There was no such thing as a self-driving car in 2003. That’s when the Defense Advanced Research Projects Agency announced its first Grand Challenge, with a $1 million prize for the first robotic vehicle to complete a course from California to Nevada in less than 10 hours.
In the eight years since the last DARPA challenge, self-driving car research has exploded. Today, nearly every car company is working to develop autonomous cars, from Ford and Tesla to Google and maybe Apple. Fully self-driving cars may be here within the next five to seven years, and much of the credit belongs to the DARPA challenges.
The idea of awarding prizes for private action, sponsored either by public or private entities, is at least as old as the patent system. Qui tam statutes, going back to the 1300s, allowed a private citizen to bring action on behalf of a government to recover a penalty, while the first known patent was in Venice in the 1400s.
One example of qui tam statutes from U.S history was the False Claims Act of 1863, also known as the “Lincoln Law,” enacted during the Civil War for the purpose of combating fraud. The original False Claims Act entitled those who pursued funds for which the federal government had been defrauded to half of any money recovered. In a recent paper for the R Street Institute, I propose a federal program to create a novel, self-funded prize that would both spur innovation and save taxpayers money.
Still currently in the developmental phase, new technologies like 3-D-printed kidneys not only would revolutionize medicine, but also could have a major impact on federal spending.
More than 400,000 Americans are currently on dialysis as they await kidney transplants. Each dialysis patient costs Medicare $700,000 per year. If 3-D-printed organs made of our own stem cells (thus ensuring they wouldn’t be rejected) were to become as ubiquitous in hospitals as blood supplies are today, not only would hundreds of thousands of lives be immeasurably improved, but taxpayers could save as much as $500 billion in just 10 years.
While the National Institutes of Health (NIH) currently spends $549 million each year on kidney disease research, its budget for 3-D technologies is only about $4 million. In addition to sparse funding, the problems associated with correctly developing the techniques for 3-D-printed organs may not be patentable inventions. They may be iterative solutions to small problems, few or none of which can receive a 20-year monopoly.
We will eventually develop 3-D-printed organs, but with proper incentives, it’s possible we could speed that development from a generation away to less than a decade.
Under the “innovation savings program” I propose, if researchers developed 3-D-printed kidneys, and this technology was shown to save the federal government money, the team would receive a portion of those savings. The NIH also could work with scientists to identify the major impediments to developing 3-D-printed organs and divide potential awards among those who solve those discrete problems.
There are, to be sure, kinks to work out. The program would have to be overseen by a competent and independent agency, and there would need to be effective legislative oversight—including from the Government Accountability Office—to ensure any awards are granted based on proper accounting and transparent processes. Federal agencies also would need an incentive to cooperate, perhaps by allowing them to retain a small portion of the savings as unrestricted funds.
Historically, prizes have been a powerful tool to spur innovation. The federal government can learn from what has worked for the past 500 years. We should be leveraging all tools at our disposal to solve our nation’s problems and a self-funded prize for innovation is an easy way to start. It has the added benefit of being free.