Obama’s False Tune on Innovation

Lurita Doan
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Posted: Feb 07, 2011 12:01 AM

Obama deserves some credit for his recent interest in innovation and the creative abilities of American entrepreneurs. Now, if only Team Obama would change their tune and review the many White House initiatives and policies that are killing innovation and punishing entrepreneurs.

The disconnect between Obama’s fascination with innovation and Washington’s continued hostility to innovators and risk takers in our economy has never been so stark. Even as Obama is talking about his intention to foster more innovation, American companies like Pfizer are announcing cuts of $2 billion in research and development.

Team Obama does not seem to understand that they have championed policies that are essentially adding “miracle grow” to the already tangled regulatory regime currently strangling American entrepreneurial energies. As a result, the task of bringing new and more innovative products to market in America has never been more difficult.

Pfizer is a good example. The company made the unusual move of cutting $2 billion in R&D costs because they have concluded that Obama’s FDA is unlikely to approve any new drugs or advanced medical therapies. Nor can you blame Pfizer for making this difficult, but rational, decision. Why would any company continue to invest billions in new product development and advanced research when the government is signaling that no matter how innovative, life saving, or fantastic the new discovery might be, Obama’s FDA is unlikely to approve it for release?

Regulations and bureaucratic red tape have been growing throughout all departments of the government. Admittedly, the Bush Administration made little effort to unwind stifling regulatory overreach, and too often acquiesced as Democrats in Congress loaded the boat with more regulations--all while convincing Americans that all problems could be solved with more oversight.

Democrats in congress don´t seem to have considered whether their simplistic demands for more oversight and regulations might produce harmful results as they hounded agencies such as the FDA. Democrats in Congress seem to think that pharma companies should bear full responsibility if even one person has a negative reaction, ignoring that the new drug might offer relief to millions. In short, what Congress wanted was a guarantee of zero risk.

Democrats went further, ensuring that favorite interests groups, such as trial lawyers, would be allowed to bring huge class-action suits for any real or imaginary side effect. As a result, riches were transferred from the developers of new drugs and medical devices to trial lawyers. And with it transferred a corresponding growth in the risks associated with developing new products.

Next, congressional Democrats, hostile to business and free market economies pushed former congressional staffers into the Obama Administration where they occupied positions to expand regulatory oversight.

Add it all up, and the result is an Administration that is so hostile to innovation and entrepreneurs that companies are now making the decision to cut billions of R&D investments. Obama may say the right words but, until he starts to unwind the toxic regulatory environment, we can expect further job erosion and a drop in American competitiveness.

A recent report by the non-partisan Battelle Institute called “Gone Tomorrow?” highlighted the problems in medical innovation and concluded that our nation is at risk of losing our global lead. Not too surprisingly, other countries are taking advantage of America’s self-inflicted problems and are busy bolstering their own efforts.

Much like our automobile industry, misguided Congressional efforts and a too-timid President have arrogantly assumed that our nation´s once-great medical innovation could continue to innovate and thrive despite all the new regulatory burdens being added. They are wrong.

There has been a slow drain in American research and development which are essential ingredients in the development of innovate products and novel new drugs. Unless the erosion is quickly addressed, the extraordinary era of new cures and new discoveries may come to an end.

But, since the Obama Administration is making little effort to reduce the regulatory burden that is stifling innovation in US companies, Americans should fear the worst.

One of the odd ideas, championed by Democrats, to arrest the alarming decline in medical innovation is for the government to build a new, multi-billion dollar research facility and staff it with government employees. Champions of this new boondoggle believe that the government is best able to perform the essential research and development that will lead to more innovative medical products.

Does anyone really believe that another huge government entity is going to be able to produce the innovative products we demand? Don’t you think that inevitably, and quite quickly, decisions to focus on different scientific pursuits would be heavily influenced by anxious politicians more interested in supporting pet causes and bringing research money to home-town universities than in producing real products?

Mr. Obama apparently believes that stifling regulations, baked into his own administration, can be overcome by building a huge new government lab. Go figure.

A better approach is still open. Ronald Reagan once, famously, addressed American entrepreneurs and risk-takers and told them it was the time to “Go for it”. His administration then cleared the path of restrictive red tape generated during the Carter years. Reagan unleashed entrepreneurial energies, and new companies, with phenomenally innovative products, thrived. Reagan knew that American creativity and innovation just needed to be summoned. As a result, our country experienced economic growth and prosperity.

Obama, whose trust and faith in bigger government is complete, wants to create more government agencies that he hopes will be similarly innovative. Does anyone think that will work?