The Value of Medical Research
The National Institutes of Health spends over $30 billion annually on health research (around 0.2% of US GDP), and other government agencies spend billions more. The United Kingdom spends roughly the same percent of GDP on health research. It has been difficult to estimate the returns to that spending however. Most health research funding goes to laboratory science, with smaller but non-negligible amounts allocated to data collection and behavioral/social research. Research papers are the proximate output of this financial support to researchers, and sometimes there are patents as well. But how do research papers and patents translate into the ultimate outcomes that society cares about – quality of life and the dollars involved in generating that quality?
The goal of this project was to spur research into the value of medical research. Among the outputs of the project are studies showing:
(1) an enormous change in the balance of health research over time from traditional US-based researchers into researchers elsewhere – Europe and increasingly China;
(2) the diversity of health research is enormous, from basic biomedical innovation to advanced clinical trials;
(3) while data on biomedical research is rarely collected as a whole, such data collection is possible and was done as part of this project; and
(4) overall health status has improved greatly, and at least part of this is due to biomedical research innovation.
The data and research effort sponsored by this project created new resources for the field of scholars looking at the value of health research.
James Banks is professor of economics at the University of Manchester and deputy research director of the Institute for Fiscal Studies (UK). His research focuses on empirical models of household spending behavior, intertemporal consumption patterns, savings, pensions, retirement, and household asset holding.
David Cutler is the Otto Eckstein Professor of Applied Economics at Harvard University. His research interests include the determinants of health status and longevity, the economics of health care delivery, and health policy.