Bad medicine

BARACK OBAMA, in his state-of-the-union speech on February 12th, called for a new era of scientific discovery. “Now is the time to reach a level of research and development not seen since the height of the space race,” he declared. He praised projects to map the human brain and accelerate regenerative medicine. This would mean spending more on research. As The Economist went to press, America’s government was about to do the opposite.

Federal spending is due to be cut on March 1st, the result of a long brawl over the deficit. Complex politics triggered this “sequester” (Congress excels at nothing if not elaborate dysfunction) but the sequester itself is brutally simple. America will cut $85 billion from this year’s budget (about 2.5% of spending), split between military and non-military programmes. Among the areas to be squeezed is R&D, and medical research in particular.

For years America has enjoyed pre-eminence in research, but this is fading. Chinese investment (including both public and private money) more than quintupled from 2000 to 2010, to $160 billion, in 2005 prices. America’s R&D spending rose by just 22% over that period, according to the OECD. Research also makes up a smaller portion of America’s economy than some other countries’. In a ranking of R&D spending as a share of GDP, America came tenth in 2011. A decade earlier it was sixth.

Nevertheless, America remains the world’s biggest engine for innovation. It spent $366 billion on research in 2011, compared with $275 billion by all 27 countries of the European Union. Despite China’s rapid ascent, America still spends more than twice as much on R&D. Subsidies help. America’s government pays for about one-third of all domestic research and for most basic science.

Medicine is one of the main beneficiaries. America’s National Institutes of Health (NIH) is the world’s biggest funder of biomedical research. It pays for risky basic science; companies pay for later stages of development. For example, the NIH supported early research into monoclonal antibodies. By 2010 such research underpinned five of America’s 20 bestselling drugs. As drug firms trim their budgets, the NIH’s work is becoming even more vital. But since 2003, inflation-adjusted spending on medical research has declined.

With the sequester public investment will shrink further. America’s total outlay on R&D will drop by $8.7 billion this year, according to the American Association for the Advancement of Science. Francis Collins, the NIH’s director, says that his organisation will spend $1.6 billion less in 2013—a cut of 5.1%—and $16 billion less over the next decade. Hundreds of grants will not be awarded. Existing grantees will receive only 90% of the cash promised to them.

These cuts will speed the erosion of American supremacy in research. In December Battelle, a research group, predicted that China would surpass America’s spending by 2023. Thanks to the sequester, that date may come earlier.

But the real problem is absolute, not relative, and affects the whole world, not just America. R&D is a rare type of public spending that stimulates growth. Knowledge is cumulative, easy to share and generates benefits that spill rapidly across borders. Dr Collins says that cuts to the NIH will slow work on Alzheimer’s disease, a universal flu vaccine and cancer therapies, to name just a few.