The Anatomy of Medical Research:  US and International Comparisons FREE

The promise of new drugs, vaccines, medical procedures, and devices captures the imaginations of the public, scientists, and physicians alike. For the last century, medical research, including public health advances, has been the primary source of and an essential contributor to improvement in the health and longevity of individuals and populations in developed countries. The United States has historically been where research has found the greatest support and has generated more than half the world’s funding for many decades. Although US-based companies, foundations, and public agencies have sponsored most research, that research is conducted by an array of autonomous university laboratories, study groups, and coalitions of researchers. This organization contrasts with that found in most other countries, where government laboratories are predominant and where health systems and insurers conduct and finance service innovations directly.

Expectations for medical research vary sharply, depending on the observer’s perspective. For a patient affected by disease, it is a source of hope. For a parent of a child with a serious condition, it evokes both expectation and frustration over the pace of progress. Where a physician may seek a route to better care, an economist sees an engine of growth and a politician sees high-skill jobs and improved national competitiveness. Hospital executives expect research to spawn new services, whereas pharmaceutical CEOs must have new products. An insurance executive doubts instinctively that the value of research will outweigh its incremental cost. A regulator aims for the appropriate amount of risk while still getting innovations that matter to the market. For philanthropists and public health campaigners, research represents the best hope for alleviating the world’s most immediate health-related problems. To a scientist, research deepens critical knowledge and the way intelligence and organized effort can improve health. All of these constituents play a role in how research is funded and brought from bench to bedside. Meeting their collective needs produces a complex set of hurdles.

This Special Communication examines developments over the past 2 decades in the pattern of who conducts and who supports medical research, as well as resulting patents, publications, and new drug and device approvals. We place the United States in an international context to understand the key forces of change and suggest remedies for the various stakeholders to explore as they seek greater benefit for their investment.

We address 3 major trends:

Better understanding of these factors is required if the full promise of the cumulative investment in biomedical science and opportunity for improved services are to be realized.

Information in 8 areas has been assembled to inform the discussion (Figure 1). Two areas involve the current and historical landscape in the United States of investment and employment in medical research, placing the United States in an international context. Two areas examine funding on biomedical and health services research separately. Four areas quantify the value of that investment as judged by resulting patents, publications, drug and device approvals, and public market performance of life science and health service companies.

To describe and document the current anatomy and historical trends of medical research, we assembled an array of information from various data sources. We relied on publicly available data, recalculated those data for display when necessary, reconciled inconsistent sources, and included years for which data are complete (in general, from 1994 to 2012). The Box contains a list of the included and supplementary figures and tables.

Methods were similar to those we have used previously.^1- 3 Additionally, in this study, the 40 largest developed nations were examined using comparable, standard measures of investment, employment, economic value, patents, and publications.

Although reliable international comparisons of biomedical science funding are possible, comparable data for health services research are not available because other countries do not distinguish them from costs of insurance and expenditures on provision of care.

A complete description of methods is included in the footnotes accompanying each table and figure.

In 2012, total US funding of biomedical and health services research was $116.5 billion (Figure 2 and eTable 1 in the Supplement), 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 Supplement). 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 represents 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 investment either slowed or declined over the past 10 years, with the exception 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 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).

The distribution of investments across the types of medical research changed from 2004 to 2011. Pharmaceutical companies shifted funding to late-phase clinical trials and away from discovery activity such as target identification and validation. The share of pharmaceutical industry funding (including that by US companies outside of the United States) spent on phase 3 trials increased by 36% (5%/year growth rate) from 2004 to 2011 (Figure 4), and the share of investment in prehuman/preclinical activities decreased by 4% (2%/year average decline). This shift toward clinical research and development reflects the increasing costs, complexity, and length of clinical trials but may also reflect a deemphasis of early discovery efforts by the US pharmaceutical industry. While industry has shifted funding to clinical trials, the share of NIH contributions dedicated to basic science and clinical research was unchanged (eTable 2 in the Supplement), with the majority of funds still focused on basic research. These data may not accurately reflect the true division of NIH investment for basic science vs disease-focused research, as a growing proportion of NIH expenditures is for projects having potential clinical application in many diseases or organ systems.⁷

In real terms, venture capital investment in biotechnology companies steadily increased from $1.5 billion in 1995 to a peak of $7.0 billion in 2007 (eFigure 3 in the Supplement). During that period, investment in biotechnology companies as a share of total venture capital investment increased from 10% to 18%, and the number of investments increased from 176 to 538. Investment levels and the number of transactions of biotechnology decreased following the financial crisis in 2008-2009, declining to a low of $4.3 billion in 2009. Venture capital investment still has not recovered to its pre-2008 levels, with only $4.5 billion invested in 2013. Size of investment per transaction (median, $11 million, inflation adjusted) has remained unchanged for 2 decades.

Public funding of medical research by condition was only marginally associated with disease 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 Supplement). Several factors other than disease burden may influence funding, including the quality of research, scientific opportunity, portfolio diversification, or building of infrastructure, and the combination of these factors complicates the relationship of 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 few organizations. In 2011, 42% of total not-for-profit funding was by the top 10 public medical charities and top 10 private foundations (eTable 4 in the Supplement). The Howard Hughes Medical Institute (which supports domestic research primarily) and the Bill and Melinda Gates Foundation (which supports international research primarily) account for 87% of biomedical research funding by private foundations (eTable 4, panel B). United States–based medical charities direct most monies in the United States, though the amount spent on research (as opposed to education, disease screening, and other activities) cannot be quantified using public data.

Health services research, which examines access to care, the quality and cost of care, and the health and well-being of individuals, communities, and populations, accounted for between 0.2% and 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 6 and eTable 5 in the Supplement). Investment from foundations 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, ambulatory 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 compared 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 funding, or 1.7%-2.5% of revenue). Health insurers may provide additional health services research funding that cannot be distinguished from the insurance industry as a whole, although these funds are small and unlikely to change the results for industry funding (Figure 7).

Global medical research expenditures by public and industry sources in the United States, Europe, Asia, Canada, and Australia combined increased from $208.8 billion in 2004 to $265.0 billion in 2011, growing at 3.5% annually (Figure 8 and eTable 6 in the Supplement). Although there may be medical research funding from other areas of the world (eg, South America), these data represent the most reliable and current sources of global medical research investment. Among the regions included in the analysis, the United States demonstrated the slowest annual growth in investment (1.5%/year), followed by Europe (4.1%/year) and Canada (4.5%/year). Asian countries increased from $28.0 billion in 2004 to $52.4 billion in 2011, or 9.4% per year, with especially large increases in China, India, South Korea, and Singapore.

These trends resulted in the restructuring of the share of total global investment (eFigure 5 in the Supplement). As a percentage of global funding, the United States declined by approximately 13% from 2004 to 2012, and Asian economies increased by approximately the same share (13% in 2004 to 20% in 2011). Although absolute growth of Asian investment from 2004 to 2011 reached $24 billion, the United States remained the leading sponsor of global medical research in 2011 (44% share), and Europe the next largest sponsor (33% share).

Overall growth was slightly greater for industry outside the United States compared with public sources (4.3% vs 2.2%), and industry accounted for two-thirds of funds in 2011. However, US contributions increased slowly from both public (0.1%/year) and industry sources (1.7%/year).

Public funding in the United States decreased to a 49% share of the world’s public research investment by 2011, down from 57% in 2004 (Figure 8). United States industry, which accounted for nearly half of global industry medical research expenditures in 2004, declined to 41% of global industry funding in 2011 (Figure 8). Japan demonstrated the greatest increase in the world’s share of industry funding (+3.9%), and European countries gained the most in public investment (+3.5%). Despite decreases in the US share of investment, the United States remained the world’s leading sponsor for both public and industry medical research funding in 2011.

From 1996 to 2011, the US science and technology workforce increased by 2.7% annually to reach 1.25 million workers (Figure 9). Over the same period, China’s workforce increased 6% annually to reach 1.31 million workers, making it the largest national science and technology workforce in the world. Reliable information about the proportion of medical researchers could not, however, be obtained.

Although China led the world in the overall size of their science and technology workforce, it had only 1.9 science and technology workers per 100 000 full-time equivalents, the lowest among the countries included in the analysis (Figure 9). The United States employed 8.1 science and technology workers per 100 000 full-time equivalents in its total workforce, or the median for the 10 largest workforces in the world.

The investment in capital terms and in labor terms differ widely across countries and regions. The United States contributes 44.2% of global medical research funding but comprises only 21.2% of the global science and technology workforce (eFigure 6 in the Supplement). Conversely, China contributes only 1.8% of global funding for medical research but comprises 22.3% of the global science and technology workforce. This difference in investment represents a natural experiment in productivity management and has broad implications for patents and intellectual property ownership, which will evolve over the next few years.

China filed 30% of global life science patent applications in 2011, increasing from 1% of global applications in 1991 (Figure 10). This includes applications from a number of patenting offices throughout the world, including offices in China, the United States, and the European Union. The United States followed with 24% of patent filings globally, increasing from an 11% share in 1991.

United States inventors led in the number of life science patent filings in both the United States and EU, where China accounted for less than 2% of filings in both regions (Figure 11 and eFigure 7 in the Supplement). The proportion of US inventors filing patents in the United States decreased from 57% to 51% from 1981 to 2011. During the same period, the share of highly valuable patents filed by US inventors decreased between from 73% to 59% (Figure 12), while all other countries in the analysis increased 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 valuable patents are defined by the frequency they are cited by other inventors in subsequent patent applications (Figure 12, footnote b)

The United States led the world with 33% of published biomedical research articles in 2009 (Figure 13A). In the United States, the number of biomedical research articles increased at 0.6% per year from 2000 to 2009. During the same period, the number of articles published in China increased by 18.7% annually.

The United States also leads the world in its share of the most highly cited biomedical research articles, with 63% of the top cited articles in 2000 and 56% in 2010; however, the growth of highly cited literature published by the United States trails other major countries, regions, and economies (Figure 13B). After controlling for the share of the world’s biomedical research articles using a citation index, the United States declined from 2000 to 2010 at −0.2% per year as the rest of the world increased by approximately 1% per year.

Since 2003, drug approvals by the US Food and Drug Administration (FDA) have remained unchanged with an average of 26 approvals per year. Although drug approvals increased slightly in 2011 and 2012, they returned closer to average in 2013 with 27 approvals (eFigure 9 in the Supplement). United States device approvals have also remained relatively constant over the last decade. While the number of approvals steadily increased from 15 approvals in 2009 to 39 approvals in 2012, only 22 new devices were approved in 2013.

During the same period, the European Medicines Agency (EMA) averaged a higher number of both applications (55/year) and approvals (42/year) than the FDA (eFigure 9). In 2013, the EMA received 22 more applications and approved 16 more drugs than the FDA.

Equity (stock) markets reflect broad public perception of one industry’s value in comparison with others. Since 2003, market return for the entire health care industry (including medical device, pharmaceutical, and biotechnology companies as well as hospitals, nursing homes, and other health service suppliers) as measured by the Dow Jones US Health Care Index increased 8.2% annually, closely trailing the Standard & Poor’s 500 (8.3%) (Figure 14). Market returns for biotechnology and health insurance companies outperformed the market, growing at 18.5% and 13.8% per year, respectively. Medical device companies, pharmaceutical companies, and hospital chains underperformed compared with the Standard & Poor’s 500, increasing annually at 7.3%, 6.8%, and 5.8%, respectively. The financial crisis of 2008 led to a decrease in market performance for all life sciences industries. Generally, all sectors recovered in the years following, and biotechnology companies, hospital chains, and health insurance companies performed exceptionally well since their decline in 2008-2009.

Medical research in the United States remains the primary source of new discoveries, drugs, devices, and clinical procedures for the world, although the US lead in these categories is declining. For example, whereas the United States funded 57% of medical research in 2004, in 2011 that had declined to 44%. Basic research and product 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 decline 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 realize the value of past investments in basic biology.

In addition, the limited support of ambitious but scientifically rigorous methods to improve delivery of health services represents a major missed opportunity to improve many aspects of health, especially as the burden of chronic illness, aging populations, and the need for more effective ways to deliver care are appreciated.¹

Over the past 2 decades, the period of this analysis, medical research has become global. It has been transformed by “multiple, complex … and subtle transitions,” from small laboratories to large, industrial-scale institutes, from hypothesis-driven inquiries to data-driven compilations, from experiments by single individuals to those requiring large teams, and from finding causes of specific diseases to learning how entire systems become disordered.²¹

The information assembled demonstrates that 3 factors, wavering financial support for science, underinvestment in service innovation, and globalization, pose the chief challenges of the current era.

New 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, ensuring sufficient support for its clinical development is a pressing need. Equally important are stable academic institutions and companies along with skilled researchers that have the capability to organize the research process and to sustain the innovation cycle,²⁴ particularly since the size of research teams and scale of activities have grown. Year to year variability in funding is a threat to that stability.

Although the biomedical research enterprise is basically healthy, to fully capture the clinical value of past investment in science and its promise for the future, 2 areas require particular attention: (1) increased financial support for critical early studies that validate basic biological discoveries and demonstrate their relevance to disease (establishing proof of concept) and (2) greater productivity, especially acceleration of the application of new findings to disease.

In the United States and Europe, private companies will not likely have the latitude from their investors, or governments the political will, to continue to make long-term investments at historical levels. Today’s political and commercial environment leads to this conclusion. Many new basic discoveries that have probable clinical value are stymied by financial constraints at the critical proof-of-concept stage, where utility in humans is demonstrated. That number can be expected to increase once platform technologies (such as high-resolution mapping of the central nervous system, analysis of complex biological systems and networks, or insights into development of cell maturation and differentiation) show potential clinical value. This is an unfortunate paradox because many of the diseases associated with substantial morbidity and mortality may benefit the most from these new discoveries.

Various new sources for long-term investments have been proposed. Most often, public funds have been sought, by expansion of the NIH budget, appropriations by state legislatures, or earmarked federal appropriations for threatened epidemics or defense-related biological risks. Most advocates look to government for support of high-risk, early-stage research, given private companies’ focus on development of new technologies at their later stage. Private foundations and public charities, though small, play an essential role in filling that gap, especially for the most speculative undertakings or where commercial incentives are insufficient. However, it is unlikely that these conventional sources of research investment will be sufficient to meet the challenges of an aging population, the aggregate burden of disease, or the promise of emerging science.

The reduced funding of large pharmaceutical and biotechnology companies on early, basic, discovery-stage research (with concomitant growth of late-stage clinical trials) is apparent from our analysis. This trend will likely continue. A combination of the limited recent record of industry research and development and the unpredictability of outcomes and length of time required to observe results produces uncertain returns on investment, which are not tolerated in an economy that values short-term performance disproportionally.

Therefore, altogether new funding sources are required. As we and others have proposed previously,^25,26 a variety of new financing vehicles are feasible and attractive. These might include

Each of these financial innovations could be invoked without direct federal or state funding. They potentially can mobilize new private sources of funds without requiring tax increases or direct public appropriations.

New science and technology have been slow to address the morbidity and cost of chronic diseases and the growing number of elderly persons. Consequently, some have suggested that changing patient behavior and education (for adherence and lifestyle modification), not technology, should become the priority.²⁹ Others focus on changing the NIH mission to emphasize prevention and clinical evaluation rather than basic scientific discovery, or altering incentives of industry to encourage their investment in high-prevalence, high-cost conditions rather than lucrative niches such as cancer and orphan diseases.^8,9,12 Some observers have even suggested that expectations for science and technology be reduced, given the long cycle time from discovery to clinical application.³⁰

Declining productivity is at the root of many of these dissatisfactions. Therefore, greater attention is required to introduce methods that enhance the pace of research with few additional costs.

Investment in new ways to deliver better, more effective, and less expensive medical care has neither economic impetus nor professional recognition compared with technological innovation or basic discovery.

Funding for health services research has increased 37% from $3.7 billion to $5.0 billion over the last decade (Figure 6). However, this growth has occurred on a very small base. Total funding for health services research is 0.3% of total health care funding (eFigure 1 in the Supplement) compared with 4% toward new drugs and devices. That is, the United States spends $116 billion 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 and devices command favorable prices, and their value accrues directly to the firm that invests in them. In contrast, service innovations can reduce morbidity and mortality while also reducing cost, but financial returns to innovators may be negligible or even negative. For example, as shown by Arriaga et al³² and Pronovost and Wachter,³³ procedure checklists and other simple precautions are effective but may result in lower payments to hospitals.³⁴ This mismatch between who invests (the hospital) and who is rewarded (the insurer) is a fundamental barrier, even though clinical benefit is enormous and total savings may exceed the return on many categories of “blockbuster” drugs.³⁵

Three other factors pose barriers:

Neither the organizations nor finances exist to innovate on the scale required. Small, incremental federal or foundation grants are an ineffective spur of sustained change in clinical practice because behavioral and cultural issues remain unaddressed. It is unlikely that recent federal and state risk sharing (accountable care organizations) or other incentives will prove to be adequate for the same reason. Therefore, more fundamental changes are needed. In particular, 3 changes should be considered.

Biomedical science and improved health are tied closely to growth of a country’s general economy.⁴² The primacy of the United States as the source of biomedical technology (and until recently, longevity) has corresponded with a 4-decade-long improvement in real personal incomes. In turn, investment in science and technology has been a potent force producing higher personal incomes and total GDP, with the longer life expectancy that was achieved between 1970 and 1990 estimated to have added about 35% to US GDP by 2000.⁴³

Some have suggested that a domestic, US-centric perspective is antiquated and parochial in an era of globalization because people, ideas, capital, and information are highly mobile.⁴⁴ The United States has been the world’s leader for 6 decades in investment in science and technology research and development. In 2012, the United States spent $366 billion on all research and development, or 2.8% of GDP.⁴⁵ However, the United States declined from sixth in 2000 to 10th in 2012 in its proportion of research and development investment compared with the 34-country Organisation for Economic Co-operation and Development. In Asia, South Korea and China now each spend about 2% of GDP, with China expected to surpass the United States in absolute funding within a decade.⁴⁵ This trend, along with aggressive patent practices by some countries (notably China) or disregard of intellectual property rights (in Africa, Central Europe, and India), raise barriers to the diffusion of clinical innovations between countries.

Two areas are of particular concern: erosion of the public’s support for science in the United States and hesitancy to reform the patent system.

Recent polls show erosion of public support for biomedical research compared with other priorities. Support has declined steadily since 2000 and is now well behind concerns about the economy, domestic security, immigration, crime, and the US role in international affairs.^46,47 The trend is not confined to the United States but is also evident in Europe. Despite the demonstrable successes of earlier decades, the primacy of science as the source of improved health is today questioned because of the convergence of several forces.

First, despite bold promises, advances visible to the public have been less frequent because solutions to many conditions like autism, Alzheimer disease, and most cancers remain elusive, with neither effective prevention nor treatment, despite intensive research. Second, drug discovery has proven more difficult and less predictable than many had expected, with a decline over the past 2 decades in altogether new classes of drugs, new registrations, and drugs in clinical trials. Third, the economics of medical advances are being scrutinized as a source of added insurance cost, with growing pressure to justify clinical value using objective criteria, formal tools of technology assessment, and consideration of quality-of-life measures separately from those that affect mortality. Some technology skeptics have even urged that the United States take a “technology holiday” 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 poor performance of US health care as judged by international mortality comparisons. Skepticism of medical research is evident in recent US budget discussions, which have favored the physical sciences 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 biopharmaceuticals are heavily driven by engineering advances, which in turn depend more on the physical sciences and less on the biological sciences. These trends imply that pressure will mount to divert resources away from challenging but high-potential avenues in biology.

As this analysis demonstrates, at the same time support for biomedical research in the United States has wavered, global interest in biomedical research is increasing.⁴⁹ Asia and Europe are now on par with the United States in the relative number of researchers, and Asia, especially China, is making rapid gains in life science patents and highly cited publications. Although the United States is far from losing its preeminent role in biomedical research, similar historical changes have occurred in other industries (eg, electronics, automobiles, industrial manufacturing) that over time reshaped the country’s competitiveness. Many in the United States applaud the new interest in other countries as a reflection of the truly international reach of science, since discoveries—made anywhere—can be applied here. This optimistic view neglects the strong barriers created by intellectual property practices, which reward patenting any discovery or technique, no matter how incremental or trivial.

A patent’s primary purpose is to foster innovation by making new knowledge generally available in order that successors may improve on the original invention. In return, the inventor receives a temporary monopoly. Recently, however, patents have been used to capture financial value of a discovery or product at the expense of further invention, a practice known as “rent-seeking.” Current intellectual property practices inhibit rather than enhance 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 demonstrated (such as of cancer-related genes), tying surgical procedures (such as deep brain stimulation) to specific patented devices, abuse of the litigation process by patent aggregators (known formally as “nonperforming entities” or pejoratively as “patent trolls”), and the high cost of patent filing and defense in multiple countries. Universities and investigators alike see that patenting early-stage discoveries rarely results in financial returns because costs exceed royalty revenue, except for occasional, high-value findings, which are serendipitous and economically unpredictable.

Three changes can align intellectual property protections with incentives for substantive, clinically important advances and would be accomplished by changes to current federal law.^51,52

Taken together, these changes could foster fundamental, not incremental, innovation and could facilitate more effective collaborations. They are also prerequisites for generating new sources of investment.

The information assembled in this article does not do justice to the breadth and depth of medical research in the United States and other countries. For any current or future patient, research provides hope. For the researcher, unanswered biological and clinical questions are endlessly fascinating. For a company or its investors, new products and services promise financial return, often at levels greater than other industries. For the policy maker, biomedical research is a route to national competitiveness as well as to enhanced public health and economic vitality.

Our perspective for this examination has been primarily economic, although the value of research surely is not solely economic. Therefore, in our view, biomedical science and technology must be seen in a broader context, with its myriad roles recognized: as a source of competitiveness on the international stage; as a vehicle to satisfy curiosity; as a means to provide realistic hope to patients and families who must confront grave conditions. None of those roles will necessarily be reflected in reduced health care costs. Therefore, a new calculus is required to weigh them as decisions of cost and value are made.

Clearly, the pace of scientific discovery and need for service improvement have outstripped the capacity of current financial and organizational models to support the opportunities afforded.

The analysis underscores the need for the United States to find new sources to support medical research, if the clinical value of its past science investment and opportunities to improve care are to be fully realized. Substantial new private resources are feasible, though public funding can play a greater role. Both will require nontraditional approaches if they are to be politically and economically realistic. Given global trends, the United States will relinquish its historical innovation lead in the next decade unless such measures are undertaken.