This piece was originally written for the Policy Institute's new Policy Review publication, which features essay contributions on a range of different issues by the institute’s researchers and Visiting Faculty.
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Each year, globally, we invest hundreds of billions of dollars of public money in biomedical and health research. In many countries, this investment feels under threat – and while there have always been many competing priorities for the public purse, this threat seems more immediate in the context of widespread austerity, shifting political sands and an increased questioning of the role and value of evidence in our society.
But what do we get in return for this investment in research? Can we justify it when faced with so many other pressing societal needs? And if so, how can we effectively make the case for supporting research?
There is no doubt that research has been vital in transforming healthcare. We are living longer, healthier lives than ever before. However, the extent to which this progress is due to research (rather than, say, general improvements in living standards) is unclear. We need to generate the evidence – and to convince those who hold the purse strings, we need to do so in the language of finance. To articulate a compelling economic argument, we must be able to show that research stacks up as an investment, just as we might make the economic case for roads, schools or aircraft carriers.
This is what we set out to do – along with collaborators from Brunel University London, RAND Europe and the Office of Health Economics – in a series of studies estimating the economic returns of UK biomedical and health research. Such calculations are not straightforward. The time between research investment and health gain is often long, and the contribution of any individual country is difficult to disentangle from the international research endeavour. We also need to be able to quantify and monetise the improvements in people’s health that research contributes to.
To articulate a compelling economic argument, we must be able to show that research stacks up as an investment, just as we might make the economic case for roads, schools or aircraft carriers.– Alexandra Pollitt
Previous attempts in this area had tended to adopt a top-down approach. That is, the starting point had been the overall improvement in mortality and morbidity of the population. A critical assumption must then be made about how much of this health gain results from medical research. However, there is little evidence on which to base such an assumption. To address this challenge of attribution, we opted for a bottom-up approach, starting instead from identifying the most important research-based clinical interventions in a particular health area – in the case of our three studies, cardiovascular disease, cancer and musculoskeletal conditions. Summing up the health benefits resulting from each of these interventions gave us the total health gain – or “output” – for our economic model.
To calculate the “input”, we used the records of UK government and charity research funders to work out how much money had been invested over time in research in these same three health areas. Then because research (a) does not produce immediate results, and (b) is international, we applied a “timelag” between the input and output in the calculations, and we estimated the role of UK research specifically (in comparison to international). Both estimates were based on an analysis of the evidence underpinning UK clinical guidance, on which NHS care is based.
The methods used were complex and are documented in detail elsewhere, but essentially, the estimates set out above allowed us to calculate a rate of return for each pound of public money invested in UK medical research. For cardiovascular research our best estimate was 9%.
This means that for every £1 invested in medical research, we receive 9 pence back in health gains each year. When this approach was applied to cancer research and musculoskeletal research the equivalent figures were very similar, at 10% and 7%. As is the case in any study of this kind, it was necessary to make assumptions and acknowledge uncertainties in the data, but we erred on the side of caution throughout, aiming for a final estimate which was, if anything, overly conservative.
But health gains are not the whole story. Simply by doing research we also generate broader benefits for the economy, a phenomenon often referred to as “spillovers”. For example, life sciences companies in the private sector build on and interact with publicly funded research, creating jobs, bringing medicines and technologies into healthcare, and so on. The return on public medical research spend in terms of impact on GDP has separately been estimated to be between 15% and 18% in the UK. Combining this with the estimated monetised health gain, this suggests an overall return of around 25% on public investment in UK medical research (representing 7-10% in relation to health gain and 15-18% for impact on GDP).
For every £1 of public money invested in UK medical research, we receive around 25 pence back in health gains and GDP benefits every year.– Alexandra Pollitt
In other words, for every £1 of public money invested in UK medical research, we receive around 25 pence back in health gains and GDP benefits every year. It is difficult to compare this figure directly to other areas of public spending, but it is well in excess of the yields of 6-8% that governments typically expect from public investments.
Economic analysis has proven a powerful tool in making the case for medical research, but it still rests upon an array of caveats and assumptions. Producing similar analysis in other research disciplines is harder still – and, indeed, would often not provide an appropriate or comprehensive picture of their impacts in any case. For a government faced with tough trade-offs on public spending, it would also be helpful to have evidence on the “marginal” return to our research investment – ie not just what the average return is, but the incremental benefits we could expect from investing a little bit more. This is an important gap in our current knowledge.
A challenge remains around how we can create robust, comprehensive and engaging accounts of research impact in all disciplines, not just to convince the Treasury, but also to demonstrate value to society as a whole. Assessing the rich diversity of benefits that can come from research needs a similarly diverse range of approaches, tools and methods. There is much work still to be done. Further developing these approaches in a robust and inclusive way is essential for us to better articulate the value – economically, socially and culturally – of investing in research.
Alexandra Pollitt is a Research Fellow at the Policy Institute, King’s College London.