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Copyright 2014 American Medical Association. All rig hts reserved.
The Anatomy ofMedical Research
US and International Comparisons
Hamilton Moses III, MD; DavidH. M. Matheson, JD,MBA; SarahCairns-Smith, PhD;BenjaminP. George, MD,MPH;
ChasePalisch,MPhil; E. RayDorsey, MD, MBA
IMPORTANCE Medical research is a prerequisiteof clinical advances, while healthservice
research supports improved delivery, access, and cost. Few previous analyses have compared
the United States with other developed countries.
OBJECTIVES To quantify total public and private investment and personnel (economic inputs)
and to evaluate resulting patents, publications, drug and device approvals, and value created
(economic outputs).
EVIDENCE REVIEW Publicly available data from 1994 to 2012 were compiled showing trends
in US and international research funding, productivity, and disease burden by source and
industry type. Patents and publications (1981-2011) were evaluated using citationrates and
impact factors.
FINDINGS (1)Reduced science investment: Total US funding increased6% per year
(1994-2004),but rate of growthdeclined to 0.8% per year (2004-2012), reaching $117 billion
(4.5%) of totalhealth care expenditures. Private sources increasedfrom 46% (1994)to 58%
(2012). Industry reduced early-stage research, favoring medical devices, bioengineered
drugs, and late-stage clinical trials, particularly for cancer and rare diseases. National Insitutes
of Health allocations correlate imperfectly with disease burden, with cancer and HIV/AIDS
receiving disproportionate support. (2) Underfunding of service innovation: Health services
research receives $5.0 billion (0.3%of total healthcare expenditures) or only 1/20thof
science funding. Private insurers ranked last(0.04% of revenue) and health systems 19th
(0.1% of revenue) among 22 industries in their investment in innovation. An incrementof
$8 billion to $15billion yearly would occur if service firms were to reach medianresearch
and development funding. (3) Globalization: US government research funding declined from57%(2004) to 50%(2012) of theglobal total,as did that of US companies (50% to 41%),
with thetotal US (public plus private)share of globalresearchfunding decliningfrom 57%to
44%. Asia, particularly China, tripled investment from $2.6 billion (2004) to $9.7 billion
(2012)preferentiallyfor educationand personnel. The US share of life science patents
declined from 57%(1981) to 51%(2011),as didthoseconsidered most valuable, from 73%
(1981)to 59%(2011).
CONCLUSIONS AND RELEVANCE New investment is required if the clinical valueof past
scientific discoveriesand opportunities to improve care are to be fully realized. Sources could
include repatriation of foreign capital, new innovation bonds, administrative savings, patent
pools, and public-private risk sharing collaborations. Given internationaltrends, the United
Stateswill relinquish itshistoricalinternational lead in thenext decade unlesssuch measures
are undertaken.
JAMA. 2015;313(2):174-189. doi:10.1001/jama.2014.15939
Editorials pages 143and 145
Supplementalcontent at
jama.com
Author Affiliations: TheAlerion
Instituteand Alerion Advisors LLC,
North Garden, Virginia (Moses);
Johns Hopkins School of Medicine,
Baltimore,Maryland(Moses);BostonConsultingGroup, Boston,
Massachusetts (Matheson, Cairns-
Smith, Palisch); Universityof
Rochester School of Medicine,
Rochester,New York (George,
Dorsey); StanfordUniversity School
of Medicine,Stanford, California
(Palisch).
Corresponding Author: Hamilton
Moses III, MD, Alerion,PO Box 150,
North Garden, VA22959
Clinical Review& Education
Special Communication | SCIENTIFIC DISCOVERY AND THE FUTURE OF MEDICINE
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Thepromiseofnewdrugs,vaccines,medicalprocedures,and
devices captures the imaginations of the public, scien-
tists, and physicians alike. Forthe lastcentury, medical re-
search,includingpublichealthadvances,hasbeentheprimarysource
ofandanessentialcontributortoimprovementinthehealthandlon-
gevity of individuals and populations in developed countries. The
United States has historically been where research has found the
greatest supportand hasgenerated more than half theworldsfund-ing for many decades. Although US-based companies, founda-
tions, and public agencies have sponsored most research, that re-
search is conducted by an array of autonomous university
laboratories,studygroups,and coalitionsof researchers. Thisorga-
nization contrasts with that found in most other countries, where
government laboratories are predominant and where health sys-
tems and insurers conduct and finance service innovations di-
rectly.
Expectations for medical research vary sharply, depending on
theobserversperspective.For a patient affected by disease, it is a
source of hope. For a parent of a child with a serious condition, it
evokes bothexpectationand frustration overthe paceof progress.
Wherea physicianmayseeka routeto bettercare, aneconomistsees
an engine of growth and a politician sees high-skill jobs and im-
proved national competitiveness. Hospital executives expect re-
search tospawn new services, whereas pharmaceutical CEOsmust
havenewproducts.Aninsuranceexecutivedoubtsinstinctivelythat
the value of research will outweigh its incremental cost. A regula-
toraims for the appropriate amountof risk while still getting inno-
vations that matter to the market. For philanthropists and public
health campaigners,researchrepresents thebest hopefor alleviat-
ing the worlds most immediate health-related problems. To a sci-
entist, research deepens critical knowledge and the way intelli-
gence and organized effort can improve health. All of these
constituentsplay a rolein howresearchis funded andbroughtfrom
bench to bedside. Meeting their collective needs produces a com-
plex setof hurdles.ThisSpecialCommunication examinesdevelopmentsover the
past 2 decades in the pattern of who conducts and who supports
medicalresearch,as wellas resulting patents, publications, andnew
drug and device approvals. We place the United States in an inter-
national context to understand the key forces of change and sug-
gest remedies for the various stakeholders to explore as they seek
greater benefit for their investment.
Key Questions
We address 3 major trends:
1. Diminishedfunding inthe UnitedStates from both publicand pri-vate sponsors at a time when scientific opportunity has never
been greater but whensupport for sustained, long-terminvest-
ments is limited and short-term performance is rewarded dis-
proportionately
2. Establishingstrongincentivesfor investment inhealthservice and
delivery innovations andbetter ways to deliver care
3. The implications of globalization
Betterunderstandingofthesefactorsisrequiredifthefullprom-
iseof the cumulative investment in biomedical science andoppor-
tunityfor improvedservices are to be realized.
Information in 8 areas has been assembled to inform the dis-
cussion(Figure 1). Twoareas involve thecurrentand historicalland-
scapein the United States of investment andemployment in medi-
cal research, placing the United States in an international context.
Two areas examine funding on biomedical and health services re-
search separately. Four areasquantify the value of thatinvestment
as judged by resulting patents, publications, drug and device ap-
provals, and public market performance of life science and health
service companies.
Methods
To describeand document thecurrent anatomyand historicaltrends
ofmedical research, weassembledan arrayof informationfromvari-
ous datasources.We relied on publicly available data, recalculated
those data for display when necessary, reconciled inconsistentsources, and included years for which data are complete (in gen-
eral,from1994to2012).TheBox containsa list ofthe includedand
supplementary figures and tables.
Methods were similar to those we have used previously.1-3Ad-
ditionally, in this study, the 40 largest developed nations were ex-
Figure 1. TheAnatomyof Medical Research:US and International Comparisons
Medical Research ActivitiesMedical Research Funding
Sources of funding
Government, industry,
foundations, charities,
and universities Historical trends
International comparisons
Biomedical research
Historical funding trends
Funding by phase of
research
Funding by therapeutic area
Workforce size
Historical trends
International comparisons
Science and TechnologyWorkforce
Health services research
Historical funding trends
Industrial sector comparisons Market performance
Health care sector
performance compared
with market average
New drugs and devices
New drug and device
approvals by FDA and EMA
Patents
International comparison
of patenting activity
Publications
International comparison
of publication activity
Medical Research Output
EMA indicates European Medicines
Agency; FDA, USFoodand Drug
Administration.
TheAnatomy of Medical Research Special Communication ClinicalReview & Education
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amined using comparable, standard measures of investment, em-
ployment, economic value, patents, and publications.
Althoughreliable internationalcomparisons of biomedicalsci-
ence funding are possible, comparable data for healthservices re-
search are notavailable because other countries do notdistinguish
themfromcostsof insurance andexpenditures onprovisionof care.
A complete description of methods is included in the foot-
notes accompanying each table and figure.
Information, Trends, and Analysis
Medical Research FundingIn 2012, total US funding of biomedical and health services
research was $116.5 billion (Figure 2and eTable 1 in the Supple-
ment), or 0.7% of gross domestic product (GDP). The largest
increase in funding occurred between 1994 and 2004, when
funding grew at 6% per year. However, from 2004 to 2012, the
rate of investment growth declined to 0.8% annually and (in real
terms) decreased in 3 of the last 5 years (eFigure 1 in the Supple-
ment). The exceptions were 2009 and 2010, accountable to
stimulus from the American Recovery and Reinvestment Act
(ARRA). As a percentage of national health expenditures, medical
research investment remained stable, ranging between 4.2% and
4.7% from 2004 to 2012 (eFigure 1).
In 1994, the National Institutes of Health (NIH) budget
totaled $17.6 billion and in 2004 reached a peak of $35.6 billion
(Figure 3). Following a decade of remarkable public sponsorship
of medical research with growth exceeding 7% per year in
the1990s, funding from the NIH declined nearly 2% per year in
real terms (Figure 3) after the mid-2000s. This decrease repre-
sents a 13% decrease in NIH purchasing power (after inflation
adjustment) since 2004 (eFigure 2 in the Supplement), which
may be more severe when considering NIH appropriations
through 2013.5 Other sources of US investment were not immune
to slowed growth. Funding from major sources of investmenteither slowed or declined over the past 10 years, with the excep-
tion of other federal support, which includes organizations such
as the Agency for Healthcare Research and Quality (AHRQ).
From 1994 to 2004, the medical device, biotechnology, and
pharmaceutical industries had annual growth rates greater than
6% per year (Figure 3), with biotechnology demonstrating the
largest increases. The share of US medical research funding from
industry accounted for 46% in 1994 and grew to 58% in 2012.
Although much of the growth in medical research funding over
the past 20 years can be attributed to industry, investment still
Box. Listof Included and SupplementaryFiguresand Tables
Included figures
Figure 1.The Anatomy of Medical Research: US and International
Comparisons
Figure 2.US Funding for Medical Research by Source, 1994-
2012
Figure 3.Growth in US Funding for Medical Research by Source,1994-2012
Figure 4.Pharmaceutical Industry Medical Research Funding by
Phase of Research, 2004-2011
Figure 5. Medicines in Development for Top 10 Therapeutic Areas,
2013
Figure6. USFunding forHealth ServicesResearchby Source,2004-
2011
Figure 7.Researchand Development Investment Ranking of Indus-
trialSectorsAmong US-BasedCompanies, 2011
Figure 8.Global Medical Research Funding in Select Countries/
Regions, 2011
Figure9. Top 10 Countriesby Sizeof Scienceand TechnologyWork-
force, 1996-2011
Figure 10.Global Life Science Patent Applications by Country of
Origin, 1981-2011
Figure 11. US LifeSciencePatent Applications by Country of Origin,
1981-2011
Figure 12.Highly Valuable US Life Science Patents by Country of
Origin, 1981-2011
Figure 13.Medical Research Articles and Citations by Selected
Countries/Regions, 2000-2010
Figure 14.Market Performance of Publicly Traded Life Sciences
and Health CareCompanies, 2003-2013
Supplementary figures and tables
eFigure1. Historical GrowthTrajectory ofUS MedicalResearchFund-
ing, 1994-2012
eFigure 2.Historical Trajectory of NIH Medical Research Funding,
1994-2012
eFigure 3.Venture Capital Investment in Biotechnology Compa-nies, 1995-2013
eFigure 4.Relationship Between NIH Disease-Specific Research
Funding and Burden of Disease forSelectedConditions
eFigure 5.GrowthinGlobalMedicalResearchFundinginSelectCoun-
tries/Regions, 2004-2011
eFigure 6.Medical Research and Development Funding and Sci-
enceand TechnologyWorkforces in Select Countries/Regions,2011
eFigure 7.EuropeanLife SciencePatent Applications by Country of
Origin, 1981-2011
eFigure 8. Highly ValuableEuropean LifeSciencePatentsby Coun-
try of Origin, 1981-2011
eFigure 9. Comparisonof NewApprovalsby USFood andDrugAd-
ministration and EuropeanMedicinesAgency, 2003-2013
eTable1. US Fundingfor Medical Researchby Source, 1994-2012
eTable2. NIHMedical Research Funding by Type ofResearch, 2004-
2012
eTable3. NIH Disease ResearchFunding and Burden of Disease for
Selected Conditions
eTable 4.Medical Research Funding From (A) Public Charities and
(B) Private Foundations, 2011
eTable 5. USFundingforHealthServicesResearchby Source,2004-
2012
eTable6. Methods andData Sourcesfor Medical ResearchFunding
by Select Countries/Regions
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slowed (medical device, 6.6% to 6.2% in 1994-2004 vs 2004-
2012; biotechnology, 14.1% to 4.6% in 1994-2004 vs 2004-
2012), or declined (pharmaceutical firms, 6.8% to 0.6% in 1994-
2004 vs 2004-2012).
Research Funding
Biomedical Research
The distribution of investments across the types of medical re-search changed from 2004 to 2011. Pharmaceutical companies
shifted funding to late-phase clinical trials and away from discov-
ery activity such as target identification and validation. The share
of pharmaceutical industry funding (including that by US compa-
nies outside ofthe UnitedStates)spenton phase 3 trialsincreased
by 36% (5%/year growth rate) from 2004 to 2011 (Figure 4), and
the share of investment in prehuman/preclinical activities de-
creased by 4% (2%/yearaveragedecline). Thisshift toward clinical
research and development reflects the increasing costs, complex-
ity, andlength of clinical trialsbut may also reflecta deemphasis of
earlydiscovery efforts by theUS pharmaceuticalindustry. Whilein-
dustry hasshifted funding to clinical trials, the share of NIHcontri-
butions dedicated to basic science and clinical research was un-
changed (eTable 2 in the Supplement), with the majority of funds
still focused on basic research. These data may not accurately re-
flectthetruedivisionofNIHinvestmentforbasicsciencevsdisease-
focused research, as a growing proportion of NIH expenditures is
forprojectshavingpotentialclinicalapplication in manydiseases or
organ systems.7
Inreal terms,venture capitalinvestmentin biotechnology com-
panies steadilyincreased from $1.5 billion in 1995 to a peak of $7.0
billion in 2007 (eFigure 3 in the Supplement). During that period,
investmentin biotechnologycompanies as a shareof total venture
capital investment increasedfrom 10%to 18%, and thenumber of
investments increased from 176to 538. Investment levelsand the
number of transactions of biotechnology decreased following the
financial crisis in 2008-2009, declining to a low of $4.3 billion in2009. Venture capital investment still has notrecoveredto its pre-
2008 levels, with only $4.5 billion invested in 2013. Size of invest-
mentper transaction(median,$11 million, inflation adjusted) hasre-
mainedunchanged for 2 decades.
Public funding of medical research by condition was only mar-
ginally associated withdisease burden in the United States in 2010
(eFigure 4 in the Supplement). A set of 27 diseases that account
for 84% of US mortality, 52% of years of life lived with disability,
84% of years of life lost, and 70% of disability-adjusted life-years
receive 48% of NIH funding (R2 = 0.26) (eTable 3 in the Supple-
ment). Several factors other than disease burden may influence
funding, including the quality of research, scientific opportunity,
portfolio diversification, or building of infrastructure, and the com-bination of these factorscomplicatesthe relationshipof funding to
particular conditions.8,9 Cancer and HIV/AIDS were funded well
above the predicted levels based on US disability alone (eFigure 4
in the Supplement), with cancer accounting for 16% ($5.6 billion)
of total NIH funding and 25% of all medicines currently in clinical
trials (Figure 5).
Rare diseases have emerged for industry as a preferential area
of therapeutic development, with nearly as many compounds in
trials as analgesics and antidiabetic drugs (Figure 5). Industry
favors rare diseases because they are commercially attractive due
to provisions of the Orphan Drug Act and relative ease of clinical
trials. Investment can be expected to increase as diseases are
defined by biomarkers that allow the development of targeted
therapies.12
Support from private foundations, public charities, and other
entities comes from only a feworganizations.In 2011,42% of total
not-for-profitfundingwas by thetop 10 public medicalcharitiesand
top10 private foundations (eTable4 in theSupplement). TheHow-
ardHughesMedicalInstitute(which supports domestic researchpri-
marily) and the Billand Melinda GatesFoundation(which supports
international research primarily)accountfor 87%of biomedical re-search funding by private foundations (eTable 4, panel B). United
Statesbased medical charities direct most monies in the United
States, thoughthe amountspenton research (asopposed to edu-
cation, disease screening, and other activities) cannot be quanti-
fied using publicdata.
HealthServices Research Funding
Health services research, which examines access to care, the qual-
ity and cost of care, and the health and well-being of individuals,
communities, and populations, accounted for between 0.2% and
Figure 2. US Fundingfor Medical Researchby Source, 1994-2012
120
140
100
80
60
40
20
0
1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
MedicalResearchFunding,$,inBillionsa
Year IncludesARRA Fundingb
Compound annual growthrate, 6.3%d
Compound annual growthrate, 0.8%d
Foundations, charities, and other private funds
State and local government
Other federalb
Medical device firms
Biotechnology firmsc
Pharmaceutical firms
National Institutes of Healthb
Funding source
Data were calculated accordingto methods outlinedin eTable 1 inthe
Supplement. ARRA indicates American Recoveryand ReinvestmentAct.
a Data were adjusted to2012dollars usingthe Biomedical Researchand
Development PriceIndex.4
b TheNationalInstitutes of Health and other federal sources includestimulus
provided byARRA in 2009 and2010.
c Datafrom 1994-2002 and 2011-2012were estimatedbased on linear
regression analysis of industry market share.
d Compoundannualgrowthrate(CAGR) supposingthatyearA isxand yearB is
y, CAGR = (y/x){1/(BA)}1.The CAGRwas calculated separatelyfor 2 different
periods witha singleoverlapping year: 1994-2004 and 2004-2012. Thecut
pointwas chosenat 2004 giventhe changes seen in funding from theNational Institutesof Health in thatyear.
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0.3% of national health expenditures between 2003 and 2011, an
approximately 20-fold difference in comparison with total medical
research funding (eFigure 1 in the Supplement). Health services
research funding increased 4.6% per year from $3.7 billion in
2004 to $5.0 billion in 2011 (Figure 6and eTable 5 in the Supple-
ment). Investment fromfoundations decreased in real terms at 1%
per year over the period, following declines after the recession of
2008. Increases in health services research funding were largely
driven by AHRQ (15.8%/year growth) and the health care services
industry (11.0%/year growth), which includes hospitals, ambula-
tory health care services, and nursing care facilities. Although
health care industry funding is likely underestimated because
research funds may not account for hidden costs of quality
improvement, research investment was especially low when com-
pared with other industrial sectors (Figure 7). Insurers and health
systems rank among the lowest in research and development
(funding $1.3 billion, or 0.1% of revenue), which was well below
the median for industrial sectors ($5.5-$7.3 billion for total fund-
ing, or 1.7%-2.5% of revenue). Health insurers may provide addi-
tional health services research funding that cannot be distin-
guished from the insurance industry as a whole, although these
funds are small and unlikely to change the results for industry
funding (Figure 7).
International Medical Research Funding
Global medical research expendituresby publicand industry sources
in theUnited States, Europe, Asia, Canada, andAustralia combined
increasedfrom$208.8billionin2004to$265.0billionin2011,grow-
ingat 3.5%annually(Figure 8 and eTable 6 inthe Supplement).Al-
thoughthere may be medical research funding from otherareasof
theworld (eg, South America),these data represent the most reli-
able and current sources of global medical research investment.
Among theregionsincludedin theanalysis, theUnited States dem-
onstrated the slowestannual growthin investment (1.5%/year), fol-
lowed by Europe (4.1%/year)and Canada (4.5%/year). Asiancoun-
tries increased from $28.0 billion in 2004 to $52.4 billion in 2011,
Figure 3. Growth in US Fundingfor Medical Researchby Source, 1994-2012
120
100
80
60
40
20
0
MedicalResearchFunding,
$,inBillio
nsa
Medical Research Funding,
$ (%), in Billions a
Funding Source
Foundations, charities, other private
State and local government
Other federal
National Institutes of Health
Medical device firms
Overall
Biotechnology firms
1994
2.6 (4)
3.9 (7)
8.0 (13)
17.6 (29)
3.8 (6)
59.5
3.7 (6)
20.0 (34)
2004
3.9 (4)
5.9 (5)
4.8 (4)
35.6 (33)
7.1 (6)
109.7
13.7 (12)
38.6 (35)
2012
4.2 (4)
6.3 (5)
7.1 (6)
30.9 (27)
11.5 (10)
116.5
19.6 (17)
36.8 (32)
Compound Annual
Growth Rate, %b
1994-2004
4.2
4.1
4.9
7.3
6.6
6.3
14.1
6.8
2004-2012
0.8
1.0
0.9
5.0
1.8
6.2
4.6
0.6Pharmaceutical firms
Year
1994 2004 2012
Data were calculated accordingto methods outlined ineTable 1 inthe
Supplement.
a Adjusted to 2012dollars usingthe BiomedicalResearchand Development
PriceIndex.4
bCompoundannualgrowthrate(CAGR) supposingthatyearA isxand yearB is
y, CAGR = (y/x){1/(BA)}1.
Figure 4. PharmaceuticalIndustryMedicalResearchFunding by Phase of Research,2004-2011
50
40
30
20
10
0IndustryMedicalResearch
Funding,$,inBillionsa
2004 2011
Phase of Research
Uncategorizedc
Phase 4
Approval
Phase 3
Phase 2
Overall
Phase 1
Industry Medical Research
Funding,$, (%), in Billions a
2004
4.2 (9)
6.4 (13)
4.5 (9)
12.6 (26)
4.9 (10)
48.3
3.2 (7)
12.5 (26)
2011
1.7 (3)
4.8 (10)
4.1 (8)
17.6 (36)
6.2 (13)
49.3
4.3 (9)
10.6 (22)
Compound Annual
Growth Rate, %b
2004-2011
0.3
11.9
3.9
1.2
4.9
3.3
4.1
2.3Prehuman/preclinical
Pharmaceutical industry funding by phasewas obtained fromPharmaceuticalResearchand Manufacturers of America (PhRMA) annual reports,2004-2011.6
Data were 2 yearsold at time of publication andincludeboth domestic and
international research funding fromPhRMA members.
a
Data were adjustedto 2012 dollars using theBiomedicalResearch andDevelopment PriceIndex.4
bCompoundannualgrowthrate(CAGR) supposingthatyearA isxand yearB is
y, CAGR = (y/x){1/(BA)}1.
c Uncategorized funding could notbe allotted toa singlephaseof research.
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or 9.4%per year, withespeciallylargeincreases in China, India, South
Korea, and Singapore.
These trendsresultedin therestructuring of theshareof total
global investment (eFigure 5 in the Supplement). As a percentage
of global funding,the United States declinedby approximately13%
from 2004 to 2012, and Asian economies increased by approxi-
matelythe same share (13% in2004to 20%in 2011). Althoughab-
solutegrowthof Asianinvestmentfrom2004to 2011 reached $24billion, the United States remained the leading sponsor of global
medical research in 2011 (44% share), and Europethe next largest
sponsor (33% share).
Overall growth was slightly greater for industry outside the
United States compared withpublicsources (4.3%vs 2.2%),and in-
dustry accountedfor two-thirdsof fundsin 2011. However, US con-
tributions increasedslowlyfrom bothpublic(0.1%/year)and indus-
try sources (1.7%/year).
Public funding in the United States decreased to a 49% share
of theworldspublic research investment by 2011,downfrom57%
in 2004 (Figure 8). United States industry, which accounted for
nearlyhalf ofglobal industry medical researchexpendituresin 2004,
declined to41% ofglobal industry funding in2011(Figure 8).Japan
demonstrated the greatest increase in the worlds share of indus-
tryfunding(+3.9%),andEuropeancountriesgainedthemostinpub-
licinvestment(+3.5%).Despite decreasesin theUS share of invest-
ment, the United States remained the worlds leading sponsor for
both publicand industry medical research funding in 2011.
Science and Technology Workforce
From 1996 to 2011, the US science and technology workforce in-
creased by 2.7% annually to reach 1.25 million workers (Figure 9).
Over the sameperiod, Chinas workforce increased6% annually to
reach1.31millionworkers,makingit thelargestnationalscience and
technology workforce in the world. Reliable information about the
proportion of medical researchers could not, however, be ob-
tained.
AlthoughChina ledthe world inthe overall size oftheirscience
and technology workforce, it had only 1.9 science and technology
workers per 100 000 full-time equivalents, the lowest among the
countriesincludedin theanalysis(Figure9). TheUnited States em-
ployed 8.1 science and technology workers per 100 000 full-time
equivalents in its total workforce, or the median for the 10 largest
workforcesin theworld.
Theinvestmentin capital terms andin labor terms differ widelyacross countriesand regions.The United States contributes 44.2%
of global medical research funding butcomprisesonly 21.2% of the
Figure5. Compoundsin Developmentfor Top 10Therapeutic Areas,2013
200 400 600 800 1200 1400 1600 18001000
Rare diseasec
Anti-inflammatory
Recombinant vaccine
Cognition enhancer
Anticancer,immunological
Anticancer, otherb
Therapeutic areaa
Prophylactic vaccine,anti-infective
Antidiabetic
Analgesic
0
No. of Compounds in Clinical Trialsa
Data forthenumber of compoundsin developmentwerefromthe Citeline
PharmaR&D AnnualReview 2014.10 Data forrarediseases were from the
Pharmaceutical Researchand Manufacturers of America.11
a Numberof compoundsin clinicaltrials orunderreviewby theUS Foodand
DrugAdministration. Thisincludes a totalof 10 479compoundsin 2013.
b Includes all nonimmunologicalanticancer compounds.
c Rare diseases were defined as those affecting200 000or fewerpeople in the
United States.
Figure 6. US Fundingfor Health ServicesResearch by Source, 2004-2011
6
4
2
0HealthServicesResearch
Funding,$,inBillionsa
2004 2011
Funding source
Health services industryc
AHRQ
NIH
Other federald
Foundationse
Overall
Health Services Research
Funding,$, in Millions (%)a
2004
653 (18)
365 (10)
1158 (32)
442 (12)
1034 (28)
3652
2011
1352 (27)
1018 (20)
1189 (24)
494 (10)
967 (19)
5019
Compound Annual
Growth Rate, %b
2004-2011
4.6
11.0
15.8
0.4
1.6
1.0
AHRQindicatesAgency for HealthcareResearch and Quality; NIH,National
Institutesof Health. Datawere calculated accordingto methods outlined in
eTable 5 in theSupplement.
a Adjusted to 2012dollars usingthe Biomedical Researchand Development
PriceIndex.4
b Compound annualgrowth rate (CAGR)supposing that year A isxand yearB is
y, CAGR = (y/x){1/(BA)}1.
c Health services industry includes funding fromhospitals,ambulatory health
careservices,nursing and residentialfacilities.Health insurancecompanies
were not included.Datamay notfullycapturethe entiretyof funding for
health services researchand quality improvement initiativesfor theUS health
careservices industry.
d Other federal funding includes theCenters forDisease Control and Prevention,
Centers for Medicare & Medicaid Services, Veterans HealthAdministration,
Health Resourcesand Services Administration,and Patient Centered
OutcomesResearchInstitute(in 2011only).
e Foundationfundingincludes totalgiving fromthe Robert Wood Johnson
Foundation, CaliforniaEndowment, PewCharitableTrusts, W.K. Kellogg
Foundation, and CommonwealthFund.
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globalscience andtechnology workforce (eFigure 6 in theSupple-
ment).Conversely, Chinacontributesonly 1.8%of globalfunding for
medicalresearchbutcomprises22.3%oftheglobalscienceandtech-
nology workforce.This differencein investment representsa natu-
ralexperiment in productivity management and hasbroad implica-
tions for patents and intellectual property ownership, which will
evolveover the next fewyears.
Outputs of Medical ResearchLife Science Patent Filings
China filed30% of global lifesciencepatentapplications in 2011, in-
creasing from 1% of globalapplications in 1991 (Figure 10). This in-
cludesapplications froma number of patentingofficesthroughout
the world, including offices in China, the United States, and the
EuropeanUnion.The United States followedwith24% of patentfil-
ings globally, increasing from an 11%sharein 1991.
United States inventors led in the number of life science pat-
ent filings in both the United States and EU, where China ac-
counted for less than 2% of filings in both regions ( Figure 11and
eFigure 7 in the Supplement). The proportionof US inventors filing
patents inthe UnitedStates decreasedfrom57% to51% from 1981
to 2011. During the same period, the share of highly valuable pat-
ents filed by US inventors decreased between from 73% to 59%
(Figure 12), while allothercountries in theanalysisincreased their
share of highly valuable patents. Similar trends were observed for
highly valuable patents filed through the European Patent Office
(eFigure 8 in the Supplement). Highly valuablepatentsare defined
by the frequency they are cited by other inventors in subsequentpatent applications (Figure 12, footnote b)
Publications
The UnitedStates ledthe world with 33% of publishedbiomedical
researcharticlesin2009(Figure13A).IntheUnitedStates,thenum-
ber of biomedicalresearcharticles increasedat 0.6%per yearfrom
2000to 2009.Duringthesame period, thenumberof articlespub-
lished in China increased by 18.7% annually.
The United States also leads the world inits share of the most
highly citedbiomedical research articles, with63% of thetop cited
Figure 7. Researchand DevelopmentInvestment Ranking of IndustrialSectorsAmong US-BasedCompanies, 2011
20 40 60 800
Research and DevelopmentSpending, $, in Billionsb
Domestic
Foreign
Transportation services
Insurance carriers
Utilities
Health care servicesc
Architectual engineering
Physical, engineering, and life sciences
Telecommunications
Banking, credit, and securities
Data processing and hosting
Mining, extraction, and support activities
Food and beverage
Internet service provider and web search
Plastics, minerals, and metal products
Aerospace and defense
Chemicals
Computer software and systems design
Machinery
Medical devicesAutomobiles and parts
Software and paper publishing
Computer and electronics manufacturing
Pharmaceuticals and biotechnology
Median
Total research and development fundinga
5 10 150
Research and DevelopmentSpending as % of Revenue
Pharmaceuticals and biotechnology
Median
Share of revenue spent on research and developmenta
Internet service provider and web search
Software and paper publishing
Physical, engineering, and life sciences
Computer and electronics manufacturing
Medical devices
Aerospace and defense
Computer software and systems design
Data processing and hosting
Machinery
Automobiles and parts
Chemicals
Plastics, minerals, and metal products
Mining, extraction, and support activities
Architectual engineering
Food and beverageTelecommunications
Utilities
Banking, credit, and securities
Health care servicesc
Transportation services
Insurance carriers 0.040.2
0.04
Researchand development expenditures forUS-based companiesperforming
research by theindustrialsector wereobtainedfrom the National Science
Foundation.13 Datainclude researchfunds spentboth domesticallyand abroad.
Industry revenues wereobtainedfrom the National Science Foundation13
orUSCensusBureau14 based onthe availabilityof data. Revenuesand researchand
development expenditures werematchedby industry usingNorth American
Industry ClassificationSystemcodes.
a Thepharmaceuticals and biotechnology, medical devices, and health care
services industriesare highlightedin red.
bAdjusted to 2012dollars usingthe BiomedicalResearchand Development
PriceIndex.4
c Healthcare services industry includes US-based hospitals,ambulatoryhealth
careservices, and nursing and residentialfacilities.
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articles in 2000 and 56% in 2010; however, the growth of highly
citedliteraturepublishedbytheUnitedStatestrailsothermajorcoun-
tries, regions, and economies(Figure13B). Aftercontrollingfor theshareof theworldsbiomedical research articles usinga citationin-
dex, the United States declined from 2000 to 2010 at 0.2% per
yearastherestoftheworldincreasedbyapproximately1%peryear.
NewDrugs andDevices
Since 2003, drug approvals by the US Food and Drug Administra-
tion(FDA) have remainedunchanged withan averageof 26approv-
als per year. Althoughdrug approvals increasedslightlyin 2011and
2012,theyreturnedclosertoaveragein2013with27approvals(eFig-
ure 9 in the Supplement). United States device approvalshave also
remained relatively constantover thelast decade. While thenum-
ber of approvalssteadily increasedfrom 15 approvals in 2009to 39
approvals in 2012,only 22 newdevices were approved in 2013.Duringthe sameperiod, theEuropean Medicines Agency(EMA)
averaged a higher number of both applications (55/year) and ap-
provals (42/year) than the FDA (eFigure 9). In 2013, the EMA re-
ceived22 more applications andapproved16 more drugs than the
FDA.
Life Sciences Market Performance
Equity (stock) markets reflect broad public perception of one in-
dustrys value in comparison with others. Since 2003, market re-
turn for the entire health care industry (including medical device,
pharmaceutical, and biotechnology companies as well as hospi-
tals, nursing homes, and other health service suppliers) as mea-
sured by the Dow Jones US Health Care Index increased 8.2% an-nually, closelytrailingthe Standard & Poors500 (8.3%)(Figure14).
Market returns for biotechnology and health insurance companies
outperformedthe market, growingat 18.5% and13.8%per year, re-
spectively. Medical device companies, pharmaceutical companies,
and hospital chains underperformed compared with the Standard
& Poors500, increasing annuallyat 7.3%,6.8%, and5.8%,respec-
tively. The financial crisis of 2008 led to a decrease in market per-
formancefor alllife sciencesindustries. Generally, allsectorsrecov-
eredin theyears following, andbiotechnology companies,hospital
chains,and healthinsurancecompaniesperformedexceptionallywell
since their decline in 2008-2009.
Discussion and Implications
Medical research in the United States remains the primary source
of new discoveries, drugs, devices, and clinical procedures for the
world,although theUS lead in these categories is declining. For ex-
ample, whereas the United States funded 57% of medical research
in2004,in2011thathaddeclinedto44%.Basicresearchandprod-
uct development are central to the health of countries economies.
However, changes in the pattern of investment, particularly level
funding by US government and foundation sponsors, with a de-
Figure 8. Global Medical ResearchFunding in Select Countries/Regions, 2011
100
20
40
80
60
0
200
120140
180
160
220
240
280
260
MedicalResearchFu
nding,inBillionsa
Medical research funding,
$, in billions (%)a
Overall
Publicb
Industryc
Compound annual growth
rate, % (2004-2011)d
Globale
265.0 (100)
102.8 (100)
162.2 (100)
3.5
UnitedStates
117.2 (44)
50.5 (49)
66.6 (41)
1.0
Europe
88.6 (33)
26.9 (26)
61.6 (38)
4.1
Japan
37.8 (14)
17.0 (17)
20.8 (13)
6.8
China
4.9 (1.2)
1.3 (2)
3.6 (0.8)
16.9
OtherAsiaf
9.7 (4)
2.4 (2)
7.3 (4)
20.8
Canada
3.1 (1.2)
1.8 (2)
1.3 (0.8)
4.5
Australia
3.8 (1.4)
2.8 (3)
1.0 (0.6)
9.3
Publicb
Industryc
Theregions/countries/economies in the analysis include the majorcountries of
NorthAmerica(United States, Canada), Europe (including the10 largest
European countriesin the Organisation for EconomicCo-operationand
Development),and Asia-Oceania (Australia,China, India,Japan, Singapore,and
SouthKorea). Datafor African and SouthAmericancountries and Russiawere
notavailable.Data were calculatedaccordingto methods outlined ineTable 6 in
the Supplement.
a Datawere convertedto US currency usingan average annual exchangerate
forthe respectiveyear15 andadjustedto 2012 dollars using theBiomedical
Researchand Development PriceIndex.4
b Publicresearchand development funding included thatfrom government
agencies,higher educationalinstitutes, and not-for-profit organizations.
c Industry researchand development funding included pharmaceutical,
biotechnology, and medical devicefirms.
d Compoundannualgrowthrate(CAGR) supposingthatyearA isxand yearB is
y, CAGR = (y/x){1/(BA)}1.
e Global totalfor medical research funding includes researchand development
expenditures from36 majorworld countriesacross 4 continents.
f Other Asia includes India,Singapore, and SouthKorea.
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cline in real terms, combined with companies focus on late-stage
products(with diminished discovery-level investment)indicate that
difficulties may soon appear in the ability of clinicians to fully real-
izethe value of past investments in basic biology.
In addition, the limited support of ambitious but scientifically
rigorous methods to improve delivery of health services repre-sentsamajormissedopportunitytoimprovemanyaspectsofhealth,
especially as the burden of chronic illness, aging populations, and
theneed formore effectiveways to deliver care areappreciated.1
Overthe past 2 decades,the periodof thisanalysis,medicalre-
searchhasbecomeglobal.Ithasbeentransformedbymultiple,com-
plex and subtle transitions, from small laboratories to large, in-
dustrial-scale institutes, from hypothesis-driven inquiries to data-
drivencompilations, fromexperimentsby singleindividualsto those
requiringlargeteams, and from finding causesof specific diseases
to learning how entire systems become disordered.21
The information assembled demonstrates that 3 factors, wa-
vering financialsupport for science, underinvestment in service in-
novation, and globalization, pose the chief challenges of the cur-
rent era.
Biomedical ResearchNew knowledge about disease has a 15- to 25-year gestation from
basic discovery to clinical application, an interval that may be
lengthening.22,23 Hence, the cumulative investment in biomedical
research of the past 3 decades will soon mature. Therefore, ensur-
ingsufficientsupportforitsclinicaldevelopmentisapressingneed.
Equally important are stable academic institutions and companies
along with skilled researchers that have the capability to organize
theresearchprocessand to sustainthe innovation cycle,24particu-
larly since the size of research teams and scale of activities have
grown.Year toyear variabilityin funding is a threatto that stability.
Figure 9.Top 10 Countriesby Sizeof Science and Technology Workforce, 1996-2011
1400
1200
1000
800
600
400
200
0
Full-timeEquivalents,in
Thousands
Chinac
6.0
UnitedStates
2.7
Japan
0.4
RussianFederation
1.5
Germany
2.6
UnitedKingdom
3.7
Korea
7.4
France
3.2
Canada
3.8
Spain
6.4
Work force sizeaA
1996
2011
Compound annual growthrate, % (1996-2011)b
12
10
8
6
4
2
0
No.per1000TotalEmployment
Korea
6.2
Japan
0.5
France
2.5
Canada
2.2
UnitedStates
1.8
Germany
2.2
UnitedKingdom
2.9
RussianFederation
2.1
Spain
4.1
Chinac
5.2
Work force size per 1000 total employmentB
1996
2011
Compound annual growth
rate, % (1996-2011)b
Thesizes of national science and technology workforces wereobtainedfrom
the Organisation for EconomicCo-operationand Development.16
a Workforce sizewas measured in number of full-time equivalentsand includes
all science and technologysectors(eg, engineering, physical sciences) in
addition to themedical and health sciences.
bCompoundannualgrowthrate(CAGR) supposingthatyearA isxand yearB is
y, CAGR = (y/x){1/(BA)}1.
c Annualgrowth in Chinas science and technology workforce may be
underestimatedbecause of a change in reportingmethodsfor Chinain 2009.
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Althoughthe biomedicalresearch enterpriseis basicallyhealthy,
to fully capture theclinicalvalue of past investment in science and
itspromisefor thefuture,2 areas require particularattention: (1)in-
creased financial support for critical early studies that validate ba-
sic biological discoveries and demonstrate their relevance to dis-
ease (establishing proof of concept) and (2) greater productivity,
especially acceleration of the application of new findings to dis-
ease.
Financing ThatCan Sustain Long-termInvestmentIn the United States and Europe, private companies will not likely
havethe latitude fromtheir investors, or governments the political
will,to continueto make long-terminvestments at historical levels.
Todays politicaland commercial environment leadsto thisconclu-
sion. Many new basic discoveries that have probable clinical value
are stymied by financialconstraintsat the critical proof-of-concept
stage, where utility in humans is demonstrated. That number can
be expected to increase onceplatformtechnologies(such as high-
resolutionmapping of thecentralnervoussystem,analysis of com-
plex biological systems and networks, or insights into develop-
mentof cell maturation and differentiation) showpotential clinical
value. This is an unfortunate paradox because many of the dis-
easesassociated withsubstantial morbidity andmortalitymay ben-
efit themost from these newdiscoveries.
Variousnew sourcesfor long-terminvestmentshave beenpro-
posed. Most often, public fundshavebeen sought,by expansion of
the NIH budget, appropriationsby state legislatures, or earmarked
federal appropriations for threatened epidemics or defense-
relatedbiologicalrisks.Mostadvocateslookto governmentfor sup-
portof high-risk, early-stage research,given privatecompanies fo-cuson developmentof newtechnologies attheirlater stage.Private
foundations andpubliccharities, thoughsmall,playan essentialrole
in filling thatgap, especially for the mostspeculative undertakings
or where commercial incentives areinsufficient. However, it is un-
likely that these conventional sources of research investment will
be sufficient tomeet thechallengesof anaging population, theag-
gregate burdenof disease, or thepromise of emerging science.
The reduced funding of large pharmaceutical and biotechnol-
ogy companieson early, basic, discovery-stage research (with con-
comitant growth of late-stage clinical trials) is apparent from our
Figure 11.US LifeSciencePatentApplicationsby Country of Origin, 1981-2011
100
80
60
40
20
0
Percentage
80000
60000
40000
20000
0
No.
Year
1981 1991 2001 2011
Other
Netherlands
China
Taiwan
Switzerland
Korea
Great Britain
Germany
Japan
United States
France
No. of patent application familiesin life science by country of inventor a
Year
1981 1991 2001 2011
Other
Netherlands
China
Taiwan
Switzerland
Korea
Great Britain
Germany
Japan
United States
France
Percentage distributionby country of inventor
Thenumber of patent application
families by country was calculated
counting the mostrecentapplication
in familyof patents based ondata
obtained fromThomsonInnovation.17
Data areincludedfor allcountries
available inthe Thomsondata set.
a Life science wasdefinedto include
thefollowingcategories: analysis of
biological materials, medical
technology, organic fine chemistry,
biotechnology, pharmaceuticals,macromolecular chemistryand
polymers,and microstructural and
nanotechnology.
Figure 10.Global LifeSciencePatentApplicationsby Country of Origin, 1981-2011
400000
300000
200000
100000
0
No.
Year
1981 1991 2001 2011
Other
Germany
Japanb
Russia
TaiwanIndia
Australia
Korea
United States
China
Canada
No. of patent family applicationsin life sciencea
100
80
60
40
20
0
Percenta
ge
Year
1981 1991 2001 2011
Other
Germany
Japanb
Russia
TaiwanIndia
Australia
Korea
United States
China
Canada
Percentage distribution by country
Thenumberof patentfamilyapplicationsby country filed wascalculatedbased
on data obtained fromThomsonInnovation.17 Onlythe mostrecentpatent
application ina patentfamily wascountedforthis analysis.Dataare included for
allcountries available in theThomson data set.
a Lifescience was defined to include thefollowingcategories: analysis of
biologicalmaterials,medical technology, organic fine chemistry,
biotechnology, pharmaceuticals,macromolecularchemistry and polymers,
and microstructural and nanotechnology.
b Onlypatent grants, not all patent applications, are counted forJapan, which
tends toward patent applicationswith narrowerdefinitions and therefore
muchgreaternumbers relative to the number of patents ultimately granted.
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Figure 12. Highly ValuableUS LifeSciencePatentsby Country of Origin, 1981-2011
8000
6000
4000
2000
0
No.
Year
1981 1991 2001 2011
Other
China
Netherlands
Korea
CanadaSwitzerland
France
Germany
Japan
United States
Great Britain
No. of life science patent applicationsin top 10% of patents by inventor countrya,b
100
80
60
40
20
0
Percenta
ge
Year
1981 1991 2001 2011
Other
China
Netherlands
Korea
CanadaSwitzerland
France
Germany
Japan
United States
Great Britain
Percentage distribution of top 10%of patents by country of inventor b
Thenumber of patent applicationfamilies by country was calculated counting
themostrecentapplicationin familyof patents based ondata obtainedfrom
Thomson Innovation.17 Data areincluded forall countriesavailablein the
Thomson dataset.
a Lifescience was defined to include the followingcategories: analysis of
biologicalmaterials,medical technology,organicfine chemistry,
biotechnology, pharmaceuticals,macromolecularchemistry and polymers,
and microstructural and nanotechnology.
bTop10% ofpatents rankedby year usingBCG Quality Index.TheBCG Quality
Indexis made up of3 components; specifically, forward citationsof a patentin
newerpatents adjustedfor thepatents age, thenumberof patentclaims, and
the strengthof a patentsbackwardcitations. Thecomponents and
correspondingweights usedby the quality indexare a product of proprietary
Boston ConsultngGroup research.
Figure 13.Medical ResearchArticlesand Citations by SelectedCountries/Regions, 2000-2010
400000
300000
200000
100000
0
No.
2000 2009
Otherb
Other Asiac
China
Japan
European Uniond
Overall
United States
No. of Medical
Research Articles
2000
49946
10029
3937
26755
114970
321795
116156
2009
63483
20790
18399
21477
120421
367229
122659
Annual
Growth Rate, %a
2000-2009
1.5
2.7
8.4
18.7
2.4
0.5
0.6
No. of medical research articlesA
Year
12000
10000
8000
6000
4000
2000
0
No.
2000 2009
Otherb
Other Asiac
China
Japan
European Uniond
Overall
United States
No. of Highly Cited
Medical Research
Articles
2000
763
20
16
345
2079
8626
5402
2010
1034
113
82
294
2936
10189
5729
Citation Index
of Highly
Cited Articles
2000
NA
0.57
0.1
0.22
0.5
0.68
1.67
2010
NA
0.59
0.22
0.22
0.45
0.86
1.63
Compound
Annual Growth
Rate (Citation
Index), %a
2000-2009
NA
0.4
8.6
0.3
1.0
2.5
0.2
No. of highly cited medical research articlesB
Year
NA indicates notavailable.Medical researchwas defined as thelifesciencesand
psychology, excludingagricultural science. Article counts reportedby the
National Science Foundationwere fromthe Thomas Reuters Science Citation
Indexand Social Science Citation Index,18 classifiedby year of publicationand
assigned tocountries onthe basis ofinstitutional addresseslisted oneach
article.Articleswerecounted ona fractional basis;ie, forarticles with
collaborating institutions frommultiple countries,each country received
fractionalcredit on the basisof proportionof its participating institutions.
Citationswerebasedon a 3-yearperiodwith 2-year lag; eg,citations for2000
arereferences made inarticles in 2000 toarticlespublishedin 1996-1998.The
citationindexof highlycitedarticles wasdefinedas theshare ofthe worlds top
1% citedbiomedical researcharticles divided bythe shareof theworlds
biomedicalresearcharticles in the citedyear window.
a Compoundannualgrowthrate(CAGR) supposingthatyearA isxand yearB is
y, CAGR = (y/x){1/(BA)}1.
bOtherincludesthe remaining159 nations ofthe world withinthe original
database.
c Other Asia includes India,Indonesia, Malaysia, Philippines,Singapore, South
Korea, Taiwan,and Thailand.
dTheEuropeanUnion includes 27 Europeannations.
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shouldbe aimed atobviating currentlimitationsof theexistingbal-
kanized corporate, venture capital, NIH, and university practices.
Examplesof newmodels arethe BroadInstitutein Cambridge,Mas-
sachusetts (genomics), BioDesign Institute at Arizona State Uni-
versity, Tempe (biomedical engineering), and Allen Institute for
Brain Sciences, Seattle,Washington(neurological and psychiatric
disease). Each of these seeks to optimize individual and institu-
tionalcontributions while ensuringfunding. Eachorchestrates ex-ternal relationships.
Underinvestment in Improving Delivery of Health Services
Investment in new ways to deliver better, more effective, and less
expensive medical care has neither economic impetus nor profes-
sional recognition compared with technological innovation or ba-
sic discovery.
Funding for health services research has increased 37% from
$3.7 billion to $5.0 billion over the lastdecade (Figure 6). However,
thisgrowthhasoccurredonaverysmallbase.Totalfundingforhealth
services research is 0.3% of total health care funding (eFigure 1 in
the Supplement) compared with 4% toward new drugs and de-
vices.Thatis, theUnited States spends$116billion on research aimed
at 13% of total health care costs but only $5.0 billion aimed at the
remaining 87% of costs.1
Why the disparity in investment? One major difference is that
new drugs anddevices command favorable prices, and their value
accrues directly to the firm that invests in them. In contrast, ser-
vice innovations canreducemorbidity andmortality while also re-
ducing cost, butfinancial returns toinnovatorsmay be negligible or
even negative.Forexample, asshown byArriagaet al32and Prono-
vost and Wachter,33procedure checklists andother simple precau-
tions are effectivebut may result in lower paymentsto hospitals.34
This mismatch between who invests (the hospital) and who is re-
warded(the insurer) is a fundamental barrier, even thoughclinical
benefitisenormousandtotalsavingsmayexceedthereturnonmany
categories of blockbuster drugs.35
Three other factors pose barriers:
Behavior change.Disruptionofthecurrentpatternsofcareisthreat-
ening to physicians and hospitals, even when shown to produce
comparable or better clinical outcomes, higher patient satisfac-
tion, andlowercost than traditionalcare.36Examplesinclude tele-
medicine, daily monitoring, and intensive in-home services.
Data quality. Claims databases, electronic medical records, and
other sources of clinical information are not yet sufficiently reli-
ableto informresearch.Recentinitiatives areaimed at linking sepa-
rate sources of data and introducing standards to support
research34-37 and are a specific goal of international measure-
mentcollaborationsfor chronic illnesses (eg,the International Con-
sortium for Health Outcomes Measurement),
38
and alliancesamong insurers, hospitals, and clinicians for the most severely ill
patients (eg, Wellpoint/Emory Health).39
Communications. Clinicalservice innovation is moredifficultthan
the introduction of a new drug or procedure because it requires
manyindividualsto adjust theway theyinteract, communicate, and
useinformation.Moreover,tohaveanyeffect,culturechangemust
occur throughout large, hierarchical organizations. Cultural barri-
ersare potentreasons whysmall-scale demonstrationprojectsare
rarely generalized,even whenthey areinitially effective.40There-
fore, research should focus on devising reliable, effective inter-
ventionsthat sustainbetter practices,with lessons adopted from
other complex organizations (eg, military or transportation).
Neither the organizations norfinancesexist to innovate on the
scale required. Small, incremental federal or foundation grants are
an ineffective spur of sustainedchange in clinical practice because
behavioraland culturalissues remainunaddressed.It is unlikelythat
recent federal and state risk sharing (accountable care organiza-
tions)orotherincentiveswillprovetobeadequateforthesamerea-son.Therefore, morefundamental changes are needed. In particu-
lar, 3 changes should be considered.
Additional investment by insurers and health systems in delivery
innovation to bring them to the median of other service indus-
tries. This increment could produce an annual influx of $8 billion
to$15 billion,potentiallyquadruplingthe levelof effortoverall,and
can be funded from administrative simplification and savings.
Sharply increasing federal support of service sector innovation,
which canbe channeled through theCenters forDisease Control
and Prevention, Public Health Service, AHRQ, Centers for Medi-
care& Medicaid (CMS), Patient-Centered Outcomes ResearchIn-
stitute,and NIH. Fundsmightbe generatedby allocating 50%all
savings generated over the next decade by CMS demonstration
projects andby creatingnew regionalprivatehospitalphysician
insurer innovationconsortia toundertake wholesale changein de-
livery.
Encouragementofnewentrantswhoarepreparedtomakebasic,
highly disruptive changes in service delivery (via tax credits and
other incentives thatare comparable withthosenow available for
investment in plant and equipment). Examples now on the hori-
zon include provision by pharmacies of chronic disease care (for
hypertension and depression) and use of simple self-monitoring
technologies linked by a ubiquitous internet-of-things to auto-
mated artificialintelligence agents forasthmaand diabetescon-
trol. Such examples are threatening to many physicians andhos-
pitals but have the potential to lowercosts and improve quality.41
The Challenge of Globalization
Biomedical science and improved health are tied closely to growth
of a countrysgeneral economy.42Theprimacyof theUnited States
as the source of biomedicaltechnology (anduntil recently, longev-
ity)has correspondedwith a 4-decade-long improvement inreal per-
sonal incomes. In turn, investment in science and technology has
been a potent force producing higher personal incomes and total
GDP,withthelongerlifeexpectancythatwasachievedbetween1970
and1990estimatedtohaveaddedabout35%toUSGDPby2000.43
Some have suggested thata domestic, US-centric perspective
is antiquatedand parochial in an era of globalization becausepeople,
ideas,capital,andinformationarehighlymobile.44TheUnitedStates
hasbeen theworlds leader for6 decades in investment in scienceand technology research and development. In 2012, the United
States spent$366 billionon allresearchand development,or 2.8%
of GDP.45 However, the UnitedStates declined from sixth in 2000
to 10th in 2012 in its proportion of research and development in-
vestment compared with the 34-country Organisation for Eco-
nomic Co-operation and Development. In Asia, South Korea and
Chinanoweachspendabout2%ofGDP,withChinaexpectedtosur-
pass theUnited States in absolute funding withina decade.45 This
trend,along withaggressivepatent practices bysomecountries(no-
tablyChina)ordisregardofintellectualpropertyrights(inAfrica,Cen-
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tral Europe, and India), raise barriers to the diffusion of clinical in-
novations between countries.
Two areas are ofparticular concern:erosionof thepublicssup-
portforscienceintheUnitedStatesandhesitancytoreformthepat-
ent system.
PublicOpinion
Recent polls show erosion of public support for biomedical re-searchcomparedwithother priorities. Supporthas declinedsteadily
since 2000 and is now well behind concerns about the economy,
domestic security, immigration, crime, and the US role in interna-
tionalaffairs.46,47The trendis not confinedto the UnitedStatesbut
is alsoevidentin Europe. Despitethe demonstrablesuccessesof ear-
lierdecades,theprimacyofscienceasthesourceofimprovedhealth
is todayquestioned because of theconvergence of several forces.
First,despitebold promises, advances visibleto thepublichave
been less frequent because solutions to many conditions like au-
tism, Alzheimerdisease, andmost cancersremain elusive,with nei-
ther effective prevention nor treatment, despite intensive re-
search. Second, drug discovery has proven more difficult and less
predictable than many hadexpected,witha decline overthe past 2
decades in altogether newclasses of drugs,new registrations, and
drugsin clinicaltrials.Third,the economicsof medical advancesare
being scrutinized as a source of added insurance cost, with grow-
ing pressure to justify clinical value using objective criteria, formal
tools of technology assessment, and consideration of quality-of-
lifemeasures separatelyfrom thosethat affectmortality.Some tech-
nology skeptics have evenurgedthatthe United Statestakea tech-
nologyholiday for a decade, suggesting that the money saved be
spent on ensuring that everyone receives existing preventive and
therapeutic means, even if this slows scientific discovery.48
Such tensions are perhaps inevitable, given the high cost and
poorperformanceof US health careas judged by international mor-
tality comparisons. Skepticismof medical research is evident in re-
cent US budget discussions, which have favored the physical sci-ences as faster, reliable, and more predictable routes to US
competitiveness than the uncertainties of medicine. Also, medical
devices and new manufacturing practices for large-molecule bio-
pharmaceuticals areheavilydrivenby engineeringadvances, which
in turn depend more on the physical sciences and less on the bio-
logical sciences.Thesetrends imply that pressure will mount to di-
vertresources away fromchallenging buthigh-potentialavenuesin
biology.
Patents and Intellectual Property
As this analysis demonstrates, at the same time support for bio-
medical research in theUnited States haswavered, globalinterest
in biomedicalresearch is increasing.
49
Asia andEurope arenow onparwiththe UnitedStatesin therelativenumber ofresearchers, and
Asia, especially China, is making rapid gains in life science patents
andhighlycited publications. Althoughthe United States is farfrom
losing its preeminent role in biomedical research, similar historical
changeshave occurredin other industries (eg,electronics, automo-
biles, industrial manufacturing) thatover time reshaped the coun-
trys competitiveness. Many in the United States applaud the new
interest in other countries as a reflection of the truly international
reach of science, since discoveriesmade anywherecan be ap-
plied here. This optimistic view neglects the strong barriers cre-
atedby intellectualpropertypractices,which reward patenting any
discovery or technique, no matter how incremental or trivial.
Apatentsprimarypurposeistofosterinnovationbymakingnew
knowledge generally available in order that successors may im-
proveontheoriginalinvention.Inreturn,theinventorreceivesatem-
porarymonopoly. Recently, however, patentshave beenused tocap-
turefinancialvalueofadiscoveryorproductattheexpenseoffurther
invention, a practice known as rent-seeking. Current intellectualproperty practices inhibit rather thanenhance biological discovery
and clinical innovation.50
Several factors bear on the global pattern we observed in this
analysis: patents on basic discoveries before utility is demon-
strated (such as of cancer-related genes), tying surgical proce-
dures (such as deep brain stimulation) to specific patented de-
vices, abuseof thelitigationprocess by patent aggregators(known
formallyas nonperforming entities orpejorativelyas patenttrolls),
andthehighcostof patentfiling anddefensein multiple countries.
Universitiesandinvestigatorsalike seethat patentingearly-stagedis-
coveriesrarelyresultsin financial returns becausecostsexceedroy-
alty revenue, except for occasional, high-value findings, which are
serendipitous and economically unpredictable.
Threechangescan alignintellectualproperty protections with
incentives forsubstantive, clinically important advancesand would
be accomplishedby changes to current federal law.51,52
Defer patents to later in thediscovery chain, awardingto the en-
tity demonstrating clinical utility as well as the inventor. Because
costs aregreatestand riskshighest to those whofinanceand con-
duct later-stage clinical development, those risks should be re-
flected in intellectual property protections.
Ensure that patents are granted only for truly novel, not just in-
cremental, technologies, withclinicalprocedures remainingin the
public domain.
Establish patent pools, which allow innovators to share value and
cost to encourage free exchange of information and set technol-
ogy standards. Patent pools haveoperatedsuccessfully sincethe19th century and are today common in semiconductors, aero-
space, and entertainment.51,53
Taken together, these changes could foster fundamental, not
incremental,innovation andcould facilitate moreeffective collabo-
rations. They are also prerequisites for generating new sources of
investment.
Conclusions
The informationassembled inthis article does notdo justice tothe
breadthanddepthofmedical researchin theUnitedStates andother
countries. For anycurrent orfuturepatient,research provides hope.Forthe researcher, unanswered biologicaland clinicalquestionsare
endlessly fascinating.For a company or its investors, new products
and services promise financial return, often at levels greater than
other industries.For thepolicymaker, biomedicalresearch isa route
tonationalcompetitivenessas well asto enhancedpublic healthand
economic vitality.
Our perspective for this examination has been primarily eco-
nomic, although the value of research surely is not solely eco-
nomic. Therefore, in our view, biomedical science and technology
must be seen in a broader context, with its myriad roles recog-
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nized: as a source of competitiveness on theinternational stage; as
a vehicle tosatisfy curiosity; asa meansto provide realistichopeto
patientsand familieswho mustconfront grave conditions. Noneof
thoseroleswillnecessarilybereflectedinreducedhealthcarecosts.
Therefore, a newcalculus isrequired toweighthemas decisions of
cost andvalueare made.
Clearly,thepaceofscientificdiscoveryandneedforserviceim-
provement have outstripped the capacity of current financial andorganizational models to support the opportunities afforded.
Theanalysis underscores theneed forthe United States to find
newsources to support medical research,if theclinicalvalue of its
past science investment and opportunities to improve care are to
be fully realized. Substantial new private resources are feasible,
thoughpublic funding canplay a greater role.Bothwill require non-
traditionalapproaches if theyare to be politically and economically
realistic.Givenglobaltrends, theUnitedStateswillrelinquishits his-
toricalinnovationlead in thenext decade unless suchmeasuresareundertaken.
ARTICLE INFORMATION
Author Contributions: DrMoseshad full accessto
allof thedatain thestudy andtakes responsibility
fortheintegrity ofthe data andthe accuracy ofthe
data analysis. Dr George and Mr Palisch contributed
equally.
Study concept and design: Moses, Matheson,
Cairns-Smith, Dorsey.
Acquisition, analysis, or interpretation of data: All
authors.
Drafting of the manuscript: Moses, Matheson,
Cairns-Smith, George, Palisch.
Critical revision of the manuscriptfor important
intellectual content: All authors.
Statistical analysis: Moses, George, Palisch.
Administrative, technical, or material support:
Moses, Matheson, Cairns-Smith,Dorsey.
Study supervision: Moses, Matheson, Cairns-Smith,
Dorsey.
Conflict of Interest Disclosures: All authors have
completedand submitted theICMJE Form for
Disclosureof PotentialConflicts of Interest.Dr
Moses reports membership in a variety of
foundation andcompanyboards in healthcareand
financial services. Dr Moses, Messrs Matheson and
Palisch, and Dr Cairns-Smith report providing
management consultingservices to hospital
systems, insurers,foundations, and
pharmaceutical, device, and IT companies.DrDorsey reports consultancyfor Amgen, Avid
Radiopharmaceuticals, Clintrex, Lundbeck,
Medtronic,the National Instituteof Neurological
Disordersand Stroke,and TransparencyLife
Sciences;a filed patent related to telemedicine and
neurology;and stock/stock options in Grand
Rounds (a second opinion service). No other
disclosureswere reported.
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