In a commentary to be published in the December 12, 2012 issue of JAMA, The Journal of the American Medical Association (Biomedical Research in an Age of Austerity), Hamilton Moses III, M.D, an adjunct professor of neurology of The Johns Hopkins Hospital, and E. Ray Dorsey, M.D., M.B.A., an associate professor of neurology at the Johns Hopkins University School of Medicine predict an ever-diminishing role for government and drug company funding of basic biomedical research and suggest scientists look to “innovative” kinds of private investment for future resources.

The 2011 Budget Control Act requires that most US federal military and civilian spending needs to be reduced by 8% to 10% in January 2013.This process, calledsequestrationwill also increase personal and corporate tax rates and revenues substantially. Current negotiations in Washington over sequestration and the so-called fiscal cliff provide an opportunity to fundamentally rethink the funding of biomedical research, they say.

Pointing to a decade of relative flat government funding for biomedical research, higher-than-ever costs of clinical trials, reduced drug industry investment and the threat of deep cuts to the federal research budget without congressional action by January to stop them, the commentators warn that without a number of creative new sources of funding, biomedical innovation faces a crisis.

Private investments
“Regardless of what happens in Congress, biomedical research must look to the private sector and not the federal government as the source of new funds,” Mosesand Dorsey write. “The uncertainty of federal support of biomedical research now and in the near-term only makes the need to look to the private sector for support more certain,” adds Dorsey.

In addition of their medical credentials, Moses and Dorsey also have business experience. Moses, a management consultant, runs the Alerion Institute, which conducts studies on research policy, and Alerion Advisors, LLC, which advises nonprofits and corporate boards on strategy, organization and governance. Hehas advised corporations, hospitals, foundations, and governments as a partner and senior advisor with the Boston Consulting Group, was the chief physician and COO of the Johns Hopkins Hospital (1988?1994), and was interim chief of psychiatry of the Partners Health System and McLean Hospital (Harvard) in Boston (1996?1998). Dorsey is an associate professor at the Johns Hopkins Carey Business School.

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Moses says that under the requirements of the 2011 Budget Control Act the National Institutes of Health(NIH) budget willbe reduced by $2.5 billion, or about 8.2% [1]Considering thatnearlythree-fourths of the entire NIH budget is committed to previously awarded research grants, sequestration is expected toaffect mostly new applications and young researchers. Moses thinks that these budget reductions, including those at otherresearch agencies, such as $0.5 billion at the Centers for Disease Control and Prevention (CDC)and $0.6 billion at the National Science Foundation (NSF), will exacerbate tensions betweenresearchers,large public (genomics) databaseprojects, bioinformaticsand investigator-initiated research. Historically speaking,investigator-initiated clinical research hasbeen a majorsource of new clinical insights andmost biomedical advances.

In the mid 1960s, exploration and medicine captured the public’s imagination, government support of science and technology reached a peak of about 5.5% of the federal budget. [2]Today, government funding for research accounts for roughly 0.4% of the total federal budget.However, the NIH, which supports $32 billion a year for research, has already reduced the proportion of grants to individual investigators. Instead, “They arefocusing instead on collaborations, multicenter clinical trials and large-scale projects such as the Human Genome Project,” Moses noted.

Reserach universities
Inflation associated with conducting research affects many universities with substantial research portfolios.This realfederal support for biomedical research in which federal dollars support two-thirds of all research and approximately 90% in science and engineering, is running at three to four times the base U.S. rate of inflation, decreasing the amount of research by one-third every three years, Mosesnotes.

“Research universities, which have benefitted during the decade of the doubling and even tripling NIH budgetsbetween 1995 and 2005, are now confronted with underfunded researchers and potentially underused research space. [3]The decline of funding comes at a timewhen additional supportfrom clinical fees alsodecline. As a result, the entire fundingof ongoing clinical research requires reevaluation of the available subsidies that have been used to support biomedical research in the past,”Dorsey explains.

Pharmaceutical Industry
Meanwhile, Moses and Dorsey say, the pharmaceutical and drug device companies,which spend roughly two-thirds of the estimated $100 billion spent each year on biomedical research in the United States,are focused on large clinical trials and late-stage research, rather than the basic research that fuels future innovation. He says they are, understandably, spending research dollars on projects most likely to yield short-term returns, even at the expense of investment in diseases that are severe, common and cannot be prevented or treated effectively.

Noting that only 5% of research funding comes from private charities and foundations,resources already strained, Moses says the best way forward is to create new forms of funding, such as mutual funds for individual and institutional investors, “Biomedical Research Bonds,” or patent pools to share risks and rewards inherent in innovation and technology transfer. “These measures are analogous to those used to build sports arenas, ports, bridges or highways, lessening the financial burden on government,” the Hopkins experts write. “They also promise to lower barriers that prevent collaboration between competing universities, companies and researchers.”

Translational research
Some areas of science, such as basic biology and mechanisms of disease, will likely never yield financial value to its discoverer, and consequently should continue to be the major focus of the NIH, Moses says. But to realize the benefits of translational research and the development of marketable new therapies and good businesses, funding must increasingly come from sources other than the government. Moses’ idea is to create new financial instruments that invite individuals, investors or pension funds to invest in research bonds that help cover the cost of making new scientific discoveries. Such bonds would draw not only those looking for financial rewards, but also those with a personal stake in a disease, a willingness to delay financial returns or a desire to help others. Buying a “cancer bond” or an “autism bond” has appeal for many, he adds.

“These bonds may not return anything in five to 10 years, or ever,” says Moses, who believes raising $10 billion a year or more this way is doable. “Science is a form of speculation and the risk of failure is quite high. Yet it?s precisely the high-risk, high-reward scientific endeavors that aren?t getting funded anymore. We need to find a way to ensure they are. Clinical need and scientific opportunity far outstrip our current ability to support innovation.

[1]Office of Management and Budget (OMB). OMB Report Pursuant to the SequestrationTransparency Act of 2012 (Pub L No. 112-155). website. Last accessed September 28, 2012
[2] Federal Obligations for Research and Development, by Character of Work, and for R & D Plant: FY 1951-2011.National Science Foundation (NSF) website.Last accessed October 25, 2012
[3]Dorsey ER, de Roulet J, Thompson JP, Reminick JI, Thai A, White-Stellato Z, et al. Funding of US biomedical research, 2003-2008.JAMA. 2010 Jan 13;303(2):137-43.

For more information:
Biomedical Researchin an Age of Austerity -Hamilton Moses, MD, E. Ray Dorsey, MD, MBA,JAMA. 2012;():1-2. doi:10.1001/jama.2012.14846(Online First)
Research funding doubles in decade – The Scientist | Ted Agres ( | September 22, 2005

Photo: Hamilton Moses III, M.D,adjunct professor of neurology of The Johns Hopkins Hospital. Photo Credit: The Dana Foundation.

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