Understandably, corporate research focuses mainly on applied research and product development that moves products to market rather than on the undirected disease-oriented research or fundamental basic biology familiar to NIH. Pharmaceuticals, biologicals, and medical implants all require human studies to reach the market; therefore, clinical investigators and manufacturers need to work together closely to ensure that testing proceeds efficiently and under the strictest scientific methodology. Development and testing requirements for investigative new drugs or devices probably account for these large R&D expenditures (Battelle, 1991, Fletcher, 1989). Also, high levels of research investment have been attributed in part to the commercial potential for biological products such as genetically engineered insulin (Institute of Medicine, 1990). In 1991 industry contributed an estimated $13.5 billion to health research, accounting for about 48 percent of the total national investment in health research (Figure 3-1) (National Institutes of Health, 1993b).

In the past, a great deal of research was performed ''in-house" for proprietary reasons, and industry relied on university research programs to develop basic knowledge and scientific talent. In addition, pharmaceutical firms, and now biotechnology firms, generally contracted with clinicians in academic centers to test compounds in all phases of clinical trials. During the 1980s these established paradigms of academic-industry and industry-government relationships began to shift. Rapid advances in science and changes in the tax code encouraging R&D investment and technology transfer have prompted many special linkages among industry, government, and academic scientists (Witt, 1991). Shared interests in specific problems have helped to create some industry-sponsored cooperative basic research programs located in universities (National Academy of Sciences, Government-University-Industry Research Roundtable, 1986). Industry has also been working closely with NIH to develop numerous therapies, particularly new drugs to fight HIV infection. Although most regard these new linkages favorably, they can create problems of conflict of interest from the level of individual investigators to that of the research institutions themselves. Some of these unique relationships between industry and academic scientists are elucidated in Chapter 5.

The shifting policies of the health insurance industry and Medicare is another problem confronting manufacturing industries that require human testing to bring their products to market. The move toward cost-containment has driven many employers to shop for health plans that provide a certain level of care at the lowest cost to themselves and their employees. More and more employers are choosing to provide managed health care as the only option. Although managed health care can potentially reduce the costs of health care in the short-term, its effects on innovation through drugs, devices, and procedures have not been fully realized (Holmes, 1992; Laetz, 1991; Leaf, 1989; Moody, 1992; Telling, 1992). As the debate over ways to contain the rate of growth of health care intensifies in



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