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The Allocation of Publicly Funded Biomedical Research

In: Medical Care Output and Productivity

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  • Frank R. Lichtenberg

Abstract

We develop a simple theoretical model of the allocation of public biomedical research expenditure, and present some empirical evidence about the determinants of this allocation. The structure of expenditure should depend on the relative costs as well as the relative benefits of different kinds of research. Analysts of technical change typically have data on neither of these, but the measures of disease burden we use are indicative of the benefit of achieving advances against different diseases. We calculate distributions of government-funded biomedical research expenditure, by disease, from records of all research projects supported by the US Public Health Service: to obtain a reasonably complete accounting of disease burden, we utilize data on both the dying (from the Vital Statistics-Mortality Detail file) and the living (from the National Health Interview Survey). We find a very strong positive relationship across diseases between total life-years lost before age 65 and public R&D expenditure. But the amount of publicly-funded research on a disease decreases with the share of life-years before age 65 lost to the deases by non-whites, perhaps because lack of scientific knowledge is a less important cause of premature mortality among non-whites than it is among whites. The number of research grants mentioning a chronic condition is completely uncorrelated with the number of people with the condition but very strongly positively related to the number of people whose activities are limited by that condition. There tends to be more research about chronic conditions that are prevalent among people living in low-income households, and that are prevalent among the young (under age 18) and the old (above age 75).

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This chapter was published in:

  • David M. Cutler & Ernst R. Berndt, 2001. "Medical Care Output and Productivity," NBER Books, National Bureau of Economic Research, Inc, number cutl01-1, July.
    This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 7642.

    Handle: RePEc:nbr:nberch:7642

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    References

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. Zvi Griliches & Frank R. Lichtenberg, 1982. "R and D and Productivity at the Industry Level: Is There Still a Relationship?," NBER Working Papers 0850, National Bureau of Economic Research, Inc.
    2. Adams, James D, 1990. "Fundamental Stocks of Knowledge and Productivity Growth," Journal of Political Economy, University of Chicago Press, vol. 98(4), pages 673-702, August.
    3. Rebecca Henderson & Iain Cockburn, 1996. "Scale, Scope, and Spillovers: The Determinants of Research Productivity in Drug Discovery," RAND Journal of Economics, The RAND Corporation, vol. 27(1), pages 32-59, Spring.
    4. Frank R. Lichtenberg, 1996. "The Effect of Pharmaceutical Utilization and Innovation on Hospitalization and Mortality," NBER Working Papers 5418, National Bureau of Economic Research, Inc.
    5. Lichtenberg, Frank R, 1996. "Do (More and Better) Drugs Keep People Out of Hospitals?," American Economic Review, American Economic Association, vol. 86(2), pages 384-88, May.
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    Cited by:
    1. A. Abigail Payne, 2003. "The Effects of Congressional Appropriation Committee Membership on the Distribution of Federal Research Funding to Universities," Economic Inquiry, Western Economic Association International, vol. 41(2), pages 325-345, April.
    2. Sampat, Bhaven N., 2012. "Mission-oriented biomedical research at the NIH," Research Policy, Elsevier, vol. 41(10), pages 1729-1741.
    3. Jay Bhattacharya & Mikko Packalen, 2008. "Is Medicine an Ivory Tower? Induced Innovation, Technological Opportunity, and For-Profit vs. Non-Profit Innovation," NBER Working Papers 13862, National Bureau of Economic Research, Inc.
    4. Daron Acemoglu & Joshua Linn, 2004. "Market Size in Innovation: Theory and Evidence from the Pharmaceutical Industry," Levine's Working Paper Archive 228400000000000002, David K. Levine.
    5. Kenkel, Donald S. & Manning, Willard, 1999. "Economic evaluation of nutrition policy: Or, there's no such thing as a free lunch," Food Policy, Elsevier, vol. 24(2-3), pages 145-162, May.
    6. Rodrigo Cerda, 2007. "Endogenous innovations in the pharmaceutical industry," Journal of Evolutionary Economics, Springer, vol. 17(4), pages 473-515, August.

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