Not everyone is a geneticist or a bioinformatician. Not everyone who has the capability to write code that Facebook need has the capability to become as good of a geneticists as they are a programmer. Yet, it's not fair to say that this talent is wasted: some Facebookers have contributed to open source, others have joined infrastructure companies (much as others have come from those companies).
Why haven't I instead went to work directly for, e.g., NASA or a national lab? Well first, as an undergraduate I deeply _wanted_ to take an internship at NASA (they had a great program for local students) but couldn't as only US citizens were permitted to do so.
I was already well into a full-time industry job when I became a US citizen (I've also worked at startups prior to attending college: again, I highly doubt NASA or a research lab would just hire a high school student ). Now I've already heard too many horror stories from classmates working for various government/aerospace/hardware/other traditional orgs about the low autonomy, office-space-esque working condition (be in the office by 8:30 AM, or there'll be a "talk", even if you've worked late into evening), but most importantly about how most of the folks working there are not doing the kind of work I am. Those that _did_ do that kind of work first had to expand a lot of energy proving what was apparently at the start -- that sometimes building something from scratch is less work (both now and later) than trying to shoehorn a problem to an existing but ill-fitting abstraction.
Fortunately, I am seeing this change for the better -- and many places (e.g., LLNL) already stand out -- but for now I'll quote Thiel: "rocket scientists go to Wall St for money, but also because aren't allowed to play with rockets anymore!"
Obligatory disclaimer: I'm a former Facebook employee and am holding on to my RSUs, but I've sad much the same long before I've worked at Facebook (indeed, this is why I chose to work there!). I am not speaking solely for myself, not on any company's behalf.
I do agree that it's B.S. to say that legal challenges prevent investment in cancer research (unless people mean "coconut oil cures cancer" type of research, in which case they well should). I would probably say that if anything current patent law makes cancer research more profitable that it would be without it (however, I don't have enough of legal background to speak definitively on this).
The question for me is why is this true? It seems like there should be.
I imagine power law holds in most disciplines: going from 99.99% uptime to 99.999% is far harder than going from 99.9 to 99.99% which in turn is harder then going from 99% to 99.9%. Likewise, I'd imagine same holds true with death tolls over N years from various illnesses (but obviously with different constants involved).
Can you explain to me what you meant by externalities here? Do you mean medical industry benefits from cures without contributing to funding the NIH grants?
I wonder if an X-Prize like model might work better here, with, e.g., individuals with genetic risk for a specific cancer "crowd funding" various grades of prizes, with the actual awarding of prizes, setting and advertising the prizes, being done by an organization/consortium that knows what they're doing.
As someone else noted, "saving the world" usually translates into economics as "generating large positive externalities". It's not just that you might have to give out cancer cures for free (in most countries the state will pay for health-care anyway), it's that you simply can't patent the Theory of General Relativity or the Germ Theory of Disease or the Dead Germ Method of Vaccination. Even improvements in nutrition and yield of crops can only partially be treated as private, excludable property.
Radical new discoveries are almost always nonexcludable, and thus can't really be treated as private commodities sold on a market. Note that I said can't, not shouldn't: trying to treat nonexcludable goods as private commodities leads to bankruptcy rather than sin.