US investment in health-related research and development accounted for 5.5% of all national health costs in 2006, a lower proportion than in any year since 2001. With rising healthcare expenditure now making up 16% of the overall economy, research outlays are gradually slipping behind, a new report warns.

Combined public and private sector investment in health research came to $116.1 billion in 2006, 4.2% more than in the previous year, according to the report by public education and advocacy alliance Research!America. At the same time, total US health costs grew by 6.8% to $2,123 billion, a trend that is expected to continue for at least the next decade.

R&D spending as a proportion of US health costs expanded significantly in the decade between 1991 and 2001, from 3.5% to 5.6%, the report notes. It then carried on growing to reach 5.7% of health costs in 2002 and 5.9% in 2004. Since then, however, the trend has started to reverse, with 5.6% of overall health costs going on research in 2005 and 5.5% in 2006.

Industry is still by some distance the leading source of health research funds in the US, providing 55.7% or $64,660 million of total expenditure in 2006. While this was a 6.1% increase over 2005 – in other words, ahead of the overall growth in health R&D spend – Research!America sees it in the wider context of constrained spending by key public funding sources. A “levelling out of public funding has in the past led to a levelling out of private funding,” it observes.

According to the report, the combined health research budgets of the National Institutes of Health (NIH) and other US federal agencies were “essentially flat” between 2005 and 2006, maintaining a trend that began in 2004. The NIH, with health research expenditure of $28,516 million last year, saw its budget remain static for the third year in a row, Research!America notes. Total expenditure by the federal government was $37,706 million in 2006.

Health research spending by universities, state and local governments, independent research institutes, voluntary health associations and philanthropic foundations was estimated at $13,713 million in 2006, compared with nearly $13 billion in 2005.

Of the total industry spend last year, $36,959 million was by pharmaceutical companies and $18,241 million by biotechnology companies, with the rest coming from the medical technology industry.

Poor returns

The bulk of health expenditure in the US goes on insurance, delivery and care, the report points out. With costs continuing to balloon, the $7,000 or so spent annually per capita “would certainly seem worth it if the resulting health outcomes at least matched other industrialised nations who spend half as much,” it comments. Instead, US citizens “pay more for their healthcare than anywhere else in the world, but they do not live as long or as well as many.”

According to the Organisation for Economic Cooperation and Development (OECD), for example, people in more than 20 countries including Korea, Greece and Mexico live longer on average than Americans. Moreover, Research!America adds, the US has 47 million residents not covered by health insurance, two-thirds of Americans are overweight or obese, and “we are facing the retirement of the Baby Boomer generation, who will draw in record numbers on Social Security and Medicare”.

The alliance called for government action to arrest the declining share of research investment in overall health costs. “The importance of federal research funding in priming the pipeline for other sources of research funding cannot be underestimated,” said Research!America chair John Edward Porter.

“The US government’s contributions to basic science have made our nation the world leader in medical and scientific discovery – a position at risk if federal funding does not keep pace at least with biomedical inflation,” he warned.