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Approaches to Developing Government R&D Programs Gregory Tassey

Approaches to Developing Government R&D Programs Gregory Tassey Senior Economist National Institute of Standards and Technology September 2007 tassey@nist.gov http://www.nist.gov/director/planning/strategicplanning.htm.

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Approaches to Developing Government R&D Programs Gregory Tassey

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  1. Approaches to Developing Government R&D Programs Gregory Tassey Senior Economist National Institute of Standards and Technology September 2007 tassey@nist.gov http://www.nist.gov/director/planning/strategicplanning.htm

  2. Factors Driving Government R&D Policy & Budgets • Rationales for government involvement • Macroeconomic trends (debt, slow economic growth) • Demands for government efficiency (GPRA, PART) • Competition for available resources across the R&D portfolio (ACI)

  3. The Process for Determining R&D Programs and Budgets Identifythe problem Rationalize government program Do strategic planning Propose technical solution (set of projects) Conduct research Assess economic impacts

  4. Why Economic Analysis? • Technology is an input into an economic process • Can no longer dodge this fundamental relationship • Even when ultimate goal of R&D is public good (e.g., health care) • Products and services delivered by industry(supply chain) • Achieving cost and quality objectives depends on private-sector efficiency • i.e., attaining a better return on investment

  5. Developing a Government R&D Program • Demonstrate systematic underinvestment by industry • Determine amount of R&D • Determine composition of R&D • Efficiency of R&D Process • Project Economic Impact

  6. Targets of Economic Analysis for S&T Programs

  7. NIST Study of Biopharmaceutical Technology Infrastructure • Estimate the U.S. biopharmaceutical industry’s annual spending on technology infrastructure • Determine key areas of technology of underinvestment • Characterize and estimate the potential efficiency gains from an improved technology infrastructure • Potential drug development cost reductions • Shorter time to market for new drugs • Greater probabilities of product approval by the FDA

  8. Annual Technology Infrastructure Expenditures by Technology Focus Area, 2005 Source: RTI International

  9. Potential R&D Cost Reductions in Biopharmaceutical Development with an Improved Technology Infrastructure Source: RTI International

  10. Potential Manufacturing Efficiency Gains from an Improved Technology Infrastructure a From Frost and Sullivan (2004). Source of estimates: RTI International

  11. The Bottom Line • The lack of adequate generic technology research leads to long delays in significant innovation • The lack of adequate infratechnology research leads to inefficiencies in R&D, production, market development, and supply-chain integration • The U.S. economy has gotten away with inefficient management of its R&D portfolio in the past due to lack of global competition • R&D programs must now be rationalized by demonstrating the cost of underinvestment and the subsequent economic benefits from increased R&D funding

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