Editor's Note: For more on academic medical centers, please read this issue's commentary and By the Numbers sections.
Despite the growing concern, several indicators suggest academic medical centers are likely to continue bearing increased research costs for some time. A study published in the Jan. 13 issue of the Journal of the American Medical Association found, for example, that funding increases for biomedical research have slowed since 2005, and annual adjustments from both the public and private sector have not kept pace with inflation. Additionally, devicemaker Boston Scientific Corp. earlier this month indicated that it won't boost research and development spending beyond its current budget of about $1 billion annually, and that much of that funding will be allocated toward near-term growth initiatives.
Another indicator of a continued research-funding pinch came in early January when John Kreger, a financial analyst with the investment firm William Blair & Co., said in a report that pharmaceutical companies' use of contract research organizations to perform clinical and preclinical trials of drugs had fallen off during 2009 and was expected to remain low during the first half of 2010. While contract research organizations are not affiliated with academic medical centers, their decline in business is suggestive of a broader trend toward decreased research funding.
Data presented in the JAMA study, “Funding of U.S. Biomedical Research, 2003-2008,” are telling. According to the study's authors, biomedical research funding from both public and private sources increased from $75.5 billion in 2003 to $101.1 billion in 2007. Adjusted for inflation, however, the nearly $26 billion increase actually represents a reduction in annual funding growth compared with previous years. Overall, biomedical-research funding from 2003 to 2007 increased by just 14% for a compounded annual growth rate of 3.4%, the study found. By comparison, funding from 1994 to 2003 increased at an annual rate of 7.8%.
Looking at more recent funding trends, the authors concluded that, adjusted for inflation, combined funding from the National Institutes of Health and industry sources totaled $88.8 billion in 2008 compared with the equivalent of $90.2 billion in 2007.
The funding declines can be attributed to a number of influences, including the ailing economy, fewer approvals of new medical products by the Food and Drug Administration and growing debate over the effectiveness and cost of new interventions, researchers says.
“The 2007-2009 severe global recession has renewed focus on public spending and has caused companies and foundations to re-examine their priorities,” wrote the study's authors. “Also, debate in the United States about the role of the federal government in providing health insurance has cast attention on the allocation of research support, especially between discovery of new clinical interventions and the evaluation of their effect, value and cost.”
Bonham says the study findings match what the AAMC is hearing from academic medical centers and teaching hospitals about decreases in their levels of outside funding for medical research. “The concern for us is workforce planning and, ultimately, the lost opportunities to find new interventions,” she says.
One bright spot in the findings is the suggestion that some of the money previously spent on new-product research is being shifted toward research into comparative effectiveness, delivery of healthcare services and healthcare information technology. “We will have larger investments in comparative effectiveness, which we have not done a huge amount of work in at this point,” Boston Scientific President and CEO Ray Elliott told attendants last month at the JPMorgan Healthcare Conference in San Francisco.
“The good news is comparative-effectiveness research, which was not covered in the article because of the time frame, got a huge boost in the stimulus act,” says Carolyn Clancy, M.D., director of the Agency for Healthcare Research and Quality, in reference to the American Recovery and Reinvestment Act of 2009. “I think right now there's such a large gap in information that helps us sort out what existing therapies will be most beneficial, and there is work we need to do to close that gap. I also think that in the future, comparative-effectiveness research can be used to help researchers decide where there is a need for innovation.”
But while such a shift can provide important information for the improvement of patient care, the JAMA researchers noted it could also have unexpected consequences for other areas of the healthcare industry. The movement of dollars away from the development of novel treatments would ultimately influence researchers' career choices and make them shy away from high-risk, long-term projects, which are important to the development of therapies for hard-to-treat illnesses and conditions with large public-health implications.
Ray Dorsey, M.D., lead researcher on the JAMA study and an assistant professor of neurology at the University of Rochester (N.Y.) Medical Center, says healthcare policymakers may need to realign the incentives for medical-product development in order to encourage increased funding of novel research, though he didn't venture to say what those steps could be.
“If a company can make slight changes to existing drugs and keep exclusivity, there's no incentive to invest in costly research,” Dorsey says. “I think we have to be cautious when encouraging investment in new technology and say that it will take years, if not decades, to realize a return on investment.”
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