1. The Economic and Health
Benefits of Research
Jon Sussex
Deputy Director, Office of Health Economics
BioWales 2013
Cardiff, Wales • 19-20 March 2013
1

2. Agenda
• Medical research
• Health gains
• Economic returns

3. UK Medical Research Funding Sources
2009/10
£billion
Health Departments 0.7
MRC & Other Research Councils 0.8
Funding Councils etc. 1.1
Total Public Sector 2.6
Charities 0.9
Private Industry 4.5
TOTAL (est.) 8.0
Source: UKCRC (2012) UK Health Research Analysis 2009/10
3

4. Exceptional returns to UK
public medical research
• 39% rate of return (real,
annual) to cardio-
vascular research
• 9% from health gains
• 30% from economic
gains

5. UK health gains from cardiovascular research
Source: Medical Research: What’s It Worth?

6. Total number of QALYs gained in UK due to
cardiovascular interventions 1985-2005
3000
Quitting
smoking
1ary prevention
2000 of CVD
Chronic stable
angina treatment
1000
2ary prevention
of CHD post-MI
0
Types of medical intervention
Source: Medical Research: What’s It Worth?

7. Average time lag between spending on
research and health impact ≈ 10-25 Years
200 Age and Number of UK Papers Cited in Seven UK
Mean age of cited Cardiovascular Guidelines (2003-2007)
papers is 12.5 years 160
Number
of cited 120
+
papers
80
Period between spending
40
and publication
0
+
1 3 5 7 9 11 13 15 17 19 21 23 25 27
Age of cited papers
(in years)
Period between
recommendation and use Time Lag ≈ 10-25 years
Source: Medical Research: What’s It Worth?

8. UK uptake of 61 medicines launched in the UK since 2007
compared to an average for 16 countries*
150%
UK uptake per head standard units
/country average uptake per head
100%
50%
0%
YR1 YR2 YR3 YR4 YR5
Years from launch
*Australia, Canada, France, Germany, Italy, Japan, the Netherlands, New Zealand, Spain, Sweden, Switzerland and the US; Austria, Belgium,
Finland, Ireland
Source: OHE analysis based on IMS (for volume data) and
ONS/OECD (population data)

9. Economic gains include spillovers
Source: Medical Research: What’s It Worth?

10. Shorter lags between research and economic benefit
Ward and Dranove (1995)
↑ 1% public basic research in a particular therapeutic area (by US NIH)
↑ 0.76% in private R&D in same ↑ 1.71% in private R&D in other
therapeutic category over 7 years therapeutic category over 7 years
In total, a 1% increase in public basic research across the board will generate up
to a 2.5% increase in total private pharmaceutical R&D spend
Toole (2007): Distinction between basic and clinical research
↑ $1 public research Additional private R&D After how many years?
Basic $8.38 8
Clinical $2.35 3
10

11. Exceptional returns to UK
public medical research
• 39% rate of return (real,
annual) to cardio-
vascular research
• 9% from health gains
• 30% from economic
gains

12. Conclusions
• Public, charity and private medical research
are complementary and total >£8bn p.a.
• Together they yield major health gains, albeit
after long time lags
• And important economic gains, after shorter
time lags
• Shorten the time lags to increase the gains

13. References
HERG, OHE and RAND Europe. (2008) Medical research: what’s it worth? London: Office of Health
Economics.
Toole, A. (2007) Does public scientific research complement private investment in research and
development in the pharmaceutical industry? Journal of Law and Economics. 50(1) 81–104.
UK Clinical Research Collaboration. (2012) UK Health Research Analysis 2009/10. London: UK
Clinical Research Collaboration.

14. To enquire about additional information and analyses, please contact
Jon Sussex at jsussex@ohe.org
To keep up with the latest news and research, subscribe to our blog, OHE News.
Follow us on Twitter @OHENews, LinkedIn and SlideShare.
Office of Health Economics (OHE)
Southside, 7th Floor
105 Victoria Street
London SW1E 6QT
United Kingdom
+44 20 7747 8850
www.ohe.org
OHE’s publications may be downloaded free of charge for registered users of its website.
©2013 OHE