# 8 - Medical Technologies: Aligning Private Rewards with Health Impacts

> **NIH NIH P01** · NATIONAL BUREAU OF ECONOMIC RESEARCH · 2020 · $131,581

## Abstract

PROJECT SUMMARY/ABSTRACT
Project 8 – Medical Technologies: Aligning Private Rewards with Health Impacts
Over the past several decades, new medical technologies have generated dramatic improvements in health
outcomes for many groups of patients. While a key ingredient in the development of any new medical
technology is a scientific breakthrough, market incentives are often a critical determinant of which scientifically
feasible medical technologies successfully make the transition from a scientist's lab to a patient's bedside.
Hence, the design of public policies that affect market incentives —such as the patent system and regulations
such as those of the US Food and Drug Administration (FDA)
direction of medical innovation.
—can have important effects on the rate and
The goal of this project is to investigate whether our current system of patent and FDA policies fails to provide
incentives for the development of some scientifically feasible medical technologies that would generate health
benefits to patients. Our focus is the so-called “new uses” distortion, which may arise in cases where an off-
patent drug has a new use discovered, such as the discovery that an off-patent diabetes drug may be an
effective cancer treatment. There are few incentives for private research investments into such new uses of old
drugs, and public research subsidies are not explicitly designed to encourage research into such new uses.
We will develop a conceptual framework for policy analysis (Aim 1) and will develop newly-constructed data
(Aim 2) to empirically test (Aim 3) whether this “new uses” distortion results in some scientifically feasible drugs
never reaching patients. We will then attempt to quantify the health value to patients of these “missing” medical
technologies (Aim 4), in order to estimate the potential health gains that could be realized under alternative
policies.
The results of this project aim to contribute more broadly to the ongoing debate about how best to deliver
evidence-based medicine to patients, particularly in the emerging field of personalized medicine. Specifically,
to the extent that the “new uses” problem exists, the magnitude of the invisible costs of the “missing”
innovations it may cause are growing as personalized medicine becomes increasingly important. Personalized
medicine is based on the idea of separating patients into subgroups, under the assumption that drugs that
work for one subgroup of patients may not work well for another. As progress is made in science and medicine
about how best to classify patients into such subgroups, opportunities will arise for new medically valuable
matches between drugs and more targeted groups—and many or most of these new matches would likely
come from the stock of existing drugs. Maximizing the health of an aging population will thus increasingly
depend on policies that promote the most effective use of medications across patients and conditions.

## Key facts

- **NIH application ID:** 9990672
- **Project number:** 5P01AG005842-32
- **Recipient organization:** NATIONAL BUREAU OF ECONOMIC RESEARCH
- **Principal Investigator:** HEIDI Lie WILLIAMS
- **Activity code:** P01 (R01, R21, SBIR, etc.)
- **Funding institute:** NIH
- **Fiscal year:** 2020
- **Award amount:** $131,581
- **Award type:** 5
- **Project period:** — → —

## Primary source

NIH RePORTER: https://reporter.nih.gov/project-details/9990672

## Citation

> US National Institutes of Health, RePORTER application 9990672, 8 - Medical Technologies: Aligning Private Rewards with Health Impacts (5P01AG005842-32). Retrieved via AI Analytics 2026-05-23 from https://api.ai-analytics.org/grant/nih/9990672. Licensed CC0.

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