After The Fall: The Financial Future of U.S Medical Research

14 December 2012 by Nsikan Akpan, posted in TBS Journal Club

Earlier this week, I wrote a story for Scientific American, "Fiscal cliff" threatens to impede biomedical discoveries, which discussed the potential impact of the looming federal budget cuts on the health research industry in the U.S.

As I recover from the adrenaline rush/dopamine overload that was triggered by publishing my first piece, I thought it’d be worthwhile to share a few factoids (with some related resources) that didn’t make it into the piece:


Half a million

The National Institutes of Health supports about half a million jobs (432,000 in 2011) in the U.S. Federally funded medical innovations also spawn a number jobs in healthcare, pharma, and biotech industries.

One opinion is the corporate taxes paid by pharmas and biotechs should be directly funneled into government funding for research.

What do you think? What are some other ideas for stabilizing federal support of research?


Upper crust, lower crust

The NIH budget experienced a net decline over the last 5 years, although the stimulus bill in 2009 did provide a temporary 2-yr boost. One concern during this stressful period was that the “bottom 10” states—ones that have historically received less NIH money—would suffer more than the leaders in biomedicine. Based on the NIH data, this hasn't been the case.

Funding—which correlates with state population by congressional mandate--has dropped by 5-6% for both the Top 10 and the Bottom 10 (Table 1).

Table 1

(Click for larger viewing)

The bottom 10 has witnessed a sharper decline in the number of awards, but there were also fewer recipients in these regions (Table 2). In all likelihood, smaller medical institutions were forced to close at a higher rate in these states, which mirrored the trend for small businesses in general.

It’s worth noting that surviving institutions in these locations are receiving more money as a result (Table 2).

Table 2

(Click for larger viewing)


October 1, 2012

The NIH’s fiscal year for 2013 predates the calendar year by ~2 months (it runs from 10/01/2012 – 09/30/2013). Thus, the NIH has already planned where funds will be allocated for next 9 months. The latest news suggests that a proposal for the tax code is closer to fruition than a resolution on entitlements (a.k.a the budget sequestration), and it’s uncertain how the NIH and its beneficiaries will respond if the budget is cut. Will the NIH stop issuing new grants or reduce its payout of current grants?

For many of the academic officials that I interviewed, maintaining the status quo would be the #1 priority.

One chairman told me that his medical school “would have a very large gap in the operating budget” because his department, like many academic research programs, often rely on the NIH to cover so-called “indirect costs”—general expenses like utilities and building upkeep. Money would be repurposed to maintain the school and keep current projects afloat, which would ultimately prevent the school from hiring new faculty.  Elsewhere, the University of Pennsylvania is expecting to cut a minimum of 1000 research jobs, according to an estimate given on Capitol Hill by one official.


PhD Workhorses

If you’re working on a PhD in science/engineering right now and need to fill your spare time in between incubations or postulates, may I recommend 2 reports on the PhD workforce. 

Provides historical trends for biomedical PhDs, along with recommendations for keeping research graduates in academia. 

See what U.S. doctorates wind up doing after graduation. Fun (if you’re nerdy like me) and interactive tables.

The outlook for aspiring scientist depends largely on whom you ask. During the recession, unemployment for scientists (4-5%) remained well below the national average (8-10%), meaning higher education is still valuable for future individual gains.

However, many biomedical students who want to stay in academia are worried that there will be fewer jobs available at universities by the time that they finish their degrees, but the NIH is making strides to address these issues.


2 Responses to “After The Fall: The Financial Future of U.S Medical Research”

    • Nsikan Akpan Reply | Permalink

      Hi Stephan,

      I did see it, and I would argue that a few of Colin’s points are misleading. First, Colin doesn’t mention any specific benefits for scientists, but rather cites general reasons why budget reform would be good for the nation. Colin doesn’t offer many, if any, positives for scientists, and I’ve never heard a scientist say, “You know what I need? Less money.”

      He’s right: “A reduction in average annual grant from about $450,000 to $400,000” is “not exactly penury”, but it’s tremendous when you consider the immediacy and when you look at the actual numbers versus the averages. Next year, research grants would lose $1.4 billion, while training grants—which are used to fund research education—would lose $61 million.

      NIH budget has steadily increased for +70 years because it’s an agency that is normally protected from the whims of politics (some would argue this is a good thing, as medical discoveries benefit everyone). Thus, there’s no contingency plan for a dramatic 8.2% cut. Even a significant delay after January 2nd would be calamitous. Kenneth Miller raises many of my concerns in the comments’ section of Colin’s piece.

      Some other points: Colin writes that Peter Orszag and Paul Krugman “say that going over the cliff may be the best path to a reasonable budget settlement.” He’s referring to this Krugman article, which mainly addresses the tax code, but doesn’t discuss the impact of the budget sequestration. Plus, Orszag has made a number of statements on the dangers of sequestration, including this one.

      Colin’s right. The U.S needs to amend its tax code and entitlements, but the “fiscal cliff” was never thought of as a serious plan for budget reform, which is why politicians are trying so hard to avoid it. Most agree that ‘across-the-board’ spending cuts and tax hikes aren’t the way to go.

      One last point: it is also conceivable that more than half of the $2.5 trillion deficit could be eliminated by simply returning tax rates for high-income households to “Clinton-era” levels.

      Thanks for the comment!

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