Stock price and dividend income. Analysis courtesy of the Boston Consulting
*Cumulative stock market return is the sum of the change in stock price plus dividend income.
Customize your JAMA Network experience by selecting one or more topics from the list below.
Moses H, Dorsey ER, Matheson DHM, Thier SO. Financial Anatomy of Biomedical Research. JAMA. 2005;294(11):1333–1342. doi:10.1001/jama.294.11.1333
Context Public and private financial support of biomedical research have increased
over the past decade. Few comprehensive analyses of the sources and uses of
funds are available. This results in inadequate information on which to base
investment decisions because not all sources allow equal latitude to explore
hypotheses having scientific or clinical importance and creates a barrier
to judging the value of research to society.
Objective To quantify funding trends from 1994 to 2004 of basic, translational,
and clinical biomedical research by principal sponsors based in the United
Design Publicly available data were compiled for the federal, state, and local
governments; foundations; charities; universities; and industry. Proprietary
(by subscription but openly available) databases were used to supplement public
Main Outcome Measures Total actual research spending, growth rates, and type of research with
Results Biomedical research funding increased from $37.1 billion in 1994 to
$94.3 billion in 2003 and doubled when adjusted for inflation. Principal research
sponsors in 2003 were industry (57%) and the National Institutes of Health
(28%). Relative proportions from all public and private sources did not change.
Industry sponsorship of clinical trials increased from $4.0 to $14.2 billion
(in real terms) while federal proportions devoted to basic and applied research
were unchanged. The United States spent an estimated 5.6% of its total health
expenditures on biomedical research, more than any other country, but less
than 0.1% for health services research. From an economic perspective, biotechnology
and medical device companies were most productive, as measured by new diagnostic
and therapeutic devices per dollar of research and development cost. Productivity
declined for new pharmaceuticals.
Conclusions Enhancing research productivity and evaluation of benefit are pressing
challenges, requiring (1) more effective translation of basic scientific knowledge
to clinical application; (2) critical appraisal of rapidly moving scientific
areas to guide investment where clinical need is greatest, not only where
commercial opportunity is currently perceived; and (3) more specific information
about sources and uses of research funds than is generally available to allow
informed investment decisions. Responsibility falls on industry, government,
and foundations to bring these changes about with a longer-term view of research
Historians and economists have recognized that while scientific innovation
has occurred in many settings, it has prospered most when talent, supportive
institutions, mobility, free communications, and financing are available in
significant measure.1 The importance of both
public and private sectors in fostering science has also been acknowledged.2
Since the Second World War, biomedical research has been the beneficiary
of parallel advances in the physical, social, and information sciences. That
momentum greatly expanded financial support for biological research, especially
that related to human health. However, not until the early 1980s did total
financing for the biomedical sciences exceed that of engineering and the physical
The public’s imagination has been captured by the promises offered
by biomedical research. Its commercial value has been readily recognized.
Political support in the developed countries of the Americas, Europe, and
Asia has gathered behind the hope of assuaging human illness and suffering,
as well as expectation of enhanced economic development. Many developing countries
also recognize the importance of science to their social and economic welfare
and see outside investment as welcome. Much of that investment, both financial
and in-kind, comes from the United States. It is difficult to document global
investment in biomedical research in detail the picture in the United States
is sufficiently challenging to assemble. However, there are strong indications
that the United States has seen a sharper growth in research investment in
the last decade than has Europe or Asia. For example, the proportion of the
global drug development pipeline belonging to organizations headquartered
in the United States has increased to 70% in 2003.4
This article explores the financing of biomedical research and the interplay
of public and private sources. An accurate appraisal of the challenges facing
researchers and their institutions can only emerge when the roles of government,
industry, investors, foundations, and universities are understood, because
not all sources of financial support afford equal latitude to explore hypotheses
having clinical importance. Previous articles have examined specific sectors,
but few have done so comprehensively.5(p3),6
We sought to determine the level and trend over the past decade of US
biomedical research support from the following 4 major sponsors of biomedical
research5(p3): (1) federal government,
(2) state and local governments, (3) private not-for-profit entities including
foundations, and (4) industry. Based on methods developed by the Centers for
Medicare & Medicaid Services (CMS) to calculate noncommercial research
in the National Health Expenditure Accounts,7 biomedical
research was defined as the life sciences excluding the agricultural science
plus the addition of psychology (Aaron Catlin, National Health Statistics
Group, written communication, June 6, 2005).
In addition to determining the level of biomedical research funding,
we sought to determine the distribution of funds between basic and clinical
research, subsidies from endowments and other sources at colleges and universities,
and funding for health policy and health services research.
Where possible, publicly available, nonproprietary information sources
were used. Public sources were available for federal spending, expenditures
by publicly traded companies, and major foundations. For cases in which public
sources were not available, we obtained proprietary information from organizations
that routinely track such information.8
Figures were adjusted for inflation using the biomedical research and
development price index (BRDPI).9 The BRDPI
measures how much the National Institutes of Health (NIH) budget must change
to maintain the same purchasing power.9 Information
was obtained for the years 1994 through 2004. In some cases, 2003 data were
used because data for 2004 are not yet available.
The principal data source for federal support of biomedical research
was the National Health Expenditure Accounts.10 The
National Health Expenditure Accounts, published by the US Department of Health
and Human Services, are an annual series of statistics presenting total health
expenditures.11 Because the National Health
Accounts’ data only provide an aggregate value for federal support,
NIH funding was based on federal obligations for research, development, and
research and development plans as reported by the National Science Foundation.12 Other federal funding was calculated as the difference
between total federal funding and NIH funding. The total for other federal
funding may be an overestimate, due to methodological differences between
the National Health Expenditure accounts and the National Science Foundation.
In addition to the NIH, federal funding comes from the National Science Foundation,
Department of Energy, the Environmental Protection Agency, and the National
Aeronautic and Space Administration. Federal spending for biodefense research
was included in the NIH total if it was administered through the NIH.
State and local government support for biomedical research was determined
from the National Health Expenditure Accounts. Certain support, such as tobacco
settlement monies that have been used to fund biomedical research and funds
from the recently passed stem cell initiative in California, are not directly
The National Health Expenditure Accounts were also the principal data
source for funding support by private not-for-profit entities. Private entities
included foundations, public charities, medical research organizations (such
as the Howard Hughes Medical Institute) and voluntary health organizations
(such as the American Cancer Society, and individual disease groups).5(p29) Additional data on total health funding
beyond medical research were obtained from the Foundation Center.13,14 Total health funding was estimated
by taking the product of total foundation giving (to all causes) times the
estimated proportion of large grants given to health.13,15
Our analysis did not account directly for private philanthropy by individuals.
Some, but not nearly all, of these funds are given to colleges and universities
and thus would be reflected in part in expenditures by these institutions.
To capture industry funding of biomedical research, data from the respective
trade organizations were used, which rely on information from companies’
audited financial statements. The Pharmaceutical Research and Manufacturers
of America (PhRMA) report total costs for all domestic pharmaceutical research
and development expenditures by their member companies.16 Likewise,
the Biotechnology Industry Organization (BIO) provides data on research and
development expense by the US biotechnology industry.17
The data for pharmaceutical and biotechnology support reflect some overlap
of research and development expenditures by large biotechnology firms that
conduct research having both agricultural and human application (such as synthetic
plant models), that have company-company research alliances, and that are
members of both PhRMA and BIO. For 2003, PhRMA published a figure of $10.5
billion for non-PhRMA member biotechnology research and development.16 By comparison, BIO’s estimate for biotechnology
industry support for 2003 was $17.9 billion. Published data for funding for
non-PhRMA members for earlier years are not available. Finally, NIH funds
to biopharmaceutical firms would also be double counted (under federal and
The medical device industry’s funding of biomedical research was
determined from a 2003 benchmarking study of 31 divisions of medical technology
companies.18 Information about regulatory approval
of devices was obtained from annual US Food and Drug Administration (FDA)
The distribution of biomedical research funds between basic and clinical
science was evaluated for the NIH and the pharmaceutical industry. For the
NIH, funds have been historically divided into basic, applied, and development
and later condensed into 2 categories, basic and applied (Andrew Baldus, NIH
Assistant Director for Budget, unpublished data, 2005). For the pharmaceutical
industry, funds were divided into prehuman/preclinical, phase 1 through 3,
phase 4, approval and regulatory, and other and uncategorized based on data
published by PhRMA.16,20-27 Studies
deemed phase 4 include both those required by the FDA for after-approval safety
tracking and those initiated by companies for new indications or entry into
The distribution of NIH funds among the most heavily funded investigators
and institutions was also determined from the NIH (Andrew Baldus, unpublished
Biomedical research expenditures at universities and colleges were estimated
from the National Science Foundation’s report Academic
Research and Development Expenditures: Fiscal Year 2002, which separates
federal and nonfederal expenditures.28 Nonfederal
expenditures include funds from the following 4 sources: state and local government,
industry, institutional funds (including endowment income), and all other
sources. To estimate the relative contribution of each of the 4 sources to
biomedical research, the relative contribution of each to all science and
engineering was calculated and then extrapolated using the reported ratio
of total science funding to biomedical research.
Funding for health policy and health services research from foundation
and federal sources was estimated from the Foundation Center’s Update on Foundation Health Policy Grantmaking,29 the Agency for Healthcare Research and Quality federal
obligations,12 and from NIH funding for health
services research (Andrew Baldus, unpublished data, 2005). Data on commercial
investment by health insurers in health services research were not available.
Estimated funding for health policy and health services research was compared
with total US health expenditures as calculated in the National Health Expenditure
Total funding from federal, state, and local governments; private entities;
and industry increased from $37.1 billion in 1994 to $94.3 billion in 2003
(Table 1 and Figure 1). Adjusted for inflation by using the BRDPI, total biomedical
research funding (in 2003 dollars) nearly doubled from $47.8 billion in 1994
to $94.3 billion in 2003.
Industry support from pharmaceutical, biotechnology, and medical device
firms account for the majority (57%) of funding for biomedical research. The
proportion of biomedical research support that comes from industry has remained
relatively constant from the 1994 to 2003 period, ranging from 56% to 61%.
The NIH is the next largest funder at 28%. State and local government support
and private funds accounted for 5% and 3% of biomedical research funds, respectively.
The NIH is by far the largest federal funder of biomedical research.
Adjusted for inflation by the BRDPI, NIH obligations nearly doubled (in 2003
dollars) from $13.4 billion in 1994 to $26.4 billion in 2003. The next largest
federal funders of biomedical research (as measured by federal obligations)
in 2002 are the Department of Defense ($1.2 billion), the Department of Agriculture
($0.5 billion), the National Science Foundation ($0.5 billion), and the Department
of Energy ($0.4 billion).12
Nonfederal spending on biomedical research (adjusted for inflation)
increased by 45% from 1994 to 2003 or roughly half the rate of federal spending.
Funding for stem cell research initiatives in California were not included.
Adjusted for inflation, private support for biomedical research increased
36% from $1.8 billion in 1994 to $2.5 billion in 2003 (in 2003 dollars). Private
support for biomedical research comes primarily from foundations, voluntary
health organizations, and the free-standing research institutes. The Bill
and Melinda Gates Foundation gave approximately $236 million in grants for
medical research in 2003 and was the largest foundation funder (Table 2).30
Medical research only represents a small proportion of total health
support from foundations. In addition, foundations give grants to support
hospital and medical care, specific diseases, and mental health. Foundation
giving for health in total has increased from an estimated $1.7 billion in
1994 to $5.9 billion in 2003.
Industry funding from pharmaceutical, biotechnology, and medical device
firms increased 102% from $26.8 billion in 1994 to an inflation-adjusted $54.1
billion in 2003 (in 2003 dollars). The growth rate (inflation adjusted) for
the medical device sector (264%) exceeded that for either the pharmaceutical
(89%) or biotechnology (98%) sectors. The proportion of biomedical research
support coming from industry sources remained relatively constant and was
56% for 1994 and 58% for 2003. Figure 2 shows
the total financial return to company investors, which reflects increasing
divergence since 2000 in the performance of medical device and pharmaceutical
companies. In turn, this reflects in part the device companies’ greater
productivity, as reflected by the number of new devices brought to market
Although overall funding for biomedical research has increased significantly
since 1994, the distribution among basic and clinical research by the 2 largest
funders, the pharmaceutical industry and the NIH, has changed. As shown in Table 3, the proportion of total pharmaceutical
research and development expenditures (including those outside the United
States) that has gone to clinical trials (phases 1-3) has increased from 28%
in 1994 to 41% in 2003. In addition, the proportion of research and development
funds that have supported phase 4 trials has increased from 5% in 1994 to
11% in 2003. The changes in NIH funding are much smaller than in the pharmaceutical
industry (Table 4). In 1994, 43% of
the NIH budget went to support clinical research and by 2004, the percentage
increased to 45%.
Total biomedical research expenditures at universities and colleges
were $19.6 billion for 2002 up from $10.7 billion in 1995. Federal expenditures
account for 64% of expenditures. Institutional funds account for the next
largest share at 17%. Institutional funds include subsidy from physician practice
income, endowments, and hospitals’ support of research.
The distribution of NIH funds among the most heavily funded institutions
has remained almost unchanged from 1994 to 2003. In 1994, the 10 most heavily
funded institutions received 19% of extramural funding and the top 50 received
55%. For 2003, the percentages were the same. Similarly, the proportion of
NIH funds going to the 100 most heavily funded investigators in 1994 was 6.4%
and in 2004 the percentage was 6.3% (Andrew Baldus, unpublished data, 2005).
The federal government and foundations spent $1.4 billion on health
policy research and health services research in 2002. Federal funding for
health services research came primarily from the NIH ($787 million in fiscal
year 2002) and the Agency for Healthcare Research and Quality ($299 million
in fiscal year 2002). The Robert Wood Johnson Foundation accounted for nearly
63% of the $359 million foundations gave for health policy in 2002.29 The sum of federal and foundation spending for health
services research in 2002 was an estimated 1.5% of biomedical research funding
and 0.1% of the total US expenditure on health care.
The doubling over a decade of total spending by US public and private
research sponsors in real, inflation-adjusted terms should be reassuring to
those who fear that financial sponsorship for research is not paralleling
scientific opportunity. It is also reassuring that spending on health and
biomedical science research by companies and government is not following reductions
in research and development in other industries or reduced support for other
areas of science.31 By comparison, the low
proportion of spending on health services research is especially notable because
it is the main tool available to evaluate the clinical benefit of technology.
However, the growth in total spending obscures some changes in how that
money is spent. Although the proportions of basic and applied federal spending
have remained constant, pharmaceutical companies have increasingly emphasized
clinical trials. In part, this reflects the growing length and complexity
of the trials process, as well as other factors that have increased companies’
research costs.32 In contrast, medical device
companies are spending more on relevant biological, materials, and electronics
research while also conducting more involved trials.18 Their
behavior also reflects the convergence of drug and device applications, as
with drug-eluting implantables, neural stimulation, alternative drug delivery,
and in vivo therapeutic monitoring.
Currently, most research sponsors strongly favor support of investigators
and programs, rather than buildings, laboratory instrumentation, clinical
databases, and other research infrastructure. This is a growing problem for
teaching hospitals and universities, which must rely on endowments and gifts
for those investments. Changes in clinical reimbursement and other pressures
on operating margins in academic medical centers limit the amount of cross-subsidy
available for research.33 Our analysis indicates
that this subsidy was 17% of academic medical centers’ research funding
in 2003, which is midway between the 6% and 28% reported by others using different
data sources in 199634 and 1999,35 respectively.
There is also evidence that state and local government funding of programs
will become more important, even in traditionally private universities.33 Similarly, universities have limited ability to support
promising activities, such as investigators who are striking out in unexplored
directions, changing focus, or involving colleagues from other scientific
fields. As these are unlikely to initially win NIH or industry funding, university
funds and foundation support will be important to sustain them. The many small
family foundations and disease charities are a growing and important source
of such funding.
The parallel growth of public and private spending suggests a strong
interrelationship between the sources of funds and their use. But does funding
follow scientific opportunity, or does opportunity arise when funds are available?
New drugs, medical devices, and diagnostic tests are more dependent
on publicly funded academic research than other industries. In one comprehensive
analysis, this dependence was especially marked for identification of entirely
new classes of drugs.36 This dependence was
in contrast to equally rapidly moving fields, such as electronics, computing,
energy, and chemicals, for which industry-sponsored research is also conducted
in universities. Aerospace, given its military tie, was another exception.
Moreover, publicly funded research contributed equally to initiation of new
projects and the completion of those already under way. This interdependence
of public and private sponsors has many implications for enhancing the productivity
Barriers to the discovery of new drugs have received much attention
over the past decade. Despite the doubling of biomedical research funding
and the shift toward clinical research by pharmaceutical companies, the number
of new molecular entities approved by the FDA has fallen. For example, from
1994 to 1997, the number of new molecular entities approved averaged 35.5
per year. From 2001 to 2004, the number of new molecular entities averaged
23.3 per year.8 As a consequence, pharmaceutical
productivity decreased over the last 10 years,32 and
it is lagging behind that of the biotechnology and device sectors (Table 5).37 Financial
return to investors has paralleled those changes in productivity, as shown
in Figure 2
Three factors are commonly cited by industry observers to explain the
productivity differences: increasing costs of clinical trials, the evolution
of the mix of targets to more complex categories, and the adoption of riskier
development strategies. As our analysis shows, clinical trial costs have increased
faster than early stage, discovery, and preclinical research funding, driven
both by expansion of the numbers of participants per trial and by the average
treatment duration. The degree to which these changes are driven by marketing
factors (proving advantages against competitive treatments) as opposed to
regulatory requirements is difficult to determine.
We believe a major factor in decreasing productivity stems from pharmaceutical
companies’ frequent determination that compounds approvable from a regulatory
standpoint are not worth bringing to the market because the intensity of competition
is so high that it is not worth challenging existing drugs that are safe and
effective. This highlights the need to invest in clinical areas with few effective
treatments and for which novel mechanisms or entirely new classes of drugs
are possible. The willingness of biotechnology companies to do this may, in
part, account for their greater relative productivity.
Observers differ sharply on the role of regulation in driving the decline
in pharmaceutical productivity. Time elapsed from submission of trial results
to FDA action has diminished, and the FDA maintains that it has not tightened
its regulatory standards.38 However, it does
seem indisputable that there have been shifts in the acceptable threshold
for risk/benefit for many diseases as the depth of scientific understanding
increases and as information about the effects of drugs on large patient populations
is more readily available. There is also no doubt that simpler FDA requirements
for devices adds to their commercial attractiveness and willingness of companies
to support research. Device trials are typically shorter, involve fewer participants,
and interpret risk and benefit differently.18
Given trends in financing, the application of emerging scientific knowledge
to new therapeutic avenues will continue to be problematic. This critical
function is often referred to as translational research. Industry’s funding of translational research has not kept pace
with the increase in total spending. Industry’s shift to favor late-stage
clinical trials, the stable distribution of NIH spending on basic and applied
research, and the growing preference of venture investors for companies having
products that are close to market reflect this “translation gap.”
There have been increasingly strident calls for creative remedies, including
shifting the relative proportion of public and private monies to translational
research.36 Past investment has produced prodigious
new basic knowledge in molecular biology, the genome, neuroscience, immunology,
and other areas. Their full clinical promise is yet to be realized.39 The NIH’s Roadmap Initiative is aimed at alleviating
translation as a rate-limiting step. We believe the private sector should
also mirror those actions.
Foundations will likely play an even more important role in funding
biomedical research in the decade to come. In addition to their direct support
of biomedical research, foundations contribute 20% of their dollars to other
health-related organizations. A 1998 Institute of Medicine report advocated
that foundations fill visible gaps by funding research that is speculative
scientifically, politically risky or unpopular, and where commercial value
is low or not readily apparent.6 Especially
identified were reproductive and international health, substance abuse, behavioral
or social interventions, education, and health services research related to
outcomes, clinical utility, and new care models. Translational research was
also identified. Our analysis indicates that foundations are following suit
and improving their ability to identify gaps on which they can have most effect,
as well as increasing their ability to make scientifically informed grant
awards and be more selective. Many have shortened the application and decision
process to allow more flexibility to fund rapidly moving scientific fields.
Health services research is much less well funded than that of biologically
based disciplines. Although the biotechnology, pharmaceutical, and medical
device industries are among the largest investors in research and development
(between 14% and 21% of their sales are invested in research and development),40 investments in health care outside the life sciences
sector are much smaller. In 2002, federal and foundation support for health
services and policy research represented less than 0.2% of US health expenditures
on hospital and physician services and less than 0.1% of total health expenditures.
This limited investment in health services research has occurred despite growing
concern about the cost (eg, double digit growth in health insurance premiums41) and quality (eg, errors in medicine42,43 and
failure to implement best practices43) of health
care in the United States.
Moreover, investments to evaluate the clinical and economic value of
new technologies have not kept pace with the significant investments in biomedical
research, which spawn new therapeutics. To change health services research
funding requires a shift in the perceived value of such research.44 Efforts to improve patient safety, disseminate best
practices, and secure the greatest value for investments in biomedical research
will all require additional investments. Some evidence exists that this is
occurring, for we are aware of 60 new regional coalitions and several dozen
venture capital–backed companies based on this premise.
Although our focus has been on domestic US spending, biomedical research
is truly international. Despite the shift of company research and development
to the United States, US-based companies of any appreciable size have laboratories
in other countries; and even smaller companies typically have research alliances
abroad. Likewise, venture capital and private equity investors view international
diversification positively. Perhaps most evidently, an increasing number of
private foundations that support health research, such as the Gates Foundation,
the Rockefeller Foundation, and the Wellcome Trust, operate internationally
to achieve their goals. The rationale for international scope in research
funding is growing if productivity is to be enhanced. Science has always been
an international undertaking, and the most successful scientific communities
In this regard, the predominantly domestic focus of the NIH and other
public sources may seem anomalous. However, the policy to increase US public
spending has not been mirrored in most other countries, with the exception
of Australia, South Korea, and Singapore.45 Our
analysis indicates that in 2003, the United States spent 5.6% of its total
health care spending on biomedical research. No other country approaches this
amount in relative or absolute terms.
Researchers have confirmed the importance of preserving the mobility
of talented researchers and the free and open interchange of ideas.46 The importance of regional geographic clusters for
enhancing research productivity has also been documented.47 Notably,
successful clusters have greater scientific value (as measured by citation
analysis) and commercial relevance (judged by the number of company alliances
or decisions on where to locate new laboratories). Such research confirms
the successful alchemy of institutions, talent, mobility, communications,
and funding. Although this does not imply futility of the efforts of the geographically
isolated researcher or institution, it does indicate that their mobility and
free communication must be ensured.
Biodefense and domestic security concerns since 2001 have produced about
$4.5 billion in additional federal spending, primarily through the NIH and
Centers for Disease Control and Prevention (CDC). Industry spending and that
of the Department of Defense cannot be readily estimated, but presumably exceeds
that amount. Biodefense research will likely have growing importance, not
only because of the overt threat to public health, but because its secondary
benefits to medicine generally are now being recognized.48 Previous
comparable federal and industry investments (such as those through the National
Aeronautics and Space Administration, National Science Foundation, military,
and Energy Department) have spawned new instrumentation, monitoring devices,
materials, and computing. Also, benefits to research in vaccines, antimicrobials,
and public health infrastructure, outbreak detection, and data sources have
already been realized in part due to growing awareness of the parallel specter
of avian influenza and severe acute respiratory syndrome.49 Anecdotally,
the venture capital community has taken particular interest in this field.
Can the rate of growth in funding of biomedical science be sustained?
Will another doubling occur over the next decade? One can only turn to recent
history to speculate. The continuously upward trend from the mid 1990s onward
obscures the cyclical nature of research increases of earlier decades. Today,
the NIH and other federal science agencies certainly face competing claims
on their budgets, during a time when deficit spending, aversion to tax increases,
and limited economic growth are likely to prevail. The pharmaceutical industry
will continue to face pressures to favor later-stage clinical trials over
early, discovery-stage research. Although biotechnology companies have the
same set of regulatory and investor scrutiny as the large pharmaceuticals,
the historical focus of biotechnology firms on large molecules, of known activity,
and with narrower therapeutic indications makes their hurdle somewhat lower.
Venture capital investment remains cyclical and its preference for later stage
investments (for products closer to market) makes it unlikely that venture
capital support of research occurring in early stage companies will grow.
Our analysis revealed the difficulty of assembling a complete picture
of all public and private sources of research support. This presents a potent
barrier for those wishing to use reliable information for ongoing decisions
about investment policy or to make choices of research strategy. Currently,
public and proprietary databases do not capture information comparably about
stage of research (basic, translational, and clinical) or type of recipient
(inside or outside the sponsoring organization); neither is it possible to
answer questions readily about specific diseases or areas of biology although
individual disease associations and interest groups compile such data selectively.
Our experience in reconciling different databases makes us skeptical about
comparability of those estimates, due to variability in definitions of research
and accounting methods. Furthermore, much information can only be obtained
from management- and industry-database suppliers that are usually unfamiliar
or unavailable to scientists. Therefore, an ongoing, accurate compilation
of such information is needed.
From an economic perspective, can the productivity and effectiveness
of research investment be enhanced? During a time of financial constraint,
and when scientific opportunity has never been greater, this becomes a pressing
question. Almost certainly the answer is yes, but how is it to occur?
Scientific, organizational, public policy, and financial remedies are
all required. Scientists must more successfully identify areas of particular
clinical need and potential, for which key advances are technically feasible,
and within reach of existing knowledge. They must also improve the ability
to determine where new knowledge is most needed and where a push will have
disproportionate effect in advancing a clinical field. There is a growing
call for investment to be directed to fields of greatest clinical need, where
there are refractory, but potentially answerable problems.48 Creative
and flexible organizational arrangements will be important so that talent,
instrumentation, and material, whether in companies or academic settings,
can be more easily applied to pressing scientific questions. As we have proposed
elsewhere, this calls for experimentation with a variety of alternative organizational
models, including freestanding research institutes.33
Public policy changes will be critical to resolve lingering questions
over intellectual property ownership that inhibit the free flow of ideas while
also stymieing private investment. Policy should create more incentives for
investing in the research of diseases that have limited commercial attraction.
Financial remedies are important. The NIH has a particular role to play by
more actively identifying areas of scientific opportunity for which answerable
scientific questions meet pressing clinical need and to direct funding to
them. Because many will not fall within the purview of any single NIH institute,
the political challenge may be considerable. Likewise, foundations will be
critically important to fill the gaps between public and private support,
especially in those areas that are scientifically speculative or high risk,
that are politically unattractive, or for which the market has failed.
For all sponsors, the challenge is patience. Biomedical research is
an inherently high risk and lengthy process. It would be helpful to remind
those making financial decisions that the promise of earlier advances in the
basic understanding of physiology in the 1920s and 1930s or of biochemistry
and microbiology in the 1940s, 1950s, and 1960s took decades to unfold. By
the same token, placing more bets (by spending more on research) will be less
effective than changing the odds of the game (by directing it to areas for
which science meets clinical need).
None of these remedies will be easy to accomplish, given current competitive
and political constraints. All will be necessary if the full potential of
the collective investment in biomedical science is to be realized.
Corresponding Author: Hamilton Moses III,
MD, The Alerion Institute, PO Box 150, North Garden, VA 22959 email@example.com).
Author Contributions: Drs Moses and Dorsey
had full access to all of the data in the study and take responsibility for
the integrity of the data and the accuracy of the data analysis.
Study concept and design: Moses, Matheson,
Acquisition of data: Moses, Dorsey, Matheson.
Analysis and interpretation of data: Moses,
Dorsey, Matheson, Thier.
Drafting of the manuscript: Moses, Dorsey,
Critical revision of the manuscript for important
intellectual content: Moses, Dorsey, Matheson, Thier.
Statistical analysis: Moses.
Obtained funding: Moses, Matheson.
Administrative, technical, or material support:
Moses, Matheson, Thier.
Study supervision: Moses, Thier.
Financial Disclosures: Dr Moses is chairman
of The Alerion Institute and its associated Alerion Advisors, which conducts
studies for academic institutions, foundations, and industry on research policy.
He is also a member of the board of directors of Edison Pharmaceuticals. Dr
Moses is a Senior Advisor and Mr Matheson a Senior Vice President at The Boston
Consulting Group, which actively consults with academic medical centers, foundations,
and health companies, including pharmaceutical, biotechnology, and device
firms, in the United States, Europe, and Asia. Dr Thier is a member of the
Merck & Co Inc and Charles River Laboratories boards of directors. Dr
Dorsey is a strategic advisor to Avid Radiopharmaceuticals Inc.
Funding/Support: This study was supported by
The Alerion Institute and the Boston Consulting Group. Alerion and the Boston
Consulting Group provided a small stipend to Dr Dorsey while he was a resident
to conduct the research and analysis for the article. In addition, Boston
Consulting Group and Alerion provided in-kind support to compile the raw data
on device R&D and venture capital funding as well as access to subscription
databases and third-party information supplied by others.
Role of the Sponsor: Other than the involvement
of Dr Moses and Mr Matheson, the funding organizations had no role in the
design and conduct of the study; in the collection, management, analysis,
and interpretation of the data; or in the preparation, review, or approval
of the manuscript.
Acknowledgment: We thank John Craig, PhD, of
The Commonwealth Fund, Aaron Catlin, MS, of the Centers for Medicare &
Medicaid Services, and Andy Baldus, BS, of the National Institutes of Health
for their assistance.
Create a personal account or sign in to: