Wasteful spending on medical public works

Huge sums of taxpayer money are being poured into frivolous projects tied to vested interests in the name of saving human lives

Social security expenditures keep rising endlessly as the aging of Japan’s population accelerates with the low birthrate. Yet, little is known about the way huge sums of taxpayer money are being poured into wasteful projects tied to vested interests in the name of saving human lives.

The Japan Agency for Medical Research and Development (AMED), which Prime Minister Shinzo Abe created with much fanfare in 2015 as a counterpart to the U.S. National Institute of Health, has an annual budget in excess of ¥140 billion. But the National Cancer Center (NCC), which is supposed to be a major recipient of the AMED fund, is in trouble because excessive sums have been spent on construction of buildings and facilities in the name of life science research.

A glance at the NCC’s financial statements shows that its retained earnings plummeted from ¥5.6 billion in fiscal 2010 to ¥762 million in 2015. The steep fall in the retained earnings is not due to cuts in grants from the Health, Labor and Welfare Ministry, as a high-ranking NCC official claims. The NCC earned ¥31.4 billion from medical services and ¥4.3 billion from research projects in fiscal 2010, and these earnings rose by 41 percent to ¥44.4 billion and 14 percent to ¥9.2 billion, respectively, unequivocally showing that the rise in earnings far exceeded the cut in government grants.

Then why have its retained earnings fallen so rapidly? The answer is that excessive investments in construction of new facilities have eaten into its funds. For example, it cost ¥5.4 billion to build a new research center on next-generation surgery and endoscopy, which was completed in May, and another ¥16.7 billion to build a new research laboratory that began operating in July. The question here is not the sheer sum spent on these projects, but their balance with the institute’s earnings. During the 2010-16 period, money spent on such construction projects exceeded the NCC’s operating income by ¥44.3 billion. It seems clear that the NCC is investing beyond its means even as construction costs surge ahead of the 2020 Tokyo Olympic Games.

An arena for big spending

Cases of advanced medicine becoming an arena for big spending like public works projects are also found in the field of heavy particle therapy. Japan has five institutions specializing in this field, the pioneer among them being the National Institute of Radiological Sciences in Chiba Prefecture. The number in Japan represents nearly half of the 11 such facilities now operating worldwide.

The five heavy particle therapy facilities are located in Chiba, Hyogo, Gunma, Saga and Kanagawa prefectures, with one more being planned in Yamagata. And oddly enough, though, the NCC — supposedly the control tower of cancer therapy in Japan — has no such institute. That is said to be because those institutes were located in facilities with close links to the Education, Culture, Sports, Science and Technology Ministry — which took the lead in the development of heavy particle therapy — instead of the health ministry.

One reason why Gunma University has one of those institutes is not because the university excelled in cancer treatment but, according to a source familiar with the decision, because of the influence of former education minister Hirofumi Nakasone, an Upper House member elected from the Gunma constituency and a powerful member of the Liberal Democratic Party’s education lobby. Gunma Prefecture was eager to have the facility established there because that involved heavy initial investments — about ¥7 billion each for the buildings and radiation equipment — providing huge economic benefits to local construction and other related industries.

Biobank boondoggles

Haphazard ways in which money is being spent on advanced medical research are also found in the projects for biobanks, institutions that collect and preserve biospecimens of people such as blood, urine and DNA samples. Through followup research on the registered people and linking with their clinical information, their activities are expected to contribute to identifying the causes of illnesses and developing new medicines.

Of a number of biobanks set up in Japan, the Tohoku Medical Megabank Organization at Tohoku University is by far the largest. It started operating in fiscal 2011 as part of a series of government projects for recontruction from the Great East Japan Earthquake and tsunami that hit the region’s Pacific coast. In its initial year of operation, more than ¥10 billion from the government budget was poured into the Tohoku Medical Megabank. A total of ¥5.1 billion was spent on the construction and design of a seven-story complex and another ¥7.5 billion on its facilities and equipment in the years through fiscal 2013. While spending was scaled back in subsequent years, ¥4.5 billion has been set aside for the project in fiscal 2017 — a sum equivalent to the funding allocated to Kyoto University for its research on iPS (induced pluripotent stem) cells.

Tohoku Medical Megabank is staffed with 32 professors, 10 associate professors and 25 instructors. However, some of the staff are deemed not necessarily fit for the types of work assigned to the institute, leading some students to comment sarcastically that those who have failed to be promoted to full professorship at Tohoku University have been given new jobs at the biobank. Moreover, the quality of some of the work performed by the institute has been called into question.

The value of biobank is determined by the quality of the data obtained by its research. If the quality is poor, such an institute would not be trusted by researchers in pharmaceutical companies or other institutes. Six years after its creation, Tohoku Medical Megabank’s achievement remains poor in terms of significant research that would have lured pharmaceutical firms and others to collaborate with the institute. The head of the biobank is not deterred, however, as he says his institute’s research projects take time before tangible results can be produced, and the institute keeps asking for more funding from the AMED.

As funding for Tohoku Medical Megabank gets prioritized, budgetary allocations for the more prestigious BioBank Japan, which has been jointly established by the government-affiliated Riken research institute and the University of Tokyo’s Institute of Medical Science, has been significantly reduced. The budget cut by AMED is about to deal a fatal blow to the institute that has played a leading role in genome research in Japan.

Given Japan’s dire fiscal conditions, government funding on scientific research cannot be an exception to budget cuts. Time will come sooner or later for the generous funding for Tohoku Medical Megabank to be curtailed. Today, however, huge sums of taxpayer money are being poured on the institute — despite its poor records of significant achievements — in the name of the reconstruction of the areas ravaged by the 2011 disasters. Along with the spending of taxpayer money, new positions are being created for post-retirement jobs for government bureaucrats.

The circumstances surrounding those advanced medical research institutes look similar to those involving the government’s public works projects: Securing funding from taxpayer money becomes more important than the outcome of projects. Unless the structure is fixed, there will be no hope of medical science becoming a core of the government’s growth strategy.

This is an abridged translation of an article from the August issue of Sentaku, a monthly magazine covering political, social and economic scenes. More English articles can be read at www.sentaku-en.com