On Thursday, March 24 in the Chang Hou Lecture Hall, Harvard University Professor of Public Policy and Business Administration Amitabh Chandra delivered Swarthmore’s annual Pierson Lecture. In the talk, Chandra discussed medical innovation, economic incentives, and pricing in the biopharmaceutical industry, emphasizing the industry’s potential for combating disease, as well as its shortcomings regarding research and development and gender and economic equality.
The Pierson Lecture is hosted by the department of economics in honor of Frank Pierson ’34, who worked as a professor of economics at Swarthmore for 39 years and served as the department’s chair for twelve years. The talk began with an introduction from Professor of Economics Syon Bhanot, who commented on Pierson’s lasting impact, both on his students as well as the economics department as a whole. Bhanot described Pierson as a distinguished scholar of labor economics and a “humble man … who cared deeply about his students.”
Bhanot then welcomed Chandra, noting his multidisciplinary positions at Harvard Business School and the Kennedy School of Government. He highlighted Chandra’s achievements and joked that “if you have a printer with a lot of paper, you can also print his CV … because it’s many pages long.”
Bhanot turned the floor over to Chandra, who expressed his gratitude for being invited as this year’s Pierson lecturer. He claimed that many of his Ph.D. students are Swarthmore graduates before adding that he himself was rejected from Swarthmore. Aside from reading the college catalog, he joked, he had never visited Swarthmore.
Chandra then introduced the topic of the lecture by displaying a graph of the causes of death in high-income countries. The largest killers were diseases such as cancer, heart disease, diabetes, Alzheimers, and Parkinsons, as well as strokes. Chandra then posed the question of the night: as philosophers, politicians, and scientists, how can countries reduce these diseases and the deaths that they cause? The number one solution, he explained, is creating drugs that can combat them.
According to Chandra, the problem with creating medicines is that many, like penicillin, were discovered as a result of luck, serendipity, and “the right person at the right time, with the right petri dish.”
This has implications for global medicine: it is a bad process for countries to rely on to fight diseases through medical development. Countries must develop public policies, he explained, to encourage medical development rather than rely on serendipity.
On a global scale, the diseases that countries choose to combat may have worldwide consequences. Chandra highlighted this problem by illustrating the differences between malaria and gout. Malaria is a large disease with 216 million cases and approximately 700,000 deaths in the world, primarily affecting countries in Sub-Saharan Africa. Gout is a rarer disease with 34 million cases globally and impacts more developed countries, unlike malaria. Pharmaceutical companies could develop a vaccine to treat malaria, which impacts more people, but they don’t. Companies focus on treatments for other diseases, like gout.
“Even though gout is a much smaller disease in terms of the number of patients who have it, it’s a much bigger disease from an economic position, because the people who have gout can pay so much more money for a gout treatment than the millions and millions of kids who have malaria,” he explained. “This is a classic market failure, because even if the science existed for a cure for malaria … no one’s going to bring that to the market, even though the social value of that invention would be colossal.”
This example emphasized Chandra’s main point about market failures in the pharmaceutical industry: there is a discrepancy between the incidence of disease and the research and development being conducted to combat those diseases. In the same way that profit-maximizing pharmaceutical companies would prefer to develop a cure for gout as opposed to malaria, within the United States these firms would prefer to develop cures for common over rare diseases, because companies could maximize their profit by selling a large quantity of the drug at a high price. Incentives can therefore be a powerful tool to increase research and development into drugs for rarer diseases.
Chandra emphasized that incentives are powerful tools for facilitating research and development. He explained that after the passing of the 1983 Orphan Drug Act, which created incentives for pharmaceutical companies in developing treatments for rare diseases, and the completion of the human genome in 2003, there was a significant increase in the number of orphan drugs that were developed (see graph). The combination of incentives and new medical research made the development of drugs for rare diseases much easier and enabled companies to make a higher profit.
However, Chandra cautioned, there are many areas of health where there should be incentives — these are known as missing incentives. This is seen with the research and development around Alzheimer’s disease, which impacts more than 44 million people globally and leads to high death rates as well as caregiver burden.
Alzheimer’s costs the U.S. $500 billion per year in terms of treatment and caregiver services, though there is still no cure for the disease. Due to the lack of economic incentives for pharmaceutical companies to develop cures for Alzheimer’s, they are discouraged from investing in research and development.
There are also “missing incentives” regarding diagnostic testing, according to Chandra. The tests that are used to screen for diseases, like cancer, are very old. If diagnostic technology is developed and enhanced, it would enable doctors to catch diseases before they become too difficult and expensive to treat.
Chandra also spoke about two issues connected to innovation and inventiveness: lost Einsteins and gender diversity. Regarding the first issue, he noted that the patenting rate for individuals in the top fifth of family income with low math scores is equivalent to the patenting rate for individuals in the lowest fifth of family income with top math scores, and further, the patenting rate for individuals in the top fifth of family income with top math scores is nearly three times the patenting rate of individuals in the same scoring category but from the lowest fifth of family income. This problem shows how income plays an important role in who dominates innovation, and further, has implications for productivity within the life sciences.
“If we don’t get the right people into the life sciences, then we reduce the productivity of the money we’re spending in the life sciences,” Chandra said.
Similarly, Chandra highlighted that male-majority teams make up a disproportionate share of patenting and ideas in the life sciences, as opposed to female-majority teams. This has implications for the drugs that are on the market, as female-majority teams study different diseases than male-majority teams: male-majority teams are approximately 35 percent less likely to study a female-focused disease than female-majority teams.
Chandra finally pivoted to discussing the output of medical research and academic articles, and explained that this research is highly concentrated in the U.S., as about 55 percent of worldwide scientific output takes place in the U.S. Furthermore, within the U.S., this research is heavily concentrated in certain geographic areas, like Boston and the Bay Area, both of which make up twenty percent of the life sciences research, globally.
“Why is it that there are a handful of cities that are able to do so much research, and why is it that so many great American cities, like Chicago and Seattle, don’t feature on the list [of top cities for science research]?” he asked. “We need to know the answer … because it helps us understand how to get even more innovation to come to the market.”
The talk concluded with questions from the audience. Regarding global disease inequality, one student questioned why the U.S. has failed to respond to the malaria virus, which is present in Sub-Saharan Africa, while other diseases present in these same areas, like Ebola, receive more attention from the U.S.
“The salience of disease to the American public drives a lot of the [research and development] decisions” to combat global disease,” Chandra explained. Since the mid-1970s, there have been seven ebola outbreaks, but the most recent outbreak around 2015 caught the attention of the American public because it almost arrived in the U.S.
This phenomenon was similar to the U.S.’s response to COVID-19, which had been impacting other countries months before it arrived in the U.S.; it was only until it began spreading in the U.S. that the government began to take it seriously.
Another student asked about the implications of much of the medical research being conducted in certain cities in the U.S. and wondered whether there should be an emphasis on equally distributing this research either globally or within the U.S.
Chandra claimed that the concentration of medical research in certain cities is not a good thing for middle class and low-income residents of those cities because it drives up prices. Furthermore, he believes that, in order to distribute the research, we should work to understand what has made cities, like Boston and San Francisco, so successful in conducting medical research. More importantly, distributing this research could address the “lost Einsteins” problem and have positive implications for the development of medicine globally.
“Before we distribute it, I would say that we need to understand what we would need to change in those cities so that we can get productive science out of those cities,” he said. “There are probably great scientists sitting in Chicago, or Cincinnati, whose ideas are not getting published or pursued, and the whole world will lose as a result of that,” he said.
