The Director of the National Cancer Institute has responded, but his response helps prove the point that funding is too risk averse:
From 2004 to 2008, as NCI’s budget increases hovered below the rate of biomedical inflation, most investigators wisely chose to put their best science forward in their R01 grant proposals, and they found other ways to generate resources for higher-risk, higher-reward projects. This is no more than simple logic. In turn, as riskier efforts mature, those that prove worthy tend to work their way into one’s principal grants. In other words, I suggested in the interview, scientists are not more risk-averse today; they are simply more careful about where they place risk.
Note that he equates the 'best science' that goes into R01s with non-risky science - he essentially admits that he believes risky science is not the best science. And that's part of the problem. Researchers "are simply more careful about where they place risk" because they know they won't get funded if they try to place that risk in the hands of an NIH study section.
Now I agree that the NY Times piece was too dismissive of the progress that's been made in the understanding and treatment of cancer, but the criticism of the NIH being too risk averse is spot on. Even the NIH recognizes the problem, because in the last few years they've been creating specific funding mechanisms to fund more risky projects.
Even more scary for me is what the NCI director views as risky science:
Consider, if you will, our initiatives in cataloguing the cancer genome, which are in fact the next generation of a project once deemed highly risky by the scientific community. The Cancer Genome Atlas will increasingly require competitively awarded, task-driven science conducted by teams of researchers in order to understand the biologic function of genetic alterations associated with cancer that can be targeted by new therapeutic interventions. A sure thing? Certainly not. If we are to succeed, though, the road to new interventions, to new methods of individual prevention, and to the earliest detection, will require scientists to work as a team. Clearly, it is a different view of risk and reward.
Big team science - that's what's in favor now. For some things, like the Cancer Genome Atlas, that works well, but I can't think of anything that would stifle creative, risky, innovative research than science carried out by committees of senior PIs supervising legions of techs, grad students, and postdocs.
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