U.S. Biomedical Research at a Precipice


Xconomy San Diego — 

[Editor’s Note: this post was co-authored by Justin Chakma, Dr. Reshma Jagsi, and Stephen M. Sammut.]

Since 1950, U.S. government funding has supported research underlying 84 percent of Nobel Prizes awarded in Medicine & Physiology. These scientific breakthroughs have resulted in new medicines and created significant economic value. For example, the discovery of gene silencing, which won the 2006 Nobel Prize, led to more than 25 new therapies in development, and created two companies valued at over $8 billion in market capitalization. U.S. government funding has contributed to the development of almost half of all FDA-approved medicines.

This marriage between federal research and industry helped establish our global preeminence in biomedical research for the last 50 years. But short-sighted cuts to federal research funding and the lack of a long-term industrial strategy have placed the U.S. biomedical research enterprise at the brink of a potentially irreversible decline. The purchasing power of grants from the National Institutes of Health declined by more than 20 percent from 2003 to 2013, and is poised to decline even further despite the recent budget accord.

In a study published in the January 2nd issue of The New England Journal of Medicine, we analyzed global biomedical R&D expenditure from 2007 to 2012. We found that overall inflation-adjusted U.S. biomedical research expenditure declined by $12 billion, while U.S. market share of global biomedical R&D expenditure declined to below 45 percent, down from its historic heights of 70 percent to 80 percent.

Surprisingly, this decline was driven by industry as pharmaceutical companies shut down R&D sites in the U.S., and moved operations to Asia in the face of poor R&D productivity – $4 billion is now the average R&D cost for every FDA approval. Public-sector spending only kept pace with inflation because of the 2009 federal stimulus package, but with cuts persisting into 2014 and beyond, NIH funding next year will likely decline an additional 7 percent in inflation-adjusted dollars, from 2012 levels.

Reducing federal funding threatens the progress of biomedical research globally because the U.S. accounted for 51 percent of global public-sector R&D spending in 2012. The U.S. has the most to lose from slowing progress in understanding disease because industry will continue to shift R&D to Asia to compensate for the higher rates of clinical trial failures, while simultaneously cutting unproductive internal R&D spending and depending even more on government funded research.

Already, U.S. share of industry biomedical research expenditure has declined from 50 percent to 42 percent over the last 5 years. Over the long run, the diminished attraction of a biomedical research career may result in our brightest talent shunning one of the few disciplines where we still retain global dominance, and departing for more welcoming shores, especially if countries like China continue to increase biomedical R&D spending–China is up 313 percent since 2007.

There are already signs of this brain drain. Less than two months ago, the FDA approved a new cancer drug, ibrutinib, which may extend the survival of certain leukemia patients by a median of 5 years according to some Wall Street analysts. Most cancer drugs extend life by months. The discoverer of ibrutinib, Dr. Zhengying Pan, trained at Columbia and Stanford before joining Celera in California, where he synthesized the drug in 2007. By 2009, Dr. Pan was on the faculty at Peking University in China, attracted by research funding and lab space made available by the Chinese government.

Governments in Asia are investing billions of dollars … Next Page »

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Justin Chakma is a life sciences venture capital investor with Thomas, McNerney & Partners in La Jolla, CA. He has published over 20 articles in peer-reviewed journals on healthcare policy and innovation, including the New England Journal of Medicine. Follow @

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2 responses to “U.S. Biomedical Research at a Precipice”

  1. the_caganer says:

    Where to begin? First, have you kept up with studies that examine the reproducibility of government funded basic research? Have you looked at number of startups that are begun by immigrants? Have you looked at the immigration laws of the US? Have you looked at the effects of regulations (from financial to FDA to EPA to CPSC to …) on startups? How many PhDs that US educates have better opportunities at home due to the HOSTILE regulations in America? Have you looked at how the US woos those same PhDs to stay? It doesn’t. Have you looked at the regulations in countries such as India, China, etc.? How about taxes – corporate, exit taxes (yes if you come to the US to start a business and want to leave at retirement the US government will take a LARGE chunk of money from you), capital gains, etc.?

    But your solution, is more taxes (the government has no extra money) so they can fund more unreproducible research.

    You are smart.

  2. Robert Jones says:

    Glen Begley and Stewart Lyman both wrote articles this week about the newfound honesty within the scientific community about the quality of research. We are slowly and reluctantly facing the fact that reproducible science matters. The question that rarely gets covered is the relationship between increased funding and increased quality of what we are paying for. Perhaps we could increase the quality and the money will come.