Annex to Chapter Two
which were subsequently written up as the book below (6) edited by Murphy and Topel.
www.laskerfoundation.org/advocacy/pdf/ exceptional.pdf
6 Murphy K, Topel R (eds). Measuring the Gains from Medical Research: An economic approach. Chicago: University of Chicago Press; 2003. The main book describing the detailed work first presented in the Funding First report, Exceptional Returns (see above). Whilst the analysis in each chapter is very rich, it is perhaps unfortunate that the introduction is not very detailed and there is no proper conclusion to pull the various contributions together. It is also noteworthy that the bibliography makes very little, if any, reference to key analyses from the past such as that by Selma Mushkin. 7 Lichtenberg F. Pharmaceutical innovation, mortality reduction and economic growth. In Murphy and Topel (2003; 6 above). pp. 74–109.
now deals with the issue of the lag between R&D spending and the health benefits. Unlike the previous study it does not provide figures for the returns for individual fields.
This chapter by Lichtenberg estimates the social rate of return on pharmaceutical investment in research (in terms of the value of additional life years generated) is around 67%. Whilst this chapter fits well into Lichtenberg’s wider stream of research on related topics it is not particularly well integrated into the rest of Murphy and Topel’s book.
8 Access Economics. Exceptional Returns: The value of investing in health R&D in Australia. Canberra; 2003. This Australian replication of the Funding First study uses the same value for a life to estimate the return on Australian health R&D. It is based on improvements in lifespan which combine reductions in specific mortality and morbidity rates for a range of illnesses. The base-case assumption is that R&D is responsible for 50% of the improvements in healthy lifespan, and that Australian R&D contributes 2.5% of the total gains, this being the percentage of global R&D undertaken in Australia. The study leaves unresolved difficulties. It uses disability-adjusted life years (DALYs) to allow for gains in mortality and morbidity; this leads to the suggestion that because there is a decline in DALYs in the mental health field, there is negative value to the measure of health ‘gains’ from mental health research. 9 Access Economics. Exceptional Returns: The value of investing in health R&D in Australia II. Canberra; 2008. This report updates the one above using new figures and a somewhat revised methodology. The value of a statistical life year has been increased to AUS$266,843 (at 2008 prices) based on a new meta-analysis of studies and the Australian contribution to world R&D outputs increased to 3.04% based on more recent bibliometric data on clinical research. Most fundamentally, the analysis
www.accesseconomics.com.au/publicationsreports/ search.php?searchfor=exceptional+returns&from=0 &search=Go
10 McGuire A, Raikou M. Inferring the Value of Medical Research to the UK. LSE Health Working Paper 5/2007. London: LSE; 2007. Broadly replicates the methodology described in Murphy and Topel to the UK. Produces a large figure of £2.6 trillion as the net gain for 1970–2000, but attributes all the improved life expectancy to medical R&D and acknowledges but does not seem to calculate either the contribution from other factors that led to improved life expectancy or the percentage of the R&D impact that comes from UK research.
www.lse.ac.uk/collections/LSEHealth/pdf/ LSEHealthworkingpaperseries/LSEHWP5.pdf
11 Johnston SC, Rootenberg JD, Katrak S, Smith WS, Elkins JS. Effects of a US National Institutes of Health programme of clinical trials on public health and costs. Lancet 2006;367:1319–27. This paper differs from the approaches used in the Funding First and Access Economics work. It adopts a hybrid approach to assess the costs and benefits of phase III randomised trials funded by the US National Institute of Neurological Disorders and Stroke. Yearly total incremental net benefits of the programmes are calculated by combining trial costs and treatment costs with a monetary value for the QALYs gained from the implementation of the trial findings. The study uses a value of a QALY based on the US GDP per capita, suggesting that this reflected “the average yearly economic productivity of a US resident, regardless of employment or age”. The study also takes into account any savings made as a result of implementing the trial findings. This work is an advance on many previous approaches but has the weakness of giving insufficient attention to other research that was reporting about the same time. 12 Cutler D, Rosen A, Vijan S. The value of medical spending in the United States, 1960–2000. NEJM 2006;355:920–7. This attempt to value medical spending in the USA 1960–2000 does not really seem explicitly to discuss the value of research. This is despite Cutler being one of the Funding First team and using somewhat similar approaches to the Funding First work, including using CVD as one of its main examples and the value of a statistical life. They claim that at least 50% of the life expectancy gains since 1950 are due to medical advances, but discuss the increased expenditure on health care and not the role of research.
http://content.nejm.org/cgi/content/ abstract/355/9/920
Medical Research: What’s it worth? Estimating the economic benefits from medical research in the UK
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