Public Release: 

Public funding essential for advances in biomedical research

Cuts in National Institutes of Health budget could impact innovation

Harvard Business School

BOSTON, March 30, 2017 -- In the budget President Trump recently submitted to Congress, he asked for a reduction in the 2018 funding of the U.S. National Institutes of Health (NIH) of almost 20 percent--or $6 billion.

That could have consequences for those suffering from a variety of illnesses and conditions and for biomedical innovation, based on results from an article to be published in Science on Friday, March 31, 2017 and coauthored by Assistant Professor Danielle Li of Harvard Business School, Professor Pierre Azoulay of MIT Sloan School of Management and the National Bureau of Economic Research (NBER), and Associate Professor Bhaven N. Sampat of Columbia University's Mailman School of Public Health and NBER.

"Our article, 'The Applied Value of Public Investments in Biomedical Research,' shows that publicly-funded research creates knowledge that links to private companies' efforts to develop drugs, medical devices, and other patented biomedical products," says Harvard's Li. "We find that 30 percent of NIH-funded grants produce research that is cited by a private-sector patent."

NIH, the world's largest single funder of research in the life sciences, provides support for one-third of biomedical R&D in the United States, as well as the majority of funding for so-called "basic" or broad-based biomedical research. Using data on life science patents (including drugs, devices, and other medical technologies), Li, Azoulay, and Sampat analyze the output of research grants awarded by NIH over a 27-year period and provide a method for large-scale accounting of linkages between these public research investments and their commercial applications. Recognizing that some patents are more valuable than others, they also examine linkages between NIH grants and patents associated with marketed drugs.

"We find that about 10 percent of NIH grants generate a patent directly--an easier-to-grasp metric that policy makers often focus on to capture the near-term economic returns to public funding of biomedical R&D," say the authors. "According to our research, however, a much larger number of NIH grants--about 30 percent of them-- generate articles that are subsequently cited by commercial patents. Focusing solely on the direct patent output of NIH funding may dramatically understate its importance for producing research that informs commercial innovation."

In addition, Li, Azoulay, and Sampat find that grants for "basic" science are almost just as likely to be cited by patents as grants for more "applied" work--which may be surprising to those who question its practical value.

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