Grants are a push funding mechanism: they fund research upfront. Grants are the most suitable mechanisms for early stage research and funding is not tied to specific outcomes, allowing exploratory work. With no incentive to translate research into a marketable product grants have little to do with access or impact based innovation.
Grants are a push funding mechanism: grants fund research upfront.1 Currently, grants are widely used for funding medical R&D, and are uncontroversial. Even strong opponents of the current system agree that grants should continue to operate as a funding mechanism.2 Grants are the most suitable mechanisms for early stage research, as information remains open for others to build upon and funding is not tied to specific outcomes, allowing exploratory work. Among the many proposals to improve the current state of medical R&D, few proposals concern improving the grants system, which also suggests that this funding mechanism is working reasonably.3
However, despite their great advantages as a funding mechanism, grants have little to do with access or impact based innovation.
With a priority on early stage exploration, grants provide no incentive to translate research into a marketable product. Further development is usually undertaken subsequently by commercial firms who then patent the results.4 This makes grant funding far removed and poorly suited to dealing with the problem of access.
With regards to health impact, grant funding does provide a significant boost to innovation, but does not exert strong incentives regarding health impact because grants are provided upfront, and it is very difficult to predict health impact before the research is transformed into a marketable product. It might also be undesirable for all funding to be directly tied to health impact: we need basic exploratory research, and grant funding is excellent at resourcing this. Though grant funding will remain, its functioning is only distantly related to the problems of access and impact-based innovation.
Ravvin, “Incentivizing Access and Innovation for Essential Medicines”, p. 115.
[return]Stiglitz, “Economic Foundations of Intellectual Property Rights”, p. 1724; Love and Hubbard, “The Big Idea”, p. 1553.
[return]An exception is the recent development of direct government grants to small and medium companies, especially in developing economies, for R&D and capacity building. See Paul Cunningham, Abdullah Gök, and Philippe Laredo, “The Impact of Direct Support to R&D and Innovation in Firms.”
[return]Hollis and Pogge, The Health Impact Fund: Making New Medicines Accessible for All, p. 102; Ravvin, “Incentivizing Access and Innovation for Essential Medicines”, pp. 115-116.
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