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The Allocation of Publicly-Funded Biomedical Research

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  • Frank 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 upon 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 re-search projects supported by the United States 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 ex-penditure. But the amount of publicly-funded research on a disease decreases with the share of life-years before age 65 lost to the disease that are lost 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).

Suggested Citation

  • Frank Lichtenberg, 1997. "The Allocation of Publicly-Funded Biomedical Research," CESifo Working Paper Series 140, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_140
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    File URL: http://www.cesifo-group.de/DocDL/WP140.PDF
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    References listed on IDEAS

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    1. 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.
    2. 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.
    3. Lichtenberg, Frank R, 1996. "Do (More and Better) Drugs Keep People Out of Hospitals?," American Economic Review, American Economic Association, vol. 86(2), pages 384-388, May.
    4. 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.
    5. 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.
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    Cited by:

    1. Sampat, Bhaven N., 2012. "Mission-oriented biomedical research at the NIH," Research Policy, Elsevier, vol. 41(10), pages 1729-1741.
    2. Daron Acemoglu & Joshua Linn, 2004. "Market Size in Innovation: Theory and Evidence from the Pharmaceutical Industry," The Quarterly Journal of Economics, Oxford University Press, vol. 119(3), pages 1049-1090.
    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. 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.
    5. 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.
    6. Rodrigo Cerda, 2007. "Endogenous innovations in the pharmaceutical industry," Journal of Evolutionary Economics, Springer, vol. 17(4), pages 473-515, August.
    7. repec:eee:pubeco:v:156:y:2017:i:c:p:185-199 is not listed on IDEAS

    More about this item

    JEL classification:

    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • I1 - Health, Education, and Welfare - - Health

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