Junjie Guo and Ananth Seshadri and Christopher Taber
Executive Summary:
- Economic research finds that $10 million in NIH grant generates around 2.7 private sector patents with a market value of $20-$30 million.
- The social benefit from increased longevity and life quality arising from medical research is much higher than the market value of private-sector patents.
- This suggests that cutting the NIH budget by 40%, as proposed by the U.S. Department of Health & Human Services, would reduce the social benefit from research by
significantly more than $28-$42 billion. - Since part of the indirect costs for research are used to comply with the increasing number of regulations, lowering the indirect cost rate without relaxing relevant regulations
that contribute to the costs would bring financial hardships to universities and other research institutions and discourage them from conducting valuable research. - While one may disagree with the precise manner in which indirect costs are allocated, NIH funding (including indirect costs) likely provides a greater societal return than any other governmental investment.