Efforts by patient advocates, scientists and the biotech industry to persuade Congress to support biomedical research have been wildly successful, yielding an embarrassment of riches for the National Institutes of Health.

President Bush's first budget proposes the largest increase in NIH's history, $2.8 billion (16.5%). And he has committed to an even larger $4.1 billion increase next year as he and members of Congress from both parties have agreed that NIH should receive at least $27 billion in the fiscal year beginning in October 2002, double the fiscal 1997 level.

Projected out over the following 10 years, NIH now can expect to receive more than $130 billion in total additional funds over what it might have expected in 1997.

At $27 billion NIH's budget will be bigger than the gross national product of Panama. By a more relevant measure, the NIH allocation will represent far more money than the entire biotech industry worldwide has raised in any year save the record $36.8 billion in 2000, which itself dwarfed the $7.8 billion in the next record year of 1996.

By another metric, research (as opposed to development) spending by the biotech and pharmaceutical industries, much of which is spent on the far more expensive endeavor of moving science past basic research, probably was only about $11 billion last year (see "Public Versus Private Spending", A5).

And while the Bush administration took pains to trumpet the largess it was bestowing on NIH, the FDA budget has remained under wraps. When it is revealed, probably this week, it will be surprising if it provides any significant endowment to the agency's efforts to boost its own scientific portfolio.

But easy money almost inevitably creates its own set of predictable problems. The increase in funding comes with an increased sense of the government's importance, as politicians convince themselves and taxpayers that a larger overall NIH budget translates into a larger public sector role in the development of each individual drug.

From this point of view, NIH discovers and tests new drugs and then turns them over to industry to manufacture, package and market, an idea that appeals to politicians and advocacy groups that want government to get a piece of the action from each new drug that NIH has touched, whether in the form of more substantial royalties or "reasonable pricing" agreements.

And while industry supports the expansion of NIH spending, underneath this universal agreement there are sharply different perceptions about the nature and value of its contributions to the U.S. health care system, particularly the development of new pharmaceuticals. These divergent views also result in different ideas about how much the respective contributions of NIH and industry are worth, as well as the most appropriate way to provide a return on the public investment.

At the same time, the surge in U.S. support for medical research coincides with intensifying pressures to contain the cost of health care, especially the pharmaceutical component. Thus, there is strong pressure for government to be able to participate in commercial decisions, especially pricing, and a growing interest in using royalties from industry to keep the research dollars flowing once the budget surplus is tapped out.

Biotech as an NIH spinoff

The U.S. biotech industry is characterized by some members of Congress as essentially a spinoff from NIH, just as the modern civilian aerospace industry got its start from World War II contracts and has benefited by applying taxpayer-funded military innovations.