A deep dive into yet more questions about the Medical Research Future Fund

To optimise government investment in health and medical research, wide-ranging concerns and questions about the Medical Research Future Fund must be addressed, according to Dr Lesley Russell, in the #LongRead below.

Lesley Russell writes:

Beginning in early 2019, I have produced a series of articles examining the operations of the Medical Research Future Fund. These can be accessed here on the Croakey Health Media website.

There are three key reasons driving this work:

1. The $20 billion in capital that delivers the funding for MRFF research, evaluations and administration was clawed back from Indigenous Affairs and health programs. The only way to compensate for this egregious budget decision is to ensure that these funds are well spent in ways that improve the health and wellbeing of all Australians.
2. Biomedical research – and the application of this research – is a driver of national innovation and status.  And, as the coronavirus pandemic perfectly highlighted, national capabilities and  capacities in epidemiology, public health, and vaccine and drug development are essential to protect Australians’ health and to enable Australia to be an effective player in global health.
3. Despite recognition of the substantial returns on investment in research and development, funding for biomedical research in Australia is increasingly difficult to secure, especially for early career researchers. As a consequence, many promising young scientists have left the field or left Australia in frustration and anger.

I was also concerned at the way the Coalition Government, which set up the MRFF, was managing these funds – concerns which proved to be justified, at least on some issues.

My articles were well supported in private by researchers, but there was little public support or willingness to speak out on the issues I raised until Liam Mannix, in a series of recent articles in The Sydney Morning Herald, also raised serious questions about the operation of the MRFF.

Now the Albanese Government is reviewing both the MRFF and the National Health and Medical Research Medical Research Council’s Medical Research Endowment Account (MREA); collectively these award more than $1.5 billion in grants each year.

In a discussion paper, the Government has proposed three models for reform: merging the two funds as a single grants program managed by the NHMRC, transferring responsibility for the MRFF to the NHMRC, and maintaining the status quo but with a new coordination mechanism between the two funds.

In my analysis ‘What is needed to deliver in the investment in the Medical Research Future Fund’, dated 31 August 2021, I raised a number of questions and issues about the operations of the MRFF and I expounded further on these in an article, Scrutinising the Medical Research Future Fund, written after the review was announced.

While a change in federal government has seen some of my earlier questions and issues met, others remain unaddressed.

Four key issues

This paper looks at four key issues that I believe must be considered as part of the current review.

1. There is a need for meaningful public consultation and for ministerial justification when expert advice is not followed.

Key takeouts:

• Greater consideration needs to be given to ensuring there are well-advertised opportunities for the general public, consumer groups and patient and carer groups to participate in MRFF consultations.
• The Minister for Health should be required to give public notice, with reasons, if he / she chooses to ignore the expert advice provided.

The Department of Health and Aged Care declares on its website: “You can have a say in how the Australian Government spends MRFF money” and states that the Australian Medical Research Advisory Board (AMRAB) talks to:

• The general public.
• Organisations with expertise in health and medical research and innovation.
• Consumer representatives.
• Clinicians.
• Health services managers.

But then, in outlining some examples of previous consultations on the same webpage, it is clear that the majority of these consultations are very time limited and are often by invitation only. Also, for those who do not regularly search the consultations.health.gov.au pages to follow what is up for consultation, I wonder if many who might have valuable contributions to make are unaware of these opportunities.

For example:

The AMRAB consultation on the Australian Medical Research and Innovation Strategy 2021-2026 and the related Australian Medical Research and Innovation Priorities was open only from 20 September 2021 to 11 October 2021. There was also a webinar on 28 September 2021 and a roundtable for key stakeholders (by invitation) on 30 September 2021.

The Consultation Guide lists just eight questions for discussion (four for the Strategy and four for the Priorities) with submissions on each question limited to 250 words.

The write up of the roundtable discussion makes interesting reading as there were clearly a variety of concerns and issues raised that were not addressed in the final versions of the Strategy and the Priorities.

The current consultation on the alignment and coordination of the MRFF and NHMRC’s MREA is following the same pattern. It was open for submissions from 4 June 2023 to 14 July 2023 and there were two webinars on 6 June 2023 and 3 July 2023.  A write up of these discussions is promised.

The submission period for the review was closed by the time the Sydney Morning Herald articles publicising the need for scrutiny appeared.

My work and that of Liam Mannix provide a number of examples where the previous Minister for Health (and possibly the previous Prime Minister) chose to make decisions about MRFF disbursements that were not in line with the MRFF Strategy and Priorities.

While the several pieces of legislation that underpin the MRFF give the Minister authority to make such decisions, it is not unreasonable, in the interests of transparency and accountability, for the rationale to be provided in cases when the Minister makes a decision that is counter to the established guidance or outside the scope of the MRFF priorities.  The MRFF should not be used as a political slush fund or subject to political lobbying.

2. Management of the MRFF investments and disbursements

Key takeouts:

• The publicly available information about the level of disbursements from the MRFF are contradictory and it is difficult, if not impossible, to differentiate the new funding available each year for research from ongoing commitments.
• There is no evidence that the provisions of the Investment Funds Legislation Amendment Bill 2021 that apply to the MRFF have been implemented.

The capital of the MRFF (planned to be $20 billion but currently $21.71 billion) is invested and managed by the Future Fund Management Agency and the earnings are used to make grants for medical research and innovation.  The Minister for Finance and the Treasurer are responsible for issuing an Investment Mandate and the Future Fund Board of Guardians determines a Maximum Annual Distribution Amount (MADA) for the MRFF each financial year.

The original commitment, as outlined in the Medical Research Future Fund Act 2015 (MRFF Act) was that, once the planned capitalisation target of $20 billion was reached, .$1 billion would be available for disbursements each year.

But in 2021 the Morrison Government, in the Investment Funds Legislation Amendment Bill 2021, amended the MRFF Act  (with support from Labor) so that the total annual amount that can be debited from the MRFF Special Account is limited to $650 million in a financial year (beginning on 1 July 2022) unless the responsible Ministers set a different amount by disallowable legislative instrument. The responsible Ministers are required to review the MADA at least every five years.

The rationale given for this, as outlined in the bill’s explanatory memorandum, was that, with the MRFF now fully capitalised, the Morrison Government intended to issue a new investment mandate with a higher benchmark of return. It was anticipated that, while this would increase expected earnings over the long term, it would increase the risk of losses in the short term.

I am neither an economist nor an accountant, but here’s how I see the numbers adding up (or not).

In order to deliver $1 billion annually a return of five percent per annum is needed on $20 billion.  The Medical Research Future Fund Investment Mandate Direction 2015, which was issued to the Future Fund Board on 8 November 2015 requires the Future Fund Board to adopt a benchmark return of the “average return of at least the Reserve Bank of Australia Cash Rate target + 1.5 per cent to 2.0 per cent per annum, net of investment fees, over a rolling 10-year term”.

Data on the MRFF pages on the Department of Finance website (last updated July 2023) show that, as of March 2023, the annualised return since the MRFF inception is 4.0 percent and has varied considerably; with the exception of 2019-20 and 2021-22 it has always been more than the benchmark rate. (See Table 1. Note that the website does not provide data for 2022-23).

Presumably the anomalous figures for the years since 2019-20 reflect the economic consequences of the pandemic – these anomalies are also reflected in the data for other funds managed by the Future Fund Management Agency.

These returns are insufficient to ensure the long-term sustainability of the MRFF. But there is no publicly available information to indicate that the commitment made in 2021 to issue a new investment mandate for the MRFF with a higher benchmark rate of return has been implemented. As far as I can determine, the 2015 mandate remains in place.

The limitations imposed upon disbursements by the 2021 legislation are, to date, a theoretical matter: no more than $573 million has been given out in any financial year (See Table 2, from Department of Finance website).

According to the information provided in Table 2, a total of $1.232 billion had been disbursed to the end of the 2021-22 financial year.

I am unable to make this sum align with the statement, provided by the Department of Health in 2021 as part of the information accompanying the Investment Funds Legislation Amendment Bill, that: “from its inception in 2015 to 30 June 2021, the MRFF has funded a total of 670 grants amounting to $1,779.8 billion [sic] with 80 percent going to competitive grants.”

The billion/million error aside, the data from Table 2 indicates that only $913 million had been disbursed in that time frame.

A factor that plays into this – and will play into the actual amount of future annual disbursements – is that the Morrison Government made sizeable, long-term funding commitments; in some cases these extended over a decade.

I first discussed this issue in my January 2019 paper Is the Medical Research Future Fund fulfilling its mission as promised?  At that time the 2018-2020 Priorities Consultation Discussion Paper showed that $1.72 billion had been committed to June 30, 2018.

In the light of the enactment of the 2021 legislation limiting the annual disbursements from the MRFF to $650 million, it is interesting to note that that the Department of Finance website indicates that the MADA determination for 2023-2024 is $967 million, of which $870 million is available for grants of financial assistance.

Does this MADA reflect decisions about increased MRFF disbursements made by the Albanese Government?

And are we to assume that almost $100 million is for administrative and other non-research costs?

If so, which organisations get this funding?

3.  MRFF funding to industry and translational research

Key takeouts:

• MRFF funding for research translation and commercialisation initiatives has, to date, received little public scrutiny.
• These funds pass through a number of organisations and so there is increased potential for funds to be allocated to administrative and management costs at the expense of specific grants.
• With government research and developments funds in short supply, it is imperative that MRFF funds are not duplicative of other government efforts or discouraging private sector investments.

Ensuring that there are timely societal and economic returns on investments in biomedical research must be seen as a priority.

The 2013 Strategic Review of Health and Medical Research (McKeon Review) found that Australia was unable to extract the full benefits from its research outputs due to a lack of funding for early clinical projects and an under-developed culture for the commercialisation of innovation.

The alarming reality of research translation is that it takes approximately 17 years for only 14 percent of medical research evidence to affect clinical practice. As indicated by Zurynski et al in their paper published in 2021, it is estimated that nearly 85 percent of medical research evidence never enters clinical practice, and fewer than 50 percent of clinical innovations are ever integrated into clinical practice.

So the fact that the MRFF has so far committed $450 million over ten years from 2022-2023 to translation and commercialisation initiatives should be seen as a positive – providing these funds are well managed and are not duplicative of other research translation and development initiatives.

To date these aspects of MRFF disbursements have received little public attention.

As I pointed out in my August 2021 paper What is needed to deliver on the investment in the MRFF, MTPConnect – an independent, not-for-profit organisation formed in 2015 by the Australian Government – coordinates most of the MRFF efforts in this area (see Table 3).

There is no indication of how work undertaken by MTPConnect using MRFF funds integrates with that of the NHMRC Research Translation Centres (there are currently 11) and the Biomedical Translation Fund (BTF). The BTF is an equity co-investment venture capital program set up by the Australian Government to invest in the commercialisation of biomedical discoveries. It is delivered by AusIndustry on behalf of the Department of Health and Aged Care.

See Table 3 for links to more information, funding details and programs.

As far as I can determine, there are no formal reporting requirements for MTPConnect, although  Impact Reports have been produced for the Biomedical Translation Bridge program and the BioMedTech Horizons program.

MTPConnect is also involved in projects around antimicrobial resistance and drug repurposing – both issues that are listed as MRFF priorities (see Table 4) but there is no indication on the website of any coordination of this work with that funded by the MRFF.

4. Where are the required reports?

Key takeouts:

• Reporting and transparency has increased under the Albanese Government but is still not well done.
• Priorities and funding levels do not adequately reflect the burden of disease, societal needs and disadvantage, and the importance of prevention, public health and improvements in the delivery of health services.
• Monitoring and evaluation efforts and reports are lagging behind schedule.

The most obvious way to address the need for transparency in the management of the MRFF and the disbursement of research funds is for regular and reliable reporting.

As it currently stands, tracking the workings of the MRFF requires accessing a number of webpages from both the Department of Finance and the Department of Health and Ageing and then juggling and attempting to align a variety of difference statistics (as I have endeavoured to do in Section 1 of this paper).

The Department of Health and Aged Care claims that information about all MRFF initiatives is available and that is likely true. But it takes a lot of work and analyses to really understand how decisions are made about MRFF grants and expenditures.

The two key documents that guide the disbursements made by the MRFF are the Australian Medical Research and Innovation Strategy 2021-2026 (produced every five years) and the accompanying Australian Medical Research and Innovation Priorities 2022-2024 (produced every two years).

The Australian Medical Research Advisory Board is responsible for developing these documents via what purports to be a national public consultation process (although there is little evidence of this).

The website for the AMRAB had just two communiques, one for a meeting held 26 July, 2019 (released 30 August, 2019) and another for a meeting held 12 March, 2020 (released 5 May, 2020). There is no indication that any Minister for Health has sought AMRAB’s advice or input when making announcements of MRFF funding or specific initiatives.

It’s insightful to compare these current documents with earlier editions. The first Australian Medical Research and Innovation Strategy 2016-2021 was a 12-page document that addressed issues such as alignment and complementarity with national and international research efforts, consumer engagement and collaboration, the need to fund the full cost of research and measurement, monitoring and evaluation.

The current strategy is just two pages and speaks for none of these issues. It sets out the vision, aim, context and strategic objectives of the MRFF and guiding principles to support the strategy. It does at least mention “a focus on achieving equity in health outcomes, particularly for Aboriginal and Torres Strait Islander people and other priority populations”.

The priorities set out in the four priority documents developed since the establishment of the MRFF are detailed in Table Four. The documents do not give any indication as to why priorities were changed, deleted or added.

It’s shocking that the only mention of COVID-19 and its consequences (something that should have been seen as a significant health burden and thus a research priority) in the 2022-24 document is in the Global Health and Health Security priority which states, “health and medical research is an international effort, as highlighted by the COVID-19 response, which significantly benefits from partnerships across jurisdictions, disciplines and sectors”.

As noted in the preamble to the 2018-2020 priorities, “The identification of new priorities does not impact initiative funding already committed by Government and yet to be the subject of an approach to market or contracted as grants. Some of these investments by Government have a four to 10 year investment horizon.”

To date the MRFF has had two 10-year investment plans.

The first 10-year plan – outlining $5 billion in spending over the decade 2018 – 2019 to 2027-2028, was released as part of the 2019–20 Budget. The second 10-year plan commits an additional $3.1 billion for a total of $6.3 billion (ie $630 million per year) over the decade 2022-2023 to 2031 – 2032.

These investment plans, presumably drawn up by the Department of Health, address “Funding Themes and Initiatives” but the second plan does make an effort to align priorities, government commitments made independently of these (especially those made by the Coalition Government), and long-term funding commitments made via the Research Missions.

There are currently eight Research Missions which were set up under the Coalition Government.

These are:

• Dementia, Ageing and Aged Care (funded at $17.5 million per annum)
• Australian Brain Cancer (funded at $5 million per annum)
• Cardiovascular Health (funded at around $20 million per annum)
• Genomic Health Futures (funded at around $50 million per annum)
• Indigenous Health Fund (funded at $12.5 million per annum)
• Million Minds Mental Health Research (funding declines from $25 million in 2022 – 2023 to $5 million in 2027 – 2028)
• Stem Cell Therapies (funded at $18 million per annum)
• Traumatic Brain Injury (funded at $5 million per annum).

The second investment plan extends each of these Research Missions for several more years (through to 2027-2028 or 2028 – 2029) at current funding levels and then states that a funding extension is “subject to evaluation”.

The total funding committed to these Research Missions from 2018 -2019 to 2031 -2032 is $2.02 billion, with $692.9 million paid out to June 30, 2023.

The second 10-year plan shows that there has been some reworking of the funding levels for the various “themes” – which mostly coincide with the priorities, although it’s not always possible to know how these have been bundled together (see Table 5).

It is worth noting how the second 10-year planning report outlines the way the funding for preventive and public health research will be allocated:

• Identify and prioritise research that will most benefit patients and their families (Consumer Led Research, $100 million over 10 years).
• Support the development and implementation of improvements in maternal and child health, with a special focus on vulnerable populations (Maternal Health and Early Childhood, $75 million over 10 years).
• Support the development and implementation of strategies and approaches for addressing modifiable risk factors such as diet, physical activity, and smoking, across key life course stages (Promoting Healthy Lifestyles, $75 million over 10 years).
• Improve the quality of care received by Australians living with chronic respiratory diseases and conditions (Chronic Respiratory Conditions, $65 million over 5 years).
• Assess the effectiveness of drugs and interventions, in order to improve the evidence base on the cost-effectiveness and comparative effectiveness of health care and strategies (Health Technology Assessment, $100 million over 10 years).
• Support ongoing investments in the Targeted Translation Research Accelerator (funding not provided).
• Support research on the safety, quality and effectiveness of medicines use and medicines interventions by pharmacists (funding not provided).

It’s easy to see the importance of the first three issues – and one might ask why the funding for something as important as promoting healthy lifestyles is limited to $7.5 million a year.

But why is research on improving the healthcare management of people living with chronic disease limited to respiratory conditions?

As for the last three issues outlined: it’s hard to tell from the description exactly what research will be covered, but there are strong cases that much of this work will deliver outcomes for the benefit of the pharmaceutical and medical device industries and that there are a variety of other funding mechanisms to cover this work.

With reference to the final issue, it should be noted that there is some $1.2 billion in the current Community Pharmacy Agreement to support and evaluate interventions by pharmacists. It is tempting to think that this last issue is to provide some sort of cover for the Albanese Government’s decision to implement the determination of the previous Coalition Government to shut down NPS MedicineWise.

The Medical Research Future Fund Act 2015 requires the Minister for Health to report to Parliament about the financial assistance provided from the MRFF as soon as possible after each set of MRFF Priorities expires. To date there have been three such reports – for 2016 – 2018 (released in September 2019), for 2018-2020 (released in June 2021) and for 2020-2022  (released in  May 2023).

A crucial part of the MRFF is the monitoring and evaluation that should determine its effectiveness in the expenditure of tax-payers’ dollars and in meeting the stated goals and priorities.

The MRFF Monitoring, Evaluation and Learning Strategy 2020-2021 to 2023-2024  (released November 2020) sets out the principles and approach to be used to monitor and evaluate the MRFF.

In a long list of requirements, it states that monitoring and evaluation will be:

• Inclusive of consumers and stakeholders.
• Regular and systematic
• Able to support continuous refinement and improvement of MRFF initiatives.
• Able to determine what impact has been made on the health outcomes of Indigenous Australians and vulnerable population groups.

It should also provide the opportunity to align the work of the MRFF with that of other Australian and international research funding activities.

I have been unable to find any information about the resources allocated to this work.

More recently, in March 2023, the Performance indicators towards the impact of the Medical Research Future Fund was released.

The nine MRFF performance indicators are:

1. Projects targeting priority populations
2. Projects targeting emerging issues
3. Clinical trials
4. Research workforce indicators
5. Knowledge gain indicators
6. Consumer involvement indicators
7. Healthcare change indicators
8. Commercialisation pathway indicators
9. Case studies.

Regrettably, the indicators are simply counts of numbers, value of research funding and proportion of projects.

The reporting requirements, as set out in the MEL Strategy, are presented in Table 6.

To date, the following reports have been made:

• Medical Research Commercialisation Landscape Report (15 December 2020)
• Evaluation of the Rapid Applied Research Translation (15 December 2020)
• Million Minds Mental Health Research Mission Review (30 June 2022)
• Evaluation of the MRFF Clinical Trials Activity (report dated May 2023, released 11 August 2023)
• Report on funding for rural, regional and remote health research (report dated July 2023, released 11 August 2023)
• Report on gender data for grant opportunities provides gender information about applicants and grantees of competitive MRFF grant opportunities up to 2021-22 (11 August 2023).

Finally a mention should be made of the report from the Australian National Audit Office of the Department of Health’s Management of Financial Assistance under the Medical Research Future Fund. This report was released in September 2021.

I wrote about this for Croakey: Despite audit findings, many questions remain about the Medical Research Future Fund.

It is clear that many of the issues raised by the ANAO and by me have been addressed. But, as this article demonstrates, many other questions and issues remain.

In conclusion

The MRFF began life as a political vehicle to ameliorate the vicious budget cuts to valuable programs in Indigenous Affairs and health; $20 billion was clawed back from these programs and directed towards commercially-orientated research and development.

The initiative was hastily developed, coming as surprise to the Government’s senior science advisors.  Government spokespeople rationalised it as an intervention to gain greater value from public health spending, to facilitate biomedical innovation and to improve commercialisation rates from publicly funded research (see, for example, this statement from then Health Minister Sussan Ley in 2015). The logic was that this would turn Australia from the lucky country into the clever country – as Bob Hawke posited in 1990.

A paper published in 2022 by Australian researchers, Reimagining Health as a ‘Flow on Effect’ of Biomedical Innovation: Research Policy as a Site of State Activism takes an stark view of the politicisation of the MRFF.  While I don’t necessarily agree with all the statements, it makes thought-provoking reading.

The fact that, as it currently stands, all the MRFF funding decisions are ultimately made by the Health Minister, should be seen in this light.

The review that is currently underway must address the issues of political interference in the MRFF and ensure that the meddling that occurred under the Morrison Government cannot happen again.

Given that the Albanese Government has accepted the recommendation of the 2022 review of the Australian Research Council to keep funding decision-making at arms-length from the Education Minister, this is at least one step that must be adopted for the MRFF.

Although it is early days in the research and development history of the MRFF, the monitoring and evaluation of all aspects of its management and funding must be structured and reported so that Australians can see that the promised outcomes are being delivered.

And if that is not the case, then precious research funds must not be wasted; there must be mechanisms for adjusting how the MRFF operates – again, to be done in an open and transparent way.

The absence of any significant discussion about the role of the MRFF in the national response to the COVID-19 pandemic is telling and belies the status that its supporters would bestow on the research it funds. What happened to the funding Hunt provided for ivermectin research?

Research translation is a difficult task that currently takes many years to implement. This work, done through the MRFF-funded Research Translation Centres (RTCs), faces a number of challenges, as outlined in a recent paper by Professor Christine Jorm and Donella Price from the University of Newcastle.

They find that “currently, the RTCs are in an invidious position, by their nature idiosyncratic and emergent, easy to criticise and working within funding systems and incentive schemes (for both academics and health systems) that are set to oppose their ambitions.”  Clearly this in an important area in need of greater support.

If Australia is to become the clever country, then we need a pipeline of young biomedical researchers.

Yet neither the NHMRC nor the MRFF are adequately fulfilling that role. Career opportunities for biomedical research scientists are severely limited. The success rate for MRFF Early- and Mid-Career Fellowships is under 5 percent. The MRFF’s 2021-22 report reveals that most Chief Investigators on successful grants are older – breaking into this exclusive club is very difficult.

The Association of Australian Research Institutes says hundreds of promising researchers are leaving the health and medical research arena. Job security is a real problem: 54 percent of researchers at universities and 74 percent of researchers at medical research institutes are employed on a contract basis and the most common contract term is 12 months.

Finally, the establishment of the MRFF should not been seen as meaning that funding for biomedical research is even close to sufficient.

Together the NHMRC and MRFF budgets are only 0.53 percent of the total health expenditure in the federal budget – nowhere near average 2.3 percent that would bring Australia in line with other OECD countries and the three percent that research bodies have requested.

It is estimated that there have been over 100 reviews into science and innovation in Australia in the past 40 years.

Among them the McKeon Review stands out as being most relevant to the review that is currently underway. It provides a blueprint for the comprehensive strategic plan Australia needs to ensure it optimises government investment in health and medical research.

Let’s hope this seminal work is not ignored.

See Croakey’s archive of articles on health and medical research