erection enhancer versus the discovery of a new cancer treatment seems a worthwhile exchange.

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