Investment in medical and health R&D not keeping up with needs of nation, report finds

In 2018, total U.S. medical and health R&D investment was $194.2 billion. Of that, industry invested $129.5 billion, almost 67% of the total.
Tuesday, December 31, 2019

Total U.S. investment in medical and health research and development grew by 6.4% from 2017 to 2018, reaching $194.2 billion. For the third straight year, the growth-rate of medical and health R&D investment outpaced the growth-rate of overall health spending.

Yet R&D spending still represents only about 5 cents of every health dollar spent. This is one of the key findings in 2019 U.S. Investments in Medical and Health Research and Development, a new report from Research!America.

The Investment Report shows growth in investment across every sector over the last six years, with industry growth leading at $36.5 billion, followed by the federal government at $9.1 billion.

The problem, authors said, is that total investment isn't tracking with disease burden, and should do so in the future if there's a realistic hope of ending or greatly curtailing certain diseases that result in hardships for many Americans.

WHAT'S THE IMPACT

Every year, almost 130,000 people in the U.S. die by the age of 45 due to health threats that a larger investment in R&D can help to better understand and ultimately prevent. Further, major chronic diseases cost the nation more than $1.1 trillion in 2018, which is almost six times the amount all sectors spend on R&D.

In 2018, total U.S. medical and health R&D investment was $194.2 billion. Of that, industry invested $129.5 billion in medical and health R&D, good for 66.7% of the total.

Federal agencies invested a total of $43 billion (22.2%), while academic and research institutions -- including colleges and universities, independent research institutes, and independent hospital medical research centers -- invested $15.7 billion of their own funds (8.1%).

Meanwhile, foundations invested $2.3 billion (1.2%); state State and local governments invested $2.1 billion (1.1%); and voluntary health associations and professional societies invested $1.5 billion (0.8%).

THE LARGER TREND

The new report is in line with findings published in November 2018 by PricewaterhouseCoopers. At that time, it found that the healthcare industry ranks second among all industries when it comes to the amount it spends on research and development, but will likely take the top spot by 2020. Only the computing and electronics industry outpaced healthcare R&D in 2018.

PwC singled out 88 companies as "high leverage innovators" for 2017. In other words, they financially outperformed the rest of their industry as a whole for five years while spending less on R&D as a percentage of sales.

Healthcare boasted 23 such companies, including Hologic, Mylan, Medtronic and Fresenius Medical Care.

ON THE RECORD

"Increased investment across all sectors contributing to R&D is the right path for our nation, but relative to unmet medical needs, we are walking, rather than running down that path," said Mary Woolley, president and CEO, Research!America. "Federal funding and policies need to be aligned behind the objective of empowering both public sector and private sector-driven research, because research saves lives."

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