Brain Disorders and Diseases Cost U.S. Economy $1.5 Trillion, Underscoring Scale of Opportunity for Greater Research and Innovative New Treatments to Improve Health and Drive Prosperity, ITIF Study Finds

July 11, 2016

WASHINGTON—In addition to the significant human costs, mental and neurological disorders and diseases cost the U.S. economy more than $1.5 trillion per year—8.8 percent of gross domestic product (GDP)—underscoring the scale of the potential benefit that could come from accelerating the progress of innovation to diagnose, treat, and cure a wide range of neurodegenerative diseases, psychiatric disorders, and other brain conditions, according to an analysis released today by the Information Technology and Innovation Foundation (ITIF).

ITIF, the top-ranked U.S. science and technology policy think tank, urged policymakers to consider policies that support federal research into brain diseases and disorders and enable biopharmaceutical innovation as not only health policies, but also important economic policies.

“Tens of millions of Americans suffer from a variety of mental and neurological health conditions each year,” said Adams Nager, ITIF economic policy analyst and the report’s lead author. “Besides the very significant human costs, these conditions also have a large impact on the U.S. economy. When you factor in both direct expenditures like treatment and reduced workforce participation, plus indirect costs like social services, the bottom line is staggering. But it also represents an incredible opportunity: Boosting brain research and spurring discovery of new treatments would simultaneously improve health and increase prosperity. If we could make more progress on innovations to address these conditions, the economic gains would likely vastly outweigh the costs of research.”

According to the report, more than 50 million American adults—21.8 percent of the adult population—experienced a brain disease or disorder in the past year. This includes neurodegenerative diseases such as Alzheimer’s and Parkinson’s, psychiatric disorders such as anxieties, bipolar disorder, major depression, and schizophrenia, as well as diseases such as autism.

In estimating the size of the opportunity from improving treatment of these brain conditions, ITIF measured direct costs, including those for treatment, disability payments, and incarceration; reduced productivity from not working, working less, or working less productively; and the cost of other conditions that frequently appear with brain conditions and impact physical health or substance abuse. The study also calculates the indirect costs to the economy of these conditions, including crime, suicide, and homelessness.

Taken together, the report finds that the direct and indirect annual costs of brain conditions amount to approximately 8.8 percent of GDP, or $1.5 trillion. Nager was careful to note that this estimate could not measure many of the indirect costs of brain diseases and disorders and is not a truly comprehensive estimate of the opportunity for growth from curtailing mental illness. Brain and mental health disorders and diseases can linger for decades and impose costs on an individual over the course of a lifetime, as well as impose heavy tolls on families and communities in addition to individuals. What is clear is that the measurable costs of mental health on the U.S. population and economy are very large, underscoring the need for serious thought on how to shape public policy to maximize efforts to cure or better treat these diseases and disorders.

As science has evolved, it has become clear that many kinds of mental illness have a direct physical component and that biopharmaceutical innovation holds significant promise in providing treatments. However, scientists still have a limited understanding of the brain and the mind, and most medications and treatments target symptoms rather than root causes. The report proposes a series of policy recommendations to spur discovery of new treatments through biopharmaceutical innovation:

  • Expand funding for the National Institute of Health’s (NIH) National Institute for Mental Health to support expanded scientific research, and fund NIH’s Brain Research through Advancing Innovative Neurotechnologies (BRAIN) Initiative with at least $1 billion per year.
  • Encourage biopharmaceutical companies to invest more in research and development by ensuring intellectual property protection for drugs on the marketplace, especially in other nations, and by limiting price controls.
  • Update the U.S. tax code to encourage more biopharmaceutical research, including by expanding the alternative simplified research and development tax credit from 14 percent to at least 20 percent and introducing an “innovation box” policy that lowers corporate tax rates on profits derived from intellectual property. 

“In an era of budget shortfalls and a growing national debt, it is tempting for federal policymakers to reduce funding for mental health research while imposing price controls, weakening intellectual property protections, and enacting other measures to reduce spending on drugs,” said ITIF President Robert D. Atkinson, co-author of the report. “But doing so would be penny wise and pound foolish: It would modestly improve short-term budget conditions but would reduce the pace of innovation related to mental and neurological health and ultimately mean more human suffering and slower rates of economic growth.”

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