Henderson and Cockburn.

• Position: Economists - Brief Article

U.S. taxpayers funded $14.8 billion of health-related research last year, four times the amount that was spent in 1970 in real terms. Henderson and Cockburn evaluate the impact of these huge expenditures on the technological performance of the pharmaceutical industry. They conclude that the returns from this investment have been large and may be growing even larger. Public sector science creates new knowledge and tools and produces large numbers of highly trained researchers, all of which are a direct and important input to private sector research. Further, public science sustains an environment in which for-profit firms can conduct their own basic research, which in turn contributes to the global pool of knowledge. Measured...