Life Science Compliance Update

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February 14, 2013

White House PCAST: Rival Countries Gaining on US Medical Research Spending

The Nation once led the world in investments in research and development (R&D) as a share of gross domestic product (GDP), but more recently, the United States has been investing less in R&D than other leading and emerging nations invest.  Moreover, U.S. industry has been shifting its investments toward applied R&D, narrowing the support for basic and early-stage applied research, which is crucial to transforming innovation.  

Without adequate support for such research, the United States risks losing its leadership in invention and discovery—the driving force behind the new industries and jobs that have propelled the U.S. economy over the past century.  

President Obama’s Council of Advisors on Science and Technology (PCAST) recently released a report maintaining that if the United States wants to maintain “its lead in technology and innovation, then the federal government must be willing to spend more on basic research and encourage industry investments.” 

PCAST said that U.S. investment in research and development as a fraction of gross domestic product “has dropped from first in the world to eighth, and is fourth in the world among large economies.  The report warns that this is a significant threat to long-term research if qualified researchers left for other countries couple with a private sector that is focused primarily on near-term results. 

At the report’s announcement, John Holdren, director of the White House Office of Science and Technology Policy and PCAST co-chair, said that the United States, for now, has no equal in terms of capabilities.  “Note that I said unmatched and not unrivalled,” said Holdren, “we do have rivals.  More and more of them all the time.” 

The report argues that losing a high ranking in science and innovation would cost the US jobs in science and supporting industries as well as benefits to safety, medicine and national security.  “More than half, and perhaps as much as 85 percent of productivity growth in the United States in the first half of the 20th century” can be attributed to technical advances, says the report.  It also describes the National Science Foundation, National Institutes of Health (NIH) and the Energy Department as the “primary stewards of basic research in the United States.” 

To promote domestic research, PCAST urges the government to increase research and development expenditures from the current level of 2.9 percent of GDP to 3 percent as well as create policy incentives that will increase the private sector's investment in long-term research.  Private industry currently accounts for some two-thirds of the total R&D expenses in the U.S. 

The report also warns against instabilities in funding, such as the looming sequestration, and says the government should develop a multiyear funding approach to prevent research gaps.  It recommends using the multiyear financial plan similar to the Defense Department's future years defense program as a possible blueprint.

Taxes also come into play, with PCAST suggesting that the research and experimentation tax credit be made permanent and rise from a rate of 14 percent to 20 percent.  It says this will make it more useful to small and medium-sized enterprises that are R&D intensive. 

Among the actions that PCAST recommends, three stand out in scope and importance: 

(1)  that the President reaffirm his stated goal that U.S. total R&D expenditures (across the public and private sectors) should achieve and sustain a level of 3 percent of GDP;

(2)  that actions be taken, some achievable entirely by Executive decision, to increase the stability and predictability of Federal research funding; and

(3)  that Congress not only make the R&D tax credit permanent, but increase it to at least 17 percent, as you have already advocated. 

While the benefits from scientific advancements are evident in virtually every aspect of modern life, they are perhaps most immediate in the area of human health.  Biological discoveries have lengthened our lives; in the mid-2000s, the life expectancy in the United States reached an all-time high of 77.5 years, up from 49.2 years at the beginning of the twentieth century. 

 Advances in treatment rooted in improved understanding of biological function contribute to continual improvements in the quality of life in later years. HIV-AIDS, whose diagnosis was once a death sentence; is now treatable: In areas where HAART (highly active anti-retroviral therapy) became available, deaths related to HIV have decreased by 94 percent and transmission rates by 96 percent. 

Thanks to the development of vaccines, global incidences of diseases, including diphtheria, polio, yellow fever, and tetanus, have plummeted, and smallpox has been eradicat-ed. Sequencing of the human genome has led to the identification of genes associated with diseases such as multiple sclerosis and cystic fibrosis, bringing the promise of improved treat-ment and ultimately a cure. 

A healthier population is also an economically more productive population.  That is not, however, the only reason that Americans value the benefits of biomedical research.  We want longer, healthier lives for our elder parents, ourselves, and our children.  Further, it is an American social value to be generous in bringing healthier lives to our own neediest and to the world.  Today, Americans look to science and technology for health care that is not only more effective, but also more affordable, so that all may benefit fully.

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