Public good innovation and the free market

A couple of weeks ago I attended the annual Science and Innovation Conference. I haven’t been to this event for a few years, and, while in some respects the points being made from the platform seemed quite familiar, there was a new degree of enthusiasm for Government action to support innovation. The steps towards an industrial policy seems to be well regarded, and there was also praise for the increased funding for the Technology Strategy Board, that had been announced in the Spending Review the day before.

For me, there was also another interesting theme that came out of several of the presentations; the potential tension between deriving public-good from innovation while simultaneously maximising economic benefit. This was very clear for me in the comments made by George Freeman, the Government’s advisor on the life sciences. He presented the case for investment in the life sciences as being a win-win for the nation. Not only can we hope to solve significant healthcare issues and save money for the NHS, but we can also build a thriving life sciences private sector to generate economic growth. Sounds good.

But then Freeman went on to explain the challenges for companies to develop novel drugs these days. Our ever-expanding genetic knowledge means that drugs need to be targeted (and tested) on ever-smaller patient groups. This means that the relationship between development costs and profit is broken. Freeman’s solution is that we need to support the pharmaceutical sector by providing easy access to the NHS – it’s patients and their data – to deliver the supposed win-win benefits.

I’m no expert in this area. Maybe this approach is the right one, but I can’t help feeling that there needs to be something more radical. Rather than seeking ways of propping up a broken system, maybe we need something new. So here is a hypothesis to think about…

What if we cut the private sector out of healthcare altogether? We could invest public money in the research, development and deployment of healthcare innovation. There would be no need for commercialisation of novel drugs, as they would simply be made available, at cost within the NHS. Maybe manufacture could be out-sourced to the private sector, maybe not. And all of this innovation could be made available for others around the world to use and build upon, if we adopted an open source model. While this approach might sacrifice some possible economic growth, I believe it would bring even better benefits of improved and more cost-effective healthcare. And many jobs would be created, albeit in the public rather than private sectors.

I also wonder whether this approach might also be worth exploring in other examples where innovation is needed for the public good, and the private sector doesn’t seem to be able to deliver without significant public intervention. The green economy and the energy sectors seem to have similar problems. Maybe the time has come to drop the notion that innovation can only happen if it is driven by the private sector and the market, and make space for public innovation for the public good.

 


Written on July 9, 2013

Creative Commons Licence
© 2017 Steven Hill. Unless otherwise stated, this work is licensed under a Creative Commons Attribution 4.0 International License.