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Special Communication | Scientific Discovery and the Future of Medicine

The Anatomy of Medical Research US and International Comparisons

Hamilton Moses III, MD1,2; David H. M. Matheson, JD, MBA3; Sarah Cairns-Smith, PhD3; Benjamin P. George, MD, MPH4; Chase Palisch, MPhil3,5; E. Ray Dorsey, MD, MBA4
[+] Author Affiliations
1The Alerion Institute and Alerion Advisors LLC, North Garden, Virginia
2Johns Hopkins School of Medicine, Baltimore, Maryland
3Boston Consulting Group, Boston, Massachusetts
4University of Rochester School of Medicine, Rochester, New York
5Stanford University School of Medicine, Stanford, California
JAMA. 2015;313(2):174-189. doi:10.1001/jama.2014.15939.
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Importance  Medical research is a prerequisite of clinical advances, while health service 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 citation rates and impact factors.

Findings  (1) Reduced science investment: Total US funding increased 6% per year (1994-2004), but rate of growth declined to 0.8% per year (2004-2012), reaching $117 billion (4.5%) of total health care expenditures. Private sources increased from 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 health care expenditures) or only 1/20th of 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 increment of $8 billion to $15 billion yearly would occur if service firms were to reach median research and development funding. (3) Globalization: US government research funding declined from 57% (2004) to 50% (2012) of the global total, as did that of US companies (50% to 41%), with the total US (public plus private) share of global research funding declining from 57% to 44%. Asia, particularly China, tripled investment from $2.6 billion (2004) to $9.7 billion (2012) preferentially for education and personnel. The US share of life science patents declined from 57% (1981) to 51% (2011), as did those considered most valuable, from 73% (1981) to 59% (2011).

Conclusions and Relevance  New investment is required if the clinical value of past scientific discoveries and 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 international trends, the United States will relinquish its historical international lead in the next decade unless such measures are undertaken.

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Figure 1.
The Anatomy of Medical Research: US and International Comparisons

EMA indicates European Medicines Agency; FDA, US Food and Drug Administration.

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Figure 2.
US Funding for Medical Research by Source, 1994-2012

Data were calculated according to methods outlined in eTable 1 in the Supplement. ARRA indicates American Recovery and Reinvestment Act.

aData were adjusted to 2012 dollars using the Biomedical Research and Development Price Index.4

bThe National Institutes of Health and other federal sources include stimulus provided by ARRA in 2009 and 2010.

cData from 1994-2002 and 2011-2012 were estimated based on linear regression analysis of industry market share.

dCompound annual growth rate (CAGR) supposing that year A is x and year B is y, CAGR = (y/x){1/(B−A)}−1. The CAGR was calculated separately for 2 different periods with a single overlapping year: 1994-2004 and 2004-2012. The cut point was chosen at 2004 given the changes seen in funding from the National Institutes of Health in that year.

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Figure 3.
Growth in US Funding for Medical Research by Source, 1994-2012

Data were calculated according to methods outlined in eTable 1 in the Supplement.

aAdjusted to 2012 dollars using the Biomedical Research and Development Price Index.4

bCompound annual growth rate (CAGR) supposing that year A is x and year B is y, CAGR = (y/x){1/(B−A)}−1.

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Figure 4.
Pharmaceutical Industry Medical Research Funding by Phase of Research, 2004-2011

Pharmaceutical industry funding by phase was obtained from Pharmaceutical Research and Manufacturers of America (PhRMA) annual reports, 2004-2011.6 Data were 2 years old at time of publication and include both domestic and international research funding from PhRMA members.

aData were adjusted to 2012 dollars using the Biomedical Research and Development Price Index.4

bCompound annual growth rate (CAGR) supposing that year A is x and year B is y, CAGR = (y/x){1/(B−A)}−1.

cUncategorized funding could not be allotted to a single phase of research.

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Figure 5.
Compounds in Development for Top 10 Therapeutic Areas, 2013

Data for the number of compounds in development were from the Citeline Pharma R&D Annual Review 2014.10 Data for rare diseases were from the Pharmaceutical Research and Manufacturers of America.11

aNumber of compounds in clinical trials or under review by the US Food and Drug Administration. This includes a total of 10 479 compounds in 2013.

bIncludes all nonimmunological anticancer compounds.

cRare diseases were defined as those affecting 200 000 or fewer people in the United States.

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Figure 6.
US Funding for Health Services Research by Source, 2004-2011

AHRQ indicates Agency for Healthcare Research and Quality; NIH, National Institutes of Health. Data were calculated according to methods outlined in eTable 5 in the Supplement.

aAdjusted to 2012 dollars using the Biomedical Research and Development Price Index.4

bCompound annual growth rate (CAGR) supposing that year A is x and year B is y, CAGR = (y/x){1/(B−A)}−1.

cHealth services industry includes funding from hospitals, ambulatory health care services, nursing and residential facilities. Health insurance companies were not included. Data may not fully capture the entirety of funding for health services research and quality improvement initiatives for the US health care services industry.

dOther federal funding includes the Centers for Disease Control and Prevention, Centers for Medicare & Medicaid Services, Veterans Health Administration, Health Resources and Services Administration, and Patient Centered Outcomes Research Institute (in 2011 only).

eFoundation funding includes total giving from the Robert Wood Johnson Foundation, California Endowment, Pew Charitable Trusts, W. K. Kellogg Foundation, and Commonwealth Fund.

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Figure 7.
Research and Development Investment Ranking of Industrial Sectors Among US-Based Companies, 2011

Research and development expenditures for US-based companies performing research by the industrial sector were obtained from the National Science Foundation.13 Data include research funds spent both domestically and abroad. Industry revenues were obtained from the National Science Foundation13 or US Census Bureau14 based on the availability of data. Revenues and research and development expenditures were matched by industry using North American Industry Classification System codes.

aThe pharmaceuticals and biotechnology, medical devices, and health care services industries are highlighted in red.

bAdjusted to 2012 dollars using the Biomedical Research and Development Price Index.4

cHealth care services industry includes US-based hospitals, ambulatory health care services, and nursing and residential facilities.

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Figure 8.
Global Medical Research Funding in Select Countries/Regions, 2011

The regions/countries/economies in the analysis include the major countries of North America (United States, Canada), Europe (including the 10 largest European countries in the Organisation for Economic Co-operation and Development), and Asia-Oceania (Australia, China, India, Japan, Singapore, and South Korea). Data for African and South American countries and Russia were not available. Data were calculated according to methods outlined in eTable 6 in the Supplement.

aData were converted to US currency using an average annual exchange rate for the respective year15 and adjusted to 2012 dollars using the Biomedical Research and Development Price Index.4

bPublic research and development funding included that from government agencies, higher educational institutes, and not-for-profit organizations.

cIndustry research and development funding included pharmaceutical, biotechnology, and medical device firms.

dCompound annual growth rate (CAGR) supposing that year A is x and year B is y, CAGR = (y/x){1/(B−A)}−1.

eGlobal total for medical research funding includes research and development expenditures from 36 major world countries across 4 continents.

fOther Asia includes India, Singapore, and South Korea.

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Figure 9.
Top 10 Countries by Size of Science and Technology Workforce, 1996-2011

The sizes of national science and technology workforces were obtained from the Organisation for Economic Co-operation and Development.16

aWorkforce size was measured in number of full-time equivalents and includes all science and technology sectors (eg, engineering, physical sciences) in addition to the medical and health sciences.

bCompound annual growth rate (CAGR) supposing that year A is x and year B is y, CAGR = (y/x){1/(B−A)}−1.

cAnnual growth in China’s science and technology workforce may be underestimated because of a change in reporting methods for China in 2009.

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Figure 10.
Global Life Science Patent Applications by Country of Origin, 1981-2011

The number of patent family applications by country filed was calculated based on data obtained from Thomson Innovation.17 Only the most recent patent application in a patent family was counted for this analysis. Data are included for all countries available in the Thomson data set.

aLife science was defined to include the following categories: analysis of biological materials, medical technology, organic fine chemistry, biotechnology, pharmaceuticals, macromolecular chemistry and polymers, and microstructural and nanotechnology.

bOnly patent grants, not all patent applications, are counted for Japan, which tends toward patent applications with narrower definitions and therefore much greater numbers relative to the number of patents ultimately granted.

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Figure 11.
US Life Science Patent Applications by Country of Origin, 1981-2011

The number of patent application families by country was calculated counting the most recent application in family of patents based on data obtained from Thomson Innovation.17 Data are included for all countries available in the Thomson data set.

aLife science was defined to include the following categories: analysis of biological materials, medical technology, organic fine chemistry, biotechnology, pharmaceuticals, macromolecular chemistry and polymers, and microstructural and nanotechnology.

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Figure 12.
Highly Valuable US Life Science Patents by Country of Origin, 1981-2011

The number of patent application families by country was calculated counting the most recent application in family of patents based on data obtained from Thomson Innovation.17 Data are included for all countries available in the Thomson data set.

aLife science was defined to include the following categories: analysis of biological materials, medical technology, organic fine chemistry, biotechnology, pharmaceuticals, macromolecular chemistry and polymers, and microstructural and nanotechnology.

bTop 10% of patents ranked by year using BCG Quality Index. The BCG Quality Index is made up of 3 components; specifically, forward citations of a patent in newer patents adjusted for the patent’s age, the number of patent claims, and the strength of a patent’s backward citations. The components and corresponding weights used by the quality index are a product of proprietary Boston Consultng Group research.

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Figure 13.
Medical Research Articles and Citations by Selected Countries/Regions, 2000-2010

NA indicates not available. Medical research was defined as the life sciences and psychology, excluding agricultural science. Article counts reported by the National Science Foundation were from the Thomas Reuters Science Citation Index and Social Science Citation Index,18 classified by year of publication and assigned to countries on the basis of institutional addresses listed on each article. Articles were counted on a fractional basis; ie, for articles with collaborating institutions from multiple countries, each country received fractional credit on the basis of proportion of its participating institutions. Citations were based on a 3-year period with 2-year lag; eg, citations for 2000 are references made in articles in 2000 to articles published in 1996-1998. The citation index of highly cited articles was defined as the share of the world’s top 1% cited biomedical research articles divided by the share of the world’s biomedical research articles in the cited year window.

aCompound annual growth rate (CAGR) supposing that year A is x and year B is y, CAGR = (y/x){1/(B−A)}−1.

bOther includes the remaining 159 nations of the world within the original database.

cOther Asia includes India, Indonesia, Malaysia, Philippines, Singapore, South Korea, Taiwan, and Thailand.

dThe European Union includes 27 European nations.

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Figure 14.
Market Performance of Publicly Traded Life Sciences and Health Care Companies, 2003-2013

NYSE indicates New York Stock Exchange. Data on market performance was accessed from Bloomberg market data. Market performance was calculated as the return on investment of US $100 on January 3, 2003, at various future time points. More detail regarding the indexes can be found at Standard & Poor’s Dow Jones and New York Stock Exchange sector classifications.19,20

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