Public Goods, NIH Funding, and Civic Literacy
Let us begin with a refresher on the basic economics of public goods. Public goods are goods or services that are different from traditional goods and services because their consumption does not reduce their availability to others. Examples include national defense, tissue culture, development of a new surgical procedure, public health surveillance, etc. Public goods tend to be intangible and many are actually information or knowledge. Private goods are normally common physical objects: drugs, MRI scanners, etc., or services such as physical examinations or rehabilitation. A second attribute of public goods is that they are not excludable. In other words, once the product is produced, it is difficult to prevent those who do not pay (free riders) from using it or benefiting from its production. By this definition, health research, knowledge, and discovery funded by the National Institutes of Health (NIH) is clearly a public good.
It is often hard to produce public goods because they represent a failure of free market forces and, as a result, are usually under produced. Although the human genome project has spawned derivative businesses to develop targeted therapeutics and genetic tests that identify risk for breast cancer, there was little incentive for individuals or businesses to develop this valuable genetic resource for the greater public good. Unless free riders can be excluded or unless the resource can somehow be monetized, there is little real incentive for businesses to participate in these grand scientific challenges. The common solution to such problems is to make government agencies responsible for production of public goods, or to have others contracted to produce them with government funding provided by taxation. Much of the early HIV/AIDS research conducted by the NIH began in the National Cancer Institute and the National Institute for Allergy and Infectious Disease. In 1988, the Office of Aids Research (OAR) was formed when it became clear that this pandemic disease required a more comprehensive strategy. This office now coordinates interagency research spanning all 27 institutes at the NIH, and its funding is directly responsible for the current therapies available to treat HIV infections and AIDS.2 The scale and complexity of response required for this one disease is an example of how valuable investments in the NIH are as the public good. The requirement to develop fundamentally new scientific knowledge, the scope of the financial investment, and the importance of sharing competitive knowledge is precisely why private industry is ill-equipped to address this and many other current challenges that exist in health research like macular degeneration or Alzheimer’s disease.