The National Institutes of Health is the United States’ primary medical research agency. It is renowned worldwide for funding and leading science that has transformed the understanding of disease and spurred lifesaving medical treatments.
It has historically been overseen by medical scientists and clinicians. President Trump’s nominee to direct the N.I.H., Stanford’s Dr. Jay Bhattacharya, is a physician, too, but he’s mostly known as a health economist. As he faces a Senate confirmation hearing on Wednesday, his nomination invites the question: Can a sharper focus on costs, incentives and efficiency improve American medical research?
Dr. Bhattacharya’s work, in part funded by the N.I.H., has spanned important areas of public health, including the role of government in driving medical innovation and the role of foreign assistance in broadening H.I.V. care globally. I’ve worked with him, and we have published multiple studies together. He has received criticism from some for his Covid views (and support from others), including those in the Great Barrington Declaration, which he wrote with two others. But he is very bright, thinks seriously about how the tools of economics can improve health and finds excitement in his research.
His confirmation hearing comes at a tricky time for the N.I.H. and the institutions and scientists it funds. The recent announcement that the N.I.H. will significantly reduce funding that research institutions rely on to cover indirect costs sparked outcry from scientists and research institutions, followed by legal challenges.
While efforts to improve efficiency are important, rapid overcorrection of the nation’s medical research infrastructure will have significant societal impact. Changes — if they are reforms — could create progress. But not through indiscriminate cuts.
At its core, the primary objective of the N.I.H. is economic: to best allocate public dollars across many thousands of potential investments, each of which aims to improve health, lengthen life and reduces illness and disability — the N.I.H.’s mission.
Here’s how a thoughtful economic approach to advancing that mission could work.
Address Market Failures
Private companies often lack the incentive to invest in areas of research that are socially valuable but do not generate immediate or significant profits — like rare diseases. Economists refer to this issue as a market failure, because the market has failed to allocate resources (in this case, investments in research) to goals that are the most socially, not just privately, valuable. The N.I.H. can help rectify this.
For example, manufacturers of new therapies are incentivized to do research and development for products they can profitably sell. (Think recent weight-loss drugs.) In contrast, generic drug manufacturers have limited incentive to study new uses for their medications because they can’t recoup the costs of that research through higher prices. The result is little research conducted on generic drugs, despite their being low cost and safe. The N.I.H. should prioritize research into new and potentially lifesaving uses of inexpensive medications already on the market. For example, aspirin, first developed and used as a pain reliever, has been shown to also have important cardiovascular benefits. Metformin, the widely used generic medication for diabetes, has been tested for treating other diseases as well.
The Covid-19 pandemic underscored the importance of recognizing and remedying gaps in medical knowledge. Throughout the pandemic, we lacked high-quality randomized studies on key interventions like masking, air filtration and social distancing. Private companies weren’t incentivized to fund them, and public funders of research globally were slow to step in. This is precisely the kind of void the N.I.H. should fill.
Fund High-Risk, High-Reward Research
N.I.H. funding has made possible fundamental discoveries in human genetics, infectious diseases and cancer. At the same time, the agency has tended to favor lower-risk research — projects that have a relatively good chance of being accomplished in a grant’s time frame but a lower probability of being transformative.
Dr. Bhattacharya’s research suggests that N.I.H. funding of edge science — risky research that tries out new ideas — has become more limited over time.
From an investment standpoint, this is shortsighted. Consider the analogy of a long-term investment portfolio: Young investors take higher-risk bets with the potential for greater returns, while retirees adopt a more conservative strategy. The N.I.H. is not investing for one generation alone but for generations of Americans to come.
Embrace Alternative Study Designs
One of the most important areas of medical research is what’s called comparative effectiveness: comparing treatments with one another to determine which ones work best. The gold standard to do so is the randomized controlled trial, in which patients with a medical condition are assigned to treatment at random, allowing researchers to establish cause and effect. But randomized trials aren’t always feasible or ideal because of cost, difficulty recruiting patients and ethical considerations.
Economists and epidemiologists have pioneered the use of so-called natural experiments. These are instances in which people are exposed to different factors by chance, not by researchers.
Natural experiments have been used for things like studying the impact of cardiac bypass surgery for older patients. Patients hospitalized just before their 80th birthday are more likely to receive surgery than patients just above 80 — revealing that doctors are influenced by a behavioral heuristic known as left-digit bias, which also explains why an item in a store costs $4.99 instead of $5.
Natural experiments offer an inexpensive but powerful way to answer questions about how the medical care we receive, the diets we consume and much more affect our health. But these tools are sorely underutilized in medical research. Prioritizing funding of this kind of research can change that.
Tackle Inefficiencies in Health Care
The United States spends more on health care per capita than any other country, yet its life expectancy falls below its peers’.
It may come as a surprise, then, that the N.I.H. has largely stayed away from funding research on how to reduce health care costs and improve efficiency. Doing so would mean that resources could be directed toward improving health in smarter, more cost-effective ways.
But the only way to pinpoint wasteful spending — that is, outlays that don’t improve health or improve it enough to warrant the amount spent — is through detailed study. The N.I.H. could play a pivotal role in addressing one of the largest health challenges of our time.
Ensure Science Can Be Reproduced
Many research studies produce findings that cannot be replicated by other scientists. This raises questions about how reliable the data is, as well as concerns about wasted resources. Although many factors contribute to what’s been deemed the reproducibility crisis, an important one stems from failures in how researchers are incentivized. Funding for researchers seeking to reproduce studies is scant, and scientific journals frequently view replicating studies as less valuable, since they are, by definition, less novel than studies presenting entirely new findings.
Not all research findings are important enough that they need to be reproduced. But some set the path for future research and clinical care for years to come. The N.I.H. could help remedy this problem by identifying which research is important enough that it should be reproduced and funding those efforts.
Overall, the agency’s future lies not in spending less but in spending smarter.
