Studies Find NIH Funding Is Beneficial For State Economies, But Also Politicized

The Families USA study, titled "In Your Own Backyard", argues that the recent plateau in NIH funding is detrimental to economic development in the states. To make their argument, they examine NIH grants in 2007 to each state and the business activity generated by those grants based on data from the Bureau of Economic Analysis (BEA). States generated between $2.49 (Texas) and $1.66 (South Dakota) for each dollar invested that year. Jobs created from NIH funding pay an average of $52,000 a year.

The report concluded that the NIH is an important driver of high-tech economic development in the states and that the loss of NIH funding can have a profound impact on a state's economy.

Download Families USA's "In Your Own Backyard: How NIH Funding Helps Your State's Economy" at: http://www.familiesusa.org/assets/pdfs/global-health/in-your-own-backyard.pdf.

In the December 19, 2008 issue of Science, doctoral student Deepak Hegde and Professor David Mowery of UC Berkeley's Haas School of Business present evidence that these state economic benefits are influenced by the makeup of the Labor, Health and Human Services, Education and Related Agencies (LHHE) subcommittee of the House Appropriations Committee. Their study, "Politics and Funding in the U.S. Public Biomedical R&D System", finds that despite the peer-review process used by NIH to make merit-based awards, congressional appropriators are able to support additional spending in their states and districts. They do this by championing funding for specific biomedical fields that have a link to research institutions in their constituencies.

By analyzing NIH funding data and the members of the LHHE subcommittee between 1984 and 2003, Hegde and Mowery find that having a representative on the subcommittee is associated with a 5.9 percent increase in NIH funding for research institutions. The figure is higher for state universities, which receive 8.8 percent more funding when they have a representative on the subcommittee, and small businesses, which receive 10.3 percent more funding. Between 1984 and 2003, subcommittee representation accounted for 5.3 percent of total funding allocations on average.

Hegde and Mowery conclude that the NIH awards process is influenced by appropriators, but stop short of claiming that political interference causes inefficiency.  Their findings, however, present a challenge for TBED professionals and research institutions seeking to tap into NIH funding to support research projects and build their biomedical industry. As the Families USA report demonstrates, many states rely on NIH funding to drive biomedical business activity. Since institutional capabilities and promising research are not themselves sufficient to secure appropriate funding, grant-seekers must create longer-term plans to gain access to influential legislators.