U.S. or China: Who will invest more in medical R&D?

If current trends continue, the US will be overtaken by China as the global leader in medical R&D in the next ten years. (Credit: iStockphoto)

The United States is steadily losing ground as the global leader in medical research.

A new study tracked medical research activity from 1994 to 2014 in the US, Europe, Asia, Canada, and Australia, compiling data on funding by public and private sources, the creation of intellectual property, and the size of the medical and scientific workforce.

“US medical research remains the primary global source of new discoveries, drugs, medical devices, and clinical procedures,” says Ray Dorsey, a neurologist at the University of Rochester.

“However, a decade of unprecedented growth in research activity has been followed by a decade of steady decline, which now leaves open the possibility that other nations could assume global leadership given their increasing investment in biomedical research.”

Decline in research funding

US spending on medical research grew at an average annual rate of 6 percent between 1994 and 2004. This pace fell sharply in the following decade, where the annual rate of growth decreased to 0.6 percent, falling behind the pace of inflation.

With the exception of the temporary increases brought about by federal stimulus spending in 2009 and 2010, the last five years have seen a decrease in research funding when adjusted for inflation. Overall, medical R&D funding has declined in real terms by 13 percent since 2004.

Research funding, particularly by the private sector, has also shifted to later stages development and away from basic science. Guided primarily by the desire to realize short-term economic benefits, the share of spending by pharmaceutical, biotechnology, and medical device companies on phase 3 clinical trials—large studies in people that often represent the final step before regulatory approval—grew by 36 percent between 2004 and 2012.

Industry spending is also now the largest component of US medical R&D, increasing from 46 percent in 2004 to 58 percent in 2012.

The move away from investing in early stage research has significant long-term implications. New knowledge often takes from 15 to 25 years to move from the discovery made in the lab to its clinical application in people.

With the private sector moving more resources to late-stage research, this leaves the shrinking resources provide by the federal government and often very small companies as the primary sources of funding for early-stage, high-risk research.

Medical R&D in Asia

The allocation of research resources doesn’t reflect the burden of disease on society. Diseases that represent more than 80 percent of all US deaths receive less than half of the funding from the National Institutes of Health.

The portion of total funding for cancer and HIV/AIDS research in particular are well above the levels that these diseases inflict in terms of death and disability. The amount of money spent by the pharmaceutical industry on finding treatments for rare diseases is also high, driven primarily by the lower barriers to market set forth in the Orphan Drug Act of 1983.

Medical research has become an increasingly global endeavor and investments by other countries, particularly in Asia, are eroding US leadership, according to the study, that is published in the Journal of the American Medical Association.

In 2004, US medical R&D spending represented 57 percent of the global total. By 2014, the US share had fallen to 44 percent with Asia—led by China, Japan, South Korea, India, and Singapore—rapidly making up ground and increasing investment by 9.4 percent per year.

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If current trends continue, the US will be overtaken by China as the global leader in medical R&D in the next ten years. China has already surpassed the US in terms of the size of its science and technology workforce and global share of patents for medical technologies, and is closing the gap in published biomedical research articles.

An area in particular need of remedy is the low levels of research funding in the field of health services.  Health services—which study topics such as access to care, cost, quality of care, and efforts to promote well-being—represent only 0.3 percent of US research expenditures.

“The low levels of investment in health services research represent a missed opportunity to improve many aspects of health, especially the burden of chronic illness, aging populations, and the need for more effective ways to deliver care,” Dorsey says.

The trends are reversible, the authors write. However, given the political environment in Washington and the pressures by shareholders on industry for short-term returns, new sources of revenue will need to be identified.

There are several possible options, including providing tax incentives that will allow medical and pharmaceutical companies to reinvest profits held overseas in research in the US, a commitment by insurance companies and the health care sector to invest more money in health services research, and government-backed research bonds and trusts similar to those employed in the United Kingdom, Australia, and Canada.

“Clearly the pace of scientific discovery has outstripped the capacity of current financial and organizational models to support the opportunities afforded,” says neurology resident Benjamin George, a study coauthor.

“This analysis underscores the need for the US to find new sources to support biomedical and health services research if we wish to remain the world’s leader in medical innovation.”

Researchers from Johns Hopkins University contributed to the study.

Source: University of Rochester