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 |  Subject: LOL: U.S. biomedical research should be guided by "financial portfolio theory"  Sat May 12, 2012 10:01 pm | |
| With U.S. biomedical research under assault by everyone from patients to Congress for turning so few scientific discoveries into treatments, a leading finance expert says decisions about what studies to bankroll should be made the same way pension funds, mutual funds, and university endowments decide how to invest their money.
Those decisions should be guided by "financial portfolio theory," argues a paper published Wednesday in the science journal PLoS ONE. Applying portfolio theory to how the National Institutes of Health (NIH) allocates its $30 billion annual budget could cut the total years of life lost by patients by anywhere from 28 percent to 89 percent, the researchers calculate.
"We need a framework for deciding how to make allocations for biomedical research that is transparent, objective, rational and reproducible," Andrew Lo of the MIT Sloan School's Laboratory for Financial Engineering said in an interview. Lo, considered a leading authority on financial theory, co-authored the paper with MIT's Dimitrios Bisias and surgeon James Watkins of Brigham and Women's Hospital in Boston.
"What we're hoping is that scientists and policy makers collaborate on measuring success" and use portfolio theory as a guide for how much to invest in research into various diseases, he said.
The paper's basic concept was dismissed by patient advocates contacted by Reuters. Some pointed out that under the criteria the new analysis proposed, research into chronic diseases, rare disorders and illnesses like Alzheimer's that have eluded a cure would be deemed nearly worthless. NIH officials were not available for comment.
Broadly speaking, portfolio theory provides guidance on how much to allocate to different investments - stocks, bonds, oil futures, real estate - based on their risks and expected rates of return, or reward.
Just as investing in U.S. Treasuries poses different risks and promises different rewards than investing in coffee futures, government investments to combat one disease versus another yield different results.
Ordinarily, when portfolio theory is used to optimize risk/reward trade-offs, the rewards are dollars. The new paper argues that in biomedical research the rewards that count are reductions in years of life lost to disease.
The most efficient allocation of biomedical research dollars is that which maximizes years of life saved per dollar spent, the researchers argue. This means that curing a 2-year-old's brain tumor is worth 70-some years of life, while curing an 85-year-old's arthritis is worth essentially zero.
The researchers are quick to caution that the emphasis on years of life saved is only the first step. Once the application of portfolio theory to biomedical spending decisions is refined, additional criteria -- such as whether a given line of research reduces pain and suffering -- would also be factored in.
Biomedical researchers and patient advocates contacted by Reuters expressed several concerns about the recommendations.
One is that the years-of-life-lost approach fails to capture chronic diseases that do not cut lives short but do cause immense suffering. "How quickly a disease kills, and how many it kills, is only one criterion," said Scott Johnson, president of the Myelin Repair Foundation, which supports research aimed at curing multiple sclerosis. "Suffering and disability also count."
Rare diseases would also lose out, since (by definition) they affect so few people. Using years of life lost "is outrageous and completely crazy," said Susan Weiner of the Children's Brain Tumor Foundation.
More: http://www.reuters.com/article/2012/05/03/us-research-idUSBRE84201520120503
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