Funding for biomedical research doubles in last decade

September 20, 2005

From 1994 to 2003, total funding for biomedical research in the U.S. doubled to $94.3 billion, with industry providing 57 percent of the funding and the National Institutes of Health providing 28 percent, according to a study in the September 21 issue of JAMA, a theme issue on medical research.

Lead author Hamilton Moses III, M.D., of the Alerion Institute, North Garden, Va., presented the findings of the study today at a JAMA media briefing on medical research.

Few comprehensive analyses of the sources of financial support of biomedical research and uses of these funds have been available, according to background information in the article. This results in inadequate information on which to base investment decisions and can create a barrier to judging the value of research to society. Previous articles have examined specific sectors, but few have done so comprehensively.

Dr. Moses and colleagues conducted a study to determine the level and trend from 1994 to 2004 of basic, translational (the application of knowledge of basic science research to clinical care), and clinical U.S. biomedical research support from the major sponsors of this research: (1) federal government, (2) state and local governments, (3) private not-for-profit entities including foundations, and (4) industry. The researchers compiled publicly available data for federal, state, and local governments; foundations; charities; universities; and industry. Proprietary (by subscription but openly available) databases were used to supplement public sources.

The researchers found that 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 percent) and the National Institutes of Health (28 percent). 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 percent of its total health expenditures on biomedical research, more than any other country, but less than 0.1 percent 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.

The NIH is by far the largest federal funder of biomedical research. Adjusted for inflation, NIH obligations nearly doubled (in 2003 dollars) from $13.4 billion in 1994 to $26.4 billion in 2003. Private support for biomedical research, adjusted for inflation, increased 36 percent 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.

Industry funding from pharmaceutical, biotechnology, and medical device firms increased 102 percent 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 percent) exceeded that for either the pharmaceutical (89 percent) or biotechnology (98 percent) sectors. The proportion of biomedical research support coming from industry sources remained relatively constant and was 56 percent for 1994 and 58 percent for 2003.

The federal government and foundations spent $1.4 billion on health policy 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 sum of federal and foundation spending for health services research in 2002 was an estimated 1.5 percent of biomedical research funding.

"The doubling over a decade of total spending by U.S. 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. By comparison, the low proportion of spending on health services research is especially notable, since it is the main tool available to evaluate the clinical benefit of technology," the authors write.

"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. As a consequence, pharmaceutical productivity decreased over the last 10 years, and it is lagging that of the biotechnology and device sectors," the researchers write.

"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."

"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."

"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 value," the authors conclude.

(JAMA. 2005; 294:1333 - 1342. Available pre-embargo to the media at jamamedia.org.)
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Editor's Note: For funding/support and financial disclosure information, please see the JAMA article.

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