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Uneven growth seen in medical research and development investments

Medical and health R&D continues to account for less than 5 percent of the total $3.5 trillion in U.S. health spending.

Jeff Lagasse, Associate Editor

Total investment in medical and health research and development in the U.S. grew by 20.6 percent from 2013 to 2016, 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.

Industry continues to invest more than any other sector, accounting for 67.4 percent of total spending in 2016, followed by the federal government at 21.9 percent. Federal investments increased from 2013 to 2014 and 2015 to 2016, largely due to increases in the National Institutes of Health budget, with a slight decline in NIH and total funding from 2014 to 2015.

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Academic and other research institutions ramped up their R&D investment substantially over the four-year period, increasing their spending by 16.6 percent, while foundations, voluntary health associations and professional societies increased investments by 4.7 percent. State and local government investment grew nearly 12 percent from 2013 to 2016.

Despite overall investment growth, medical and health R&D continues to account for less than 5 percent of the total $3.5 trillion in U.S. health spending.

While the uptick in investments across sectors has been positive overall, investment in research remains stagnant as a percentage of total U.S. health spending, the report found.

Biopharmaceutical companies contributed the largest share of funding within the industry sector  in 2016 at 77.5 percent, accounting for more than half of total U.S. R&D expenditures last year. The two-year suspension of the medical device tax, which went into effect in 2016, likely contributed to an increase in R&D investments in the medical technology sector last year.

Industry members, including those specializing in software, semiconductors and transportation equipment, increased investments substantially on a percentage basis from 2013 to 2016, likely as an iterative effect of investment growth in the medical technology sector or diversification strategies.

Federal R&D investments were uneven across health agencies during the four-year period. While the NIH experienced a "bounce back" in funding from 2015 to 2016 after a slight decline the previous year, the Centers for Disease Control and Prevention's budget was cut nearly 45 percent from 2015 to 2016 as supplemental funds tied to the Ebola outbreak dwindled.

Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com

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