Anlaysing Federally Funded Research

¶ … Federal Government Funding

Federal funding has been at the heart of many breakthroughs in medical research in the 20th century (Angela & Chris, 2000). The NIH takes credit for leading the research campaign for many years. The achievements by NIH are many. They include (Angela & Chris, 2000):

Reduced time frames for the discovery and development of new cures

Lowered the incidence of disease rates among the sick

Reduced mortality

Reduced disability levels

Better quality of life through pain reduction and suffering.

Sustaining University research, education and future leading scientists through support

The federal government, through NIH, funds 36% of all the biomedical research in the U.S. The Non-Profit Organizations contribute 7% while the private sector funds 57% (Angela & Chris, 2000).

Although the federal government funds both basic and applied research, it has focused most of the resources on basic research. Basic research is essential in the discovery of new principles in science. Researchers are often unable to get enforceable rights on property that would help to recover their investment in the new ideas. Basic research disseminates knowledge for free. Consequently, investing in basic research is often unprofitable; albeit in the short run; unless it has clear links with applied research (Angela & Chris, 2000).

Concerns about Federal Government funding

Boston Globe's Spotlight Team led a group of researchers in investigating health-related R&D in the 90s to arrive at the conclusion that pharmaceutical companies "piggyback" on research done by the government and in turn charge onerous prices (Wendy, 2011). The article observes that NIH takes huge risks and reaps little. Globe's report says that government funded research worth about $170 million contributes between 40 to 50% of the best selling drugs. The net profit recovered from the sale of such drugs by companies in 1997 was 14%. This is higher than the 6% that is the average recorded for industrial companies in the Standard & Poor (Wendy, 2011). The government funds basic research because the knowledge acquired is for public good. The assumption is that such incentives as patents motivate companies to bring the results of the research to the marketplace. Other observers point out that health care is both public and private, in the reaping of the benefits. Therefore, it is not entirely a public good (Wendy, 2011). Companies receive individual benefits that are determined by its public investments. It is also observed that incentives for development of drugs and patents are not necessarily for innovation in the field because there is a lot of government subsidization of research and development (Wendy, 2011).

Public investment in basic research reduces some fraction of the incentives conferred by patents that are critical for encouraging private research by companies (Wendy, 2011). For instance, the high cost of AIDS drugs is not related to the cost of R&D or long bureaucratic regulatory procedures, since there is significant government investment in the research and a fast-tracked approval of the drugs (Wendy, 2011). The general view is that government funded research is a long-term venture that does not focus on immediate and overt profits. Rather, it aims at benefiting the society as opposed to individual companies (Wendy, 2011). Professor Ian Cockburn and Rebecca Henderson point out in their study that the return to government as a result of the investment in basic research may only be 30% every year. The figure may be significantly higher since it does not account for the wider effects of innovation in the pharmaceutical industry and general health and well-being (Wendy, 2011).

What might happen if the government significantly reduces its level of funding for research?