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Toward A Policy Agenda On Medical Research Funding: Results Of A Symposium

Abstract

 
University of the Sciences in Philadelphia convened a symposium to discuss the roles of government, industry, and foundations in funding biomedical research. Government, no longer the largest funder of biomedical research, focuses on basic science. The pharmaceutical industry, now the largest sponsor, focuses on developing and testing new products. Foundations play a unique role in their ability to fund research overlooked by the other sectors. However, gaps remain in this infrastructure. Barriers, including lack of qualified investigators and administrative burdens, constrain discovery. Funders should collaborate to address these constraints and stimulate new sources of funding.

A symposium held in September 2002 at University of the Sciences in Philadelphia brought together representatives from government, industry, and foundations to consider these issues. Panel participants were Francis Chesley Jr. of the Agency for Healthcare Research and Quality (AHRQ); John Kelly of the Pharmaceutical Research and Manufacturers of America (PhRMA); and Elaine Gallin of the Doris Duke Charitable Foundation. Keynote speaker Frank Lichtenberg of Columbia University gave an overview of the economic and policy context of medical research, and an audience of health care professionals contributed comments. This interchange was intended as a first step in developing a policy agenda on financing for medical research. This paper summarizes the proceedings of the symposium and presents suggestions for focusing a policy dialogue.

Existing Funding Infrastructure

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The Ransdell Act of 1930 created the National Institutes of Health (NIH) after government efforts failed to promote private-sector research funding in the years after World War I. After World War II, government and private initiatives grew exponentially but independently. Foundations, based mostly on the fortunes of nineteenth-century industrialists, played a major role during the early twentieth century in the professionalization of medicine but were eclipsed in prominence as the other sectors expanded. In 2001 the two major federal agencies doing health research, the NIH and AHRQ, spent more than $20 billion, and pharmaceutical companies more than $30 billion, for research. In 2001 nonprofit private foundations contributed approximately $1 billion to health-related research.¹

The Economics Of Medical Research Funding

Top Existing Funding Infrastructure The Economics Of Medical... Perspective Of Government Perspective Of Industry Perspective Of Foundations Challenges For A Policy... Commentary NOTES

 
Lichtenberg defined medical research in economic terms as a public good, as it benefits everyone. The government generally funds public goods because the private sector cannot impose a charge structure that discriminates between those who benefit and those who do not. This dynamic underlies the government’s traditional role of funding basic "upstream" research, where the return on each investment is difficult to measure. Private industry, in contrast, tends to concentrate its funding on applied "downstream" research, where the economic return is clearer.

Criteria for research funding. A more fundamental issue is determining the optimal level of funding. Despite the tremendous benefits of medical research, there is a point at which too much is being spent. Two primary criteria determine the best possible level of research spending on a disease: (1) the potential benefit of finding a cure, measured by the disability, morbidity, premature mortality, and medical expenses prevented; and (2) the projected cost of finding a cure, measured as research productivity. This is often the juncture at which policymakers and scientists collide. Issues of measurement aside, everyone, including policymakers, can observe disease burden. In Lichtenberg’s view, however, only scientists directly observe research productivity.

Lichtenberg has found a strong positive overall relationship between the allocation of public research expenditures and the conditions causing the greatest burdens to society in terms of life years lost and impairments caused. Within this trend, he has found that a disproportionate amount of research is funded that addresses chronic conditions prevalent among certain population groups, such as the elderly. He has also found that research expenditures are positively correlated with life years lost by whites but not by nonwhites, possibly because low income and poor access to medical care are more critical in determining premature mortality among nonwhites.²

Federal government’s role. While continuing to grow substantially, the federal government’s relative share of biomedical research funding has declined from about two-thirds in 1980 to less than half of the total spent today.³ However, the government’s funding role is not just to sponsor investigators but also to stimulate private-sector firms to conduct and fund research on their own. Ideally, government efforts motivate an array of other funding sources, thereby increasing the probability of success and keeping research costs competitive without stimulating excessive spending.

Lichtenberg described two approaches by government agencies to supplement funding that can accomplish these goals. When private scientific investigators have more information than the government does, patents can provide the needed incentive to stimulate the optimal amount of research. If the reverse is true, prizes and awards for discoveries will likely be more effective. Lichtenberg recommended that the federal government support "push" programs to initiate new lines of inquiry in basic research. This can be accomplished through research in its own laboratories, grants to academic researchers, public equity investments such as those in vaccine development, and research and development (R&D) tax credits. Lichtenberg believes that once basic research is accomplished, the NIH should focus on "pull" programs that encourage private industry to pay for the actual development of health care products such as pharmaceuticals. These programs can include cash prizes, commitments to purchase products, and patent extensions. He emphasized that by working together, various funding sectors can encourage the optimal level of medical research and the most effective implementation of findings.

Perspective Of Government

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Chesley noted that government funding agencies must be continuously mindful of the public interest. This is particularly true at two points in the research funding process: when overall budget allocations within an agency are determined, and when individual proposals are evaluated. Government funders are responsible to all of the American people.

The NIH is the most visible government funder of research, but other agencies, such as AHRQ, provide an important supplement. AHRQ’s goals range from encouraging health services research to facilitating the training of health care professionals. Chesley noted that diversity of funding organizations expands each sector’s horizons and opportunities for discovery.

The task of responding to the public interest is complicated by health-related concerns that vary not only among individuals but also across groups and institutions according to such factors as culture, religion, and region. AHRQ has asked its stakeholders, including researchers, providers, payers, patients, and policymakers, to assess the kinds of research that will improve the nation’s health. Their responses have identified priorities for health services research, including finding ways to focus services on the patient; evaluating strategies to promote high-quality care systems; and measuring the impact of research.⁴

In Chesley’s view, the process of evaluation deserves special attention. It develops evidence of research impact at various levels. For example, research into health care quality can influence other research, foster the implementation of better processes and policies, and help to translate findings into practice. Thus, evaluation is a crucial step in assessing the return from the public’s research investment.

Partnerships among diverse funding agencies permit both specialization and collaboration. No single organization has the resources or expertise to cover all needs, and collaborations permit funders to leverage spending. Successful partnerships exist between government agencies and between government and nonprofit organizations. Chesley recommended growth in the number and diversity of such partnerships.

For example, AHRQ has successfully partnered with several organizations. Collaboration with the Veterans Health Administration (VHA) seeks to identify effective strategies for translating research into practice by assessing the VHA system. A new initiative with the Robert Wood Johnson Foundation (RWJF), Prescription for Health: Promoting Healthy Behaviors in Primary Care Research Networks, will field-test new models to address the leading causes of preventable disease that can be easily adopted across primary care practices.⁵ AHRQ has joined a sister federal agency, the Health Resources and Services Administration (HRSA), and others, to help evaluate HRSA’s Health Disparities Collaboratives demonstration projects.

Perspective Of Industry

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PhRMA estimates that more than 1,000 new medications are now in development by pharmaceutical firms.⁶ Kelly explained that these research efforts, which represent the largest of the three funding sectors’ efforts in terms of dollars spent, complement those of government in important ways. In particular, NIH funding lies behind the development of some important new drugs that the pharmaceutical industry has brought to market.⁷

The need for industry’s large research expenditure stems from the complexity of drug development. This multistage process typically lasts up to fifteen years, and few drugs actually reach the market. For every 5,000–10,000 new molecular entities that begin the drug development process, only five merit clinical testing, and only one ultimately receives Food and Drug Administration (FDA) approval. On average, twenty-four new molecular entities receive FDA approval each year, but that number is variable and unpredictable.⁸ Even after the FDA ultimately approves a drug and marketing begins, more testing is required. The complex process of clinical trials is often funded collaboratively by industry, universities, the NIH, and other federal agencies.

In addition to funding, other challenges to conducting clinical research include enrolling a sufficient number of subjects, accurately assessing the benefits and risks of new agents, communicating research results to both health care providers and the public, and monitoring clinical uses of drugs. Managing these challenges is crucial to making the research investment more successful and to assuring the availability of safe and effective medicines in the United States and worldwide.

Perspective Of Foundations

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Gallin described the unique role that foundations play. In contrast to the sensitivity of government agencies to public opinion and the market-driven nature of for-profit corporations, foundations are accountable only to their boards of directors. Therefore, foundations can be more creative in the kinds of research that they fund, tackling controversial, high-risk initiatives that fill gaps in existing programs and adding flexibility to new initiatives. With smaller bureaucracies, foundations can move quickly, and being less influenced by changing public opinion than the other entities are, they may be willing to commit needed resources for longer periods of time.

During the first half of the twentieth century, foundations played the central role in funding biomedical research since government funding for this purpose did not yet exist. Gallin pointed to two notable examples of this early role. In 1910 the Carnegie Foundation supported the work of Abraham Flexner on the state of medical education in America, which led to a complete revamping of the medical education system. The Rockefeller Foundation, incorporated in 1913, established the first clinical research hospital in the United States, the first school of public health, and the Population Council, which supported the first contraceptive research in this country.

Foundations’ distinctive role continues today. They contribute a sizable sum to medical research, even if it is dwarfed by government and industry. Examples of substantial efforts include the International AIDS Vaccine Initiative (IAVI), whose foundation supporters include the Bill and Melinda Gates Foundation and the Rockefeller Foundation, and the Global Alliance for Vaccines and Immunizations (GAVI), launched with an initial pledge from the Gates Foundation. In these initiatives, donors, researchers, and implementers partner to solve complex health problems.⁹ These recent initiatives show that despite the extraordinary growth in government and industry funding, foundations still play an important role and will do so in the future.

Among the gaps that the Doris Duke Charitable Foundation is attempting to fill is the pressing need to quickly translate basic research findings into clinical practice, primarily through the support of a pipeline of physician-scientists to conduct studies. Other overlooked issues that foundations address include health concerns in the developing world, such as malaria, AIDS, arsenic poisoning, and nutrition, Gallin said. Finally, foundations are addressing a need for more research into health outcomes, including research by cross-disciplinary teams.

Gallin foresees a clear trend of increasing globalization of biomedical research. Because of this, more work is needed to strengthen the research and health infrastructure in developing nations, which have been poorly equipped to handle the AIDS pandemic and threats of new infectious diseases associated with environmental and population changes. Also, researchers increasingly must be concerned with the social implications of their work and the ethical issues that it raises.

Challenges For A Policy Agenda

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Against this overview of the roles of government, industry, and foundations, symposium participants identified three primary concerns with the funding infrastructure: constraints on research, areas in need of further research, and the need for new funding approaches.

Constraints on research. Panelists concurred that the biggest challenge to conducting medical research today is the lack of qualified investigators. When the Doris Duke Charitable Foundation reviewed health care needs at its inception in the mid-1990s, it found support for investigator training in translational clinical research to be among the most pressing. Of particular concern is a steady decrease in the number of physician-scientists, who are needed to lead both clinical and basic research studies, particularly in academic settings.

Various factors, including the burden of educational debt and salary differentials between researchers and clinicians, appear to be influencing this trend. Also, physicians do not receive research training in medical school or during residencies, so they must devote additional years to acquiring the necessary knowledge and skills. Increasing the number of physician-scientists will require a sizable investment in human capital, but it is an investment that is vital to the continued growth of medical research overall.

As another constraint, investigators increasingly complain of excessive paperwork. Funders impose bureaucratic burdens to ensure accountability, but some requirements, particularly government reporting rules, may impede research. Funding organizations might be able to coordinate administrative oversight to create a less onerous system.

A final constraint discussed was that academic journals prefer to publish studies with positive findings rather than those that report no effect. Consequently, applied researchers face incentives to design studies that will prove effectiveness instead of disputing it. Important lines of investigation may thereby be discouraged. Several attendees felt that research funders can, and should, try to rectify this barrier to more free-ranging studies.

Areas in need of further research. The benefits of medical advances are valuable only to the extent that they are widely available. Limits on access to care and preventive services are an important concern. Understanding such limits requires the perspectives of different disciplines and interests. Some limits relate to individual behavior and decision making rather than to costs, as reflected in the failure of many patients with adequate health insurance to use needed services. Other limits are imposed by increasing medical costs, which can lead purchasers and payers to increase barriers to care. AHRQ and some private foundations have made it a priority to support investigations into ways to broaden access to specific kinds of health services. Examples of foundation initiatives include the W.K. Kellogg Foundation’s focus in recent years on projects to increase access to integrated, comprehensive health care systems organized around primary and preventive care and the RWJF’s activities to improve treatment for people with chronic illness.¹⁰ The pharmaceutical industry also has a strong interest in improved access to care. Collaborative initiatives could bring in the diverse perspectives of different funding sectors to find ways to ensure that health care innovation actually leads to improved health.

To address another area in need of additional study, AHRQ is developing a research agenda on strategies to increase access to screenings and other forms of preventive care.¹¹ Despite such efforts, a true appreciation of prevention is difficult in a society that has not historically been oriented toward wellness. Interdisciplinary approaches may be needed.

New funding approaches. Some research priorities cut across existing institutional lines, particularly research areas with both basic long-term aspects and short-term applications. Biodefense is an example of an area in which a collaboration of funding sources is crucial. Government looks to long-term national security needs, and industry, to developing vaccines and other products.

A possible new funding source for some medical research is insurance. The availability of reimbursement for expenses that patients incur in undergoing investigational treatments varies considerably. Most health insurance policies exclude coverage for experimental procedures, although exceptions exist. Medicare now covers the cost of treatments in some clinical trials, and several states have enacted legislation that requires private insurers to do the same.¹² Insurers do not share the research mission that drives funding agencies, but the role of insurance reimbursement in funding experimental treatments deserves further attention.

Some states provide a limited amount of medical research funding, much of it facilitated by the recent legal settlements with tobacco companies. Since medical research benefits all of society, states are not well equipped to carry the investment burden for the entire country. However, they may be in the best position to promote research into local health concerns, such as access constraints, disparities in care, and prevention of regionally focused diseases. Despite current budget crises, a more clearly delineated role for state governments may be appropriate in the longer term.

Commentary

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The symposium highlighted the development of the three major funding sectors’ unique roles in medical research, which, even if not designed to fit together into a coordinated scheme, make sense. These disparate roles result from historical accident rather than explicit policy design, as each funding sector became active to address specific needs at different times during the twentieth century. Since each is accountable to a different constituency, it may be appropriate that the sectors remain distinct. However, because of today’s needs, the infrastructure for financing medical research should facilitate coordination and actively address research barriers.

Shortage of investigators. For example, the growing shortage of trained investigators imperils all three sectors. The NIH has taken initial steps through its medical school loan forgiveness program. Working together, funders can amplify such efforts to reach a larger pool of young potential physician-researchers. Working separately, they may find only partial solutions that encourage training in limited areas. Similarly, all funding requires administrative processes, but burdens are created when these are unnecessary or duplicative. A coordinated approach to accounting, proposal design, and human-subject protection might be less onerous and more effective.

Translating research into practice. All funders want the fruits of the research they facilitate to be translated into practice. This is an inherently interdisciplinary task involving biomedical, clinical, and behavioral perspectives, as well as administrative issues. Yet none of the funding organizations represented or discussed at the symposium has all of the necessary expertise. Collaborations, such as that between AHRQ and the RWJF, are needed so that capabilities can be shared.

Global health. Many global health programs require alliances because major public health challenges are beyond the capacity of any one organization. Alliances of funders, researchers, providers, and others enhance the capabilities of all. Studies of international health alliances have yielded clues to key success factors, which could guide efforts in the United States.¹³ Funders could also collaborate to address ethical issues, such as human-subject protection, that become particularly difficult across borders and cultural norms.

Prevention and wellness. Another interdisciplinary area needing further research is prevention and wellness. Each funding sector has a unique perspective along a continuum from basic physiology to social behavior that would be most effective in concert with the others.

Finding new research support. Funders can also collaborate to stimulate new sources of research support. A coordinated approach could structure innovative insurance reimbursement mechanisms for experimental therapies and clinical trials. As Kelly noted, clinical trial funding already encompasses many players beyond the pharmaceutical industry. Each has its own concerns in bringing new drugs to market. Private insurers have clear interests in this regard that could add an important perspective.

To maintain the progress made to date in Medicare’s coverage of experimental procedures, policymakers should also consider the possible effects of Medicare reforms that shift beneficiaries to the private sector. A coordinated approach to broadening the funding base might also reinforce the interests of smaller players, such as academic health centers that fund some of their own research, and state governments, which could fund medical concerns of regional interest.

Together, the funding sectors finance a complex enterprise that is crucial to society as a whole and to individual constituencies. The act of financing medical research intrinsically affects not just the flow of money but also the structure and effectiveness of the overall research infrastructure. Funders encourage scientific careers, promote or discourage new ideas, and ultimately reshape clinical practice. Operating in isolation, funding organizations leave gaps in meeting America’s health care research needs and miss opportunities to enhance the return on this country’s massive investment in medical research. Further exploration of the policy aspects of medical research funding—in essence, research on research—should become a focus.

Editor's Notes

 
Robert Field is director of the Graduate Program in Health Policy and associate professor of health policy at University of the Sciences in Philadelphia (USP). Barbara Plager is an adjunct assistant professor of health policy at USP. Rebecca Baranowski, Mary Anne Healy, and Margaret Longacre are doctoral students in health policy at USP.

The symposium was supported by an unrestricted educational grant from the Eli Lilly and Company Foundation. The views expressed are those of the authors.

NOTES

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1. National Institutes of Health, NIH Almanac, 2001, Part 3: Appropriations by Component, 15 July 2002, www.nih.gov/about/almanac/appropriations/appropriations2001.pdf (10 March 2003); Agency for Healthcare Research and Quality, Annual Report, 2001, Part 2: Financial Management, February 2001, www.ahcpr.gov/about/annrpt01/annrpt01g.htm#Budgetary (10 March 2003); Pharmaceutical Research and Manufacturers of America, Industry Profile 2002, 2002, www.phrma.org/publications/publications/profile02/chapter2.pdf (10 March 2003), 12–14; and Steven Lawrence, director of research, Foundation Center, New York, N.Y., personal communication, 21 March 2003.
2. F.R. Lichtenberg, "The Allocation of Publicly Funded Biomedical Research," NBER Working Paper no. 6601 (Cambridge, Mass.: National Bureau of Economic Research, June 1998).
3. NIH, NIH Almanac, 2001, Part 3: Appropriations by Component; and PhRMA, Industry Profile 2002, 14.
4. AHRQ, "Summary of AHRQ Performance Objectives," 2001, www.ahrq.gov/about/gpra2001/exsumm01b.htm (10 March 2003).
5. Detailed information on the initiative is available at www.prescriptionforhealth.org.
6. PhRMA, Industry Profile 2002, 12–14.
7. NIH, "A Plan to Ensure Taxpayers’ Interests Are Protected," July 2001, www.nih.gov/news/070101wyden.htm (10 March 2003).
8. PhRMA, Industry Profile 2002, 19.
9. Detailed information on these initiatives is available at www.iavi.org and www.gavi.org.
10. Detailed information on these initiatives is available at W.K. Kellogg Foundation, "Programming," www.wkkf.org/Programming (10 March 2003) and at RWJF, "Our Programs," www.rwjf.org/programs/programArea.jsp (10 March 2003).
11. U.S. Preventive Services Task Force, Guide to Clinical Preventive Services, 3d ed., 2000–2003, March 2003, www.ahcpr.gov/clinic/cps3dix.htm (10 March 2003).
12. National Cancer Institute, "Clinical Trials and Insurance Coverage—A Resource Guide: Summary," 30 January 2002, www.cancer.gov/clinicaltrials/understanding/insurance-coverage (19 March 2003).
13. Bill and Melinda Gates Foundation, Developing Successful Global Health Alliances, April 2002, www.gatesfoundation.org/nr/downloads/globalhealth/GlobalHealthAlliances.pdf (10 March 2003).

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