Ch. 11— Economic Considerations • 245 
hand and ready for sale.) With reduced demand, 
vendors would have to raise prices to cover their 
overhead. Second, if the number of animals used 
decreases, the expense of maintaining each re- 
maining animal in a laboratory facility can be ex- 
pected to increase. Laboratory -animal facilities 
would have to spread the cost of operation over 
fewer animals. In both breeding and laboratory 
maintenance of animals, there are economies of 
scale such that breeding and maintenance of mar- 
ginally fewer animals does not yield a correspond- 
ing decrease in costs. 
COSTS AND BENEFITS IN RESEARCH 
The many important economic contributions of 
research with animals are difficult to character- 
ize. First, research does not lend itself to such 
analysis. Normally, one experiment will draw 
from many others and contribute to future re- 
search, making allocation of costs and benefits to 
a particular activity virtually impossible. Second, 
the outcome of each experiment is uncertain, and 
the experiences in one program would not nec- 
essarily apply to others. Third, the delay between 
research and commercialization is long, reaching 
a decade or more, with payoff taking even longer. 
Thus, it is not possible to evaluate with any rea- 
sonable confidence the costs and benefits of cur- 
rent or even recent animal and nonanimal re- 
search practices. 
Biomedical Research 
This section discusses biomedical research in 
general, which unavoidably averages many di- 
verse research experiences. Biomedical research 
is of interest because it is a major user of animals, 
because it affects human health, and because it 
affects an important sector of the economy— the 
health care industry. As with most areas of re- 
search, many of the contributions are indirect and 
many are not easily quantified in economic terms 
(see ch. 5). Most benefits are realized in the health 
care industry, which in 1983 accounted for $355.4 
billion (10.8 percent) of the gross national prod- 
uct (9). Drugs, which require both biomedical re- 
search and toxicological testing in their develop- 
ment, have annual sales of about $30 billion and 
contribute about 20,000 jobs to the economy (29). 
The first medical discovery that was largely a 
result of research with animals was diphtheria 
antitoxin at the end of the 19th century. Its use 
reduced the likelihood of death for those contract- 
ing diphtheria from 40 to 10 percent (28). Ani- 
mals eventually came to be used in all phases of 
biomedical research and in the development of 
medical products such as drugs and devices and 
of services such as surgery and diagnostic tech- 
niques. 
Research with animals that leads to practical 
applications can last from a few days to many 
years. It may involve inexpensive equipment or 
hundreds of thousands of dollars’ worth of in- 
strumentation, may be performed by a laboratory 
technician with little supervision or by a team of 
highly educated scientists and may be done with 
fruit flies or with primates. The costs will vary 
accordingly. 
The benefits and rates of return on a given ex- 
periment vary widely. The rate of return for a 
given research program can only be determined 
reliably many years after commercialization. In 
the case of products with high research and test- 
ing costs and long lead times to commercializa- 
tion, which applies to many of the products of bio- 
medical research, the lag can be several decades. 
A 1972 study on the rates of return for six large 
pharmaceutical companies for research they con- 
ducted in 1954 through 1961, when animals were 
widely used, estimated the pretax private rate of 
return to be 25 to 30 percent (2). The social rate 
of return— the benefits to the public, was esti- 
mated to be at least twice as high (20). 
Another approach to gauging costs and bene- 
fits involves looking at expenditures from 1900 
to 1975 and comparing them with the benefits 
of medical advances in preventing sickness and 
death in the work force over the same period (4). 
All data were adjusted to 1975 conditions. Anal- 
ogous comparisons were made for 1930 to 1975. 
