Pending Budget Cuts will Further Jeopardize Global Leadership in Research and Innovation
WASHINGTON, DC—October 25, 2012—Biomedical and health research and development (R&D) spending from all sources declined by more than $4 billion or 3% between FY10 and FY11 according to Research!America’s 2011 U.S. Investment in Health Research report. This represents the first drop in overall spending since Research!America began compiling the data in 2002.
The decline follows an uptick in research funding attributed to the American Recovery and Reinvestment Act (ARRA), which allocated $10.4 billion to the National Institutes of Health (NIH) over two fiscal years (2009-2010). The overall downward trend in R&D spending is coming at a time when other nations are ramping up their own investments in research, and meanwhile, pending across-the-board budget cuts (sequestration) could reduce federal biomedical and health research funding by 8%-10% or more.
“Insufficient funding, coupled with deep budget cuts under sequestration, could be devastating for research,” said Research!America’s chair, former Congressman John E. Porter. “Our global competitiveness hinges on a robust investment that will support bright scientific minds, create high-quality jobs and provide a catalyst for private sector innovation.”
Research!America’s 2011 U.S. Investment in Health Research report shows varying levels of health research funding in the private and public sector. For example, federal funding for research totaled $39.5 billion in FY11, a 14% decrease from the previous year’s total of $45.9 billion. Agency funds were distributed across all 50 states to hospitals, universities, independent research institutes and small businesses. Under sequestration, the NIH would lose $2.53 billion in funding in FY13.
“As R&D spending abroad outpaces federal investments here at home, U.S. companies will set up shop in countries with stronger policies to support research,” said Mary Woolley, president and CEO of Research!America. “We cannot afford to become complacent as cures for Alzheimer’s, cancer, heart disease and other serious health threats remain a priority for every American.”
Overall, private industry has continually increased investments in R&D — a total of $77.6 billion in 2011, a 1.4% increase from 2010, despite inflationary pressure and the economic recession. The pharmaceutical industry increased its investment to $38.5 billion, a 3% increase from the previous year. In contrast, biotechnology investment declined by nearly $800 million, or 3%. The medical device and technology sector slightly increased investment in research, totaling $9.8 billion. Currently, more than 80% of R&D among PhRMA member companies is conducted in the United States, but R&D spending abroad has more than doubled over the past decade.
Aside from federal and industry investment, other institutions spent $19.1 billion on health research, an increase of about 5% from the previous year. Universities increased spending of institutional funds for research to $11.9 billion in 2010, a 6% increase. Philanthropic spending decreased slightly, while voluntary health groups increased investment in research by 15%, or $131 million, from the prior year.
According to funding projections in the report, the research investment landscape could worsen in 2013 and over the next decade. The scenario is different in other countries; as just one example, China has identified biotechnology as one of the seven “strategic and emerging (SEI) pillar” industries and has pledged to invest $308.5 billion in biotechnology over the next 5 years. Overall, the report provides analysis that outlines health research as one of the underpinnings of the U.S. economy and a key to improving the health of Americans.
Research!America has issued estimates of the US investment in health research since 2002. All reports in the series are available online at www.researchamerica.org/research_investment.