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comparison with the situation with ATP funding. Three measures of benefit are computed for each project: (1) social return on investment, (2) private return on investment, a component of social return, and (3) social return on public investment, the return on ATP's investment based on the difference in social return with and without the ATP.

Findings: Large Social Spillovers

All the projects have expected social returns much larger than their private returns, primarily due to projected positive spillovers to patients treated with the new technologies. ATP played a significant role in increasing the expected returns on these projects to the developers and to society at large by accelerating the R&D phase of the projects and improving the probability of technical success. The estimated composite social return on ATP's investment in the seven projects is $34 billion, in net present value.

Limitations

Our methodology and its use to evaluate the seven projects have limitations. Modeling the entire process from R&D to health outcomes requires the development and use of a large amount of data. In some cases, the data is directly estimated. In others when data are lacking, assumptions must be employed. Thus, the findings are preliminary. Despite limitations, this approach does provide a useful framework for evaluating ATP's expected contributions to social welfare.

EVALUATING MEDICAL TECHNOLOGIES

The objective is to provide insight regarding the factors that affect the social return on public investment in ATP-funded projects with medical applications. ATP-funded medical technologies may improve the long-run health outcomes of thousands of patients each year with acute and chronic diseases. They may also reduce the cost of health care. Valuing these effects requires extending conventional benefit-cost models and applying methods commonly used in health economics. We developed a framework for measuring benefits resulting from improved patient health, reduced cost of medical care, and creation of new business opportunities for the technical innovators and their partners.

We also demonstrated the feasibility of our approach by applying the methodology to seven ATP-funded technologies in tissue engineering. Tissue engineering integrates discoveries from biochemistry, cellular and molecular biology, genetics, material science, and biomedical engineering to produce materials and techniques that can be used either to replace or to correct poorly functioning components in humans or animals. At the time of the study, the seven projects examined comprised all of the tissue engineering projects funded by the ATP;



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