Medical Research: What's It Worth?

Health Economics Research Group, Office of Health Economics and RAND Europe.

Consulting Report
November 2008

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Understanding the nature, extent and processes involved in the return on investment in medical research has been largely neglected as an area of serious scientific study. This report is the outcome of a one-year study commissioned by the UK Academy of Medical Sciences, the UK Medical Research Council and the Wellcome Trust. Its purpose is to compare the economic benefits accruing in the UK from medical research funded in the UK, publicly or by charities only, to the cost of that research. The report includes time series estimates of public/charitable and private pharmaceutical industry expenditure on medical research; explores the concept of knowledge ‘spillovers’ from public and charitably funded medical research; estimates the magnitude of spillovers in the UK; and computes internal rates of return on research investment. Using mental health and cardiovascular disease (CVD) as case studies, the report provides a clear demonstration of an approach that provides an improved theoretical basis for empirically estimating the two main elements of the economic returns from medical research: the value of health gains and the impact on GDP.