U.S. Medical and Health R&D Investments Unsteady Over Three Year Period

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Total U.S. investment in medical and health R&D grew by 13.3% from 2013 to 2015, led by industry and the federal government, according to U.S. Investments in Medical and Health Research and Development, a new report from Research!America, a nonprofit public education and advocacy alliance.

Federal and industry investments fluctuated over the three year period, likely reflecting destabilizing forces like sequestration, automatic spending cuts and the medical device excise tax. Foundations, voluntary health associations and professional societies increased their level of spending over the three-year period. Despite overall growth in investments, the U.S. currently spends less than five cents of each health dollar on R&D (4.93%), a press release from Research!America notes.

“Without sustained growth in R&D investments across the board, we won’t be able to find solutions for the many health challenges that plague us and contribute to rising health care costs,” said Research!America’s chair, former Congressman John E. Porter. “Robust federal investments play a pivotal role in strengthening our nation’s research ecosystem, and such investments catalyze private sector innovation.”

Industry, including pharmaceutical, medical technolo­gy, biotechnology and health IT companies, accounted for the largest share of U.S. investment in medical and health R&D (65%). The medical technology sector experienced a decline in investments from 2014 to 2015, likely reflecting the impact of merger and acquisition activity and the medical device tax.

Federal government expenditures increased 5.4% in 2013-2014, an apparent “bounce-back” from sequestration enacted in 2013.  Aside from funding for specific initiatives such as the Ebola response, federal spending grew modestly by 1.4% from 2014 to 2015.

“Steady growth in federal R&D investments is critical to overcoming the ravages of cancer and Alzheimer’s, developing vaccines for Zika and other global health threats,” said Mary Woolley, president and CEO of Research!America. “Industry investments and funding from other sectors cannot compensate for inadequate federal funding.”

A majority of federal investment (82.5%) is channeled through the National Institutes of Health (NIH), which funds R&D at universities and businesses in every state, as well as at NIH’s campuses. NIH accounted for 18.7% of total U.S. medical and health R&D expenditure in 2015; each of the other federal agencies in this category contributed less than 1% to total U.S. medical and health R&D.

Investments from voluntary health associations, professional societies, foundations and state and local governments increased 8.3% from 2013 to 2014 and 16.8% from 2014 to 2015. Universities grew their investments substantially by more than 20% from 2013 to 2015 while independent research institutes increased their spending modestly by just over 3% each year.

“Moving forward, federal policymakers must be more strategic with R&D spending to draw on the power of both the public and private sector to assure faster medical progress,” Woolley added.

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