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Dollars Invested in Pharmaceutical and Medicine Manufacturing Research and Development

Investment in research and development work (R&D) in the field of pharmaceutical and medical manufacturing is critical to developing new and innovative medical products that improve our nation’s health and address unmet health needs.

Metrics Calculation:

The Bureau of Economic Analysis (BEA) at the US Department of Commerce primarily draws estimates of R&D investment from the National Science Foundation’s (NSF) Business Research and Development and Innovation Survey (BRDIS). Prior to 2008, NSF's Survey of Industrial R&D (SIRD) was BEA’s primary source data; in 2008, the BRDIS replaced the SIRD. For benchmark years, R&D expense estimates from the NSF surveys are reconciled with data from the Census Bureau’s economic censes. Estimates of R&D expenditures from the most recent year are based on company financial reports, as NSF BRDIS data are available with a 2-year lag. Additional information about BEA’s methodology can be found here: http://www.bea.gov/national/pdf/chapter6.pdf.

The calculations converting the nominal dollar values of R&D investments to 2014 adjusted dollars were performed by the Office of the Assistant Secretary for Planning and Evaluation using the Bureau of Labor Statistics Consumer Price Index (CPI) to adjust for inflation (http://www.bls.gov/cpi/cpifaq.htm#Question_1). The Health System Measurement Project uses the CPI for all nominal value conversions. The CPI adjusts values for economy-wide inflation rather than health care-specific inflation.

Additional Information:

BEA includes R&D investments as a type of private fixed investment in intellectual property. As defined by BEA, private fixed investment “measures spending by private businesses, nonprofit institutions, and households on fixed assets in the U.S. economy.” Fixed assets are structures, equipment and intellectual property used in the production of goods and services. Under BEA’s definition, R&D investments include: 1) expenditures for the discovery or development of new products, of improvements to existing products, and of new or more efficient processes of production; and 2) depreciation on other fixed assets used to produce R&D.

National Summary

Investments in Pharmaceutical and Medicine Manufacturing Research and Development by National Summary

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