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Is the Medical Research Future Fund fulfilling its mission as promised?

The Medical Research Future Fund (MRFF) was announced by the Coalition Federal Government, led then by Prime Minister Tony Abbott, in the calamitous 2014-15 Budget that delivered massive cuts to proposed health spending and to the Indigenous Advancement Strategy.

As Croakey contributing editor Dr Lesley Russell writes in the #LongRead below, the MRFF was announced as the salve to those cuts.

In a very timely and detailed analysis, Russell looks at what the MRFF has delivered to date, and how much greater transparency is required to enable more effective analysis and accountability.

That includes the need for Health Minister Greg Hunt to report to Parliament and taxpayers on how MRFF funding to date is consistent with the priorities developed by the Federal Government and how it is, as promised, building on existing funding for medical research and innovation, and not supplanting it.

Croakey will seek a response from the Minister to the concerns raised in the article.

Readers may find it easier to read and circulate this article via this PDF: Is the Medical Research Futures Fund living up to its mission as promised?


Lesley Russell writes

As Australia heads to a federal election, it’s timely to look at what is happening to the Medical Research Future Fund (MRFF), a much-vaunted Coalition commitment to health and innovation that will surely be highlighted again in their election campaigning.

I have used publicly available data and information to attempt to assess how much money is available in the MRFF and how this is distributed to date. This has not been an easy task and my accounting may well be inaccurate or incomplete.

My key findings:

  • The MRFF appears to be severely underfunded when compared to the Government’s initial commitments.
  • To date, the MRFF has given out less funding than promised, but significant long-term commitments mean that the majority of future funding is already directed.
  • Some MRFF funds have been allocated outside of the Australian Medical Research and Innovation Priorities established by the Advisory Board by Government/Ministerial fiat, perhaps for political purposes.
  • It appears that the Health Minister has yet to make publicly available the required biennial report on the financial assistance provided to medical research and medical innovation from the MRFF for the period in which the 2016-18 Priorities were in effect.
  • There needs to be a dramatic increase in transparency around the aggregation, management and distribution of these funds so that taxpayers can see where and why the funding, much of it clawed back from important healthcare and Indigenous programs, is invested.

The commitment

The Medical Research Future Fund (MRFF) was announced in the 2014-15 Budget. That Budget was notorious, with $10.16 billion over five years in proposed cuts to the Health budget and $500 million taken from Indigenous Affairs. The Abbott Government’s salve was the creation of the MRFF, with the claim: “Every dollar of estimates savings from health reforms in this Budget will be invested in the Fund until it reaches $20 billion. This is consistent with the commitment to maintain the existing level of investment in health.” (see Figure 1).

Distributions from the MRFF to medical research were proposed to begin in 2015-16, reach $500 million in 2019-20 and be around $1 billion by 2022‑23, thus doubling the Government’s commitment to biomedical research.

Figure 1: Fund balance reaches $20 billion by 2020: from the 2014-15 Budget Papers

Where was the $20 billion predicted to come from?

The Government closed the existing Health and Hospitals Fund (HHF) and reinvested the $1 billion in remaining funds into the MRFF on 1 January 2015. The total savings taken in the 2014-15 Budget plus the inclusion of returns on the investment would provide $10.87 billion by June 2018 (see Table 1 for a summary of all the cuts proposed and returns expected).

However almost half of this funding never arrived in the MRFF coffers because the enabling legislation was not enacted.

In the 2016-17 Budget the Government announced that the Fund would not reach the $20 billion goal until 2020-21, a year later than projected. But no announcement has ever been made about how the significant funding deficit compared to the levels initially proposed has been/would be addressed.

Table 1: Funding for MRFF from 2014-15 Budget

2013-14

$m

2014-15

$m

2015-16

$m

2016-17

$m

2018-19

$m

Total

$m

Savings made to MRFF
Changes to Commonwealth funding arrangements for public hospitals -213.7 -260.5 -133.4 -1162.8 -1800.0
Cessation of Dental Flexible Grants Program -50.3 -55.1 -61.2 -62.4 -229.0
Cessation of Diagnostic Imaging Quality Program -1.0 -3.0 -3.4 -3.5 -3.5 -14.4
Cessation of discretionary grant programs -3.7 -0.2 -0.1 -0.1 -0.1 -4.4
Pausing indexation and efficiencies for Health Flexible Funds -46.4 -69.7 -81.0 -197.1
Changes to Medicare comprehensive eye examinations -7.4 -11.3 10.6 -1.5 -9.6
Reduced Medicare optometry rebates, removal of charging cap -10.5 -24.8 -26.3 -27.8 -89.6
Deferral of National Partnership Agreement (NPA) for adult public dental services -200.5 -95.2 -95.1 -0.1 -390.0
Cessation of NPA for improving hospital services -99.5 -99.5 -0.1
Cessation of NPA on preventive health -53.5 -53.5 -130.4 -130.5 -367.9
Consolidation of NT medical program -0.1 -0.1 -0.1 -0.1 -0.4
Reduced funds for Partners in Recovery -25.3 -28.5 -53.8
Rebuilding GP education and training -16.4 -40.9 -35.9 -22.1 -115.4
Abolishing Australian National Preventive Health Agency 1.0 -0.2 -2.0 -2.6 -2.6 -6.4
Amendment to the Stoma Appliance Scheme -0.1 -0.1 -0.2
Cessation of the Tasmanian nursing and allied health scholarship and support -2.0 -2.6 -2.6 -2.7 -9.9
Reduced funding for the World Health Organisation (WHO) -2.3 -2.3
Rationalisation of Indigenous Affairs budget with move to Prime Minister & Cabinet -40.7 -163.0 -145.6 -118.1 -67.0 -534.4
Savings not achieved because legislation not enacted
Medical Benefits Scheme (MBS) co-payments for GPs, pathology, diagnostic imaging 0.2 8.8 -1130.2 -1153.0 -1200.8 -3500.0
Increased Phamaceutical Benefits Scheme (PBS) co-payment and safety net thresholds 0.1 -145.2 -306.7 -366.5 -448.5 -1300.0
Simplifying Medicare safety net arrangements 0.2 3.4 -44.7 -113.1 -116.1 -266.7
Savings level uncertain – but less than proposed
Pausing indexation of MBS fees (done) and increased thresholds for Medicare levy surcharge, Private Health Insurance Rebate (PHIR) (not enacted) .. -141.6 -394.5 -496.9 -620.8 -1700.0
MRFF investment on earnings (will be less) 19.9 77.0 179.3 276.2

How much money does the MRFF currently manage?

In June 2018 the MRFF balance stood at $7.06 billion. In the 2018-19 Budget the Government maintained its commitment to build the Fund to $20 billion by 2020-2021 (see Figure 2 – these data are from the Finance Portfolio Budget Statements, Outcome 2).

How will the funding level increase by over 100 per cent by 2020-21 to enable this target to be reached? The Budget Papers simply state that $7.83 billion of investment credits in 2019-20 consist of “uncommitted funds for the HHF and estimated health function savings published in the 2014-15 Budget.” There is no way to test the accuracy of this estimate.

This is an issue that must be confronted by whichever party wins government at the next election if funding commitments for biomedical research made by the Abbott/Turnbull/Morrison governments are to be maintained.

Figure 2: MRFF funds: from AAMRI Budget 2018-19 analysis


Returns on investments

So far, the MRFF has achieved a return of 4.1 per cent per annum since inception, beating the benchmark target return of 3.1 per cent per annum. However, a return of 5 per cent per annum is needed to generate income of $1 billion per year from $20 billion. At the current rate, the funding available from the investment income for distribution for research will be around $645 million annually.

So even assuming that the target funding level of $20 billion can be reached, the promised payouts for research funds can only be met if there is a significant upturn in investment rates. A comparison of projected investment earnings from the 2017-18 and 2018-19 Budgets suggest that the Morrison Government is betting on that (see Table 2).

Table 2: Investment earnings for MRFF: Data from Finance PBS Outcome 2

2016-17

$m

2017-18

$m

2018-19

$m

2019-20 $m 2020-21

$m

2021-22

$m

From 2017-18 Budget

 

175,948 229,122 307,616 613,288 812,993
From 2018-19 Budget

 

343,592 381,667 749,094 910,785 965,905

Governance arrangements for the MRFF

The MRFF was established on 26 August 2015 by the Medical Research Future Fund Act 2015. The Act established an independent Australian Medical Research Advisory Board to provide guidance to the Australian Government about the MRFF strategy and priorities.

The Australian Medical Research and Innovation Strategy 2016-2021 sets out the vision, aims, objectives, impact measurement and strategic platforms of the MRFF. This is to be updated every five years.

There are six strategic platforms:

  1. Strategic and international horizons: Support stronger partnerships between researchers, healthcare professionals, governments and the community. This will help position Australia as a leader in significant global research, such as tackling antimicrobial resistance.
  2. Data and infrastructure: Make better use of existing data and infrastructure to help improve our health and medical research.
  3. Health services and systems: Strengthen our health services and systems research to make healthcare more efficient and affordable.
  4. Capacity and collaboration: Develop the skills of researchers and healthcare professionals and encourage collaboration across health and medical research disciplines and sectors.
  5. Trials and translation: Support new and existing clinical trial networks to guide the development of new drugs and devices, new models of care, and improved clinical practice.
  6. Commercialisation: Support researchers to find a commercial partner or investor to help turn their discoveries into everyday realities.

The Australian Medical Research and Innovation Priorities are updated every two years. The 2018-20 Priorities were recently released. These were developed very quickly – the consultations around their development did not begin until July 2018.

The 2016-18 Priorities do not seem to be available online. However, in a discussion paper developed for the consultation process, these initial Priorities are mapped against the strategic platforms.

In addition to these reporting mechanisms, the Health Minister is required to report to Parliament every two years on:

  1. how the financial assistance provided for medical research and innovation from the MRFF was consistent with the Priorities, and
  2. how the spending profile for the MRFF adds to other categories of Commonwealth funding for medical research and innovation, to demonstrate that the MRFF builds upon existing funding.

I cannot find any such report online.

There are 16 funding principles that have been developed to guide the allocation of MRFF research funding. These were issued by the MRFF Advisory Board in December 2017.

A Government review of the MRFF is due before 30 June 2023.

Table 3: Mapping Priorities against the Strategic Platforms

Strategic Platform Priorities 2016-18 Priorities 2018-20
Strategic and international horizons Antimicrobial resistance Antimicrobial resistance
International collaborative research Global health and health security
Disruptive technology Aboriginal and Torres Strait Islander health
Ageing and aged care
Data and infrastructure Clinical quality registers Digital health intelligence
National data management study
MRFF infrastructure and evaluation
Communicable disease control
Health services and systems National Institute of Research Comparative effectiveness research
Building evidence in primary care Primary care research
Behavioural economics application
Drug effectiveness and repurposing
Capacity and collaboration Clinical researcher fellowships Clinical researcher capacity
Industry exchange fellowships Consumer-driven research
National infrastructure sharing scheme
Trials and translation Clinical trial network Drug repurposing
Public good demonstration trials Public health interventions
Targeted translation topics
Commercialisation Research incubator hubs Translational research infrastructure
Biomedical translation

Funding allocations and changes to the original timelines

The 2015-16 Budget announced that $10 million would be distributed for research funding via the MRFF in 2015-16 by bringing forward some of the earnings that would otherwise be made available in 2016‑17. There is no evidence that this was done. At the same time the 2015-16 Budget cut $10 million from NHMRC funding and there were further cuts in the forward estimates.

The first allocation for MRFF research ($60.88 million) was provided in the 2016-17 Budget, which included details of the first $25 million in research funding.

Table 4. MRFF research funding: Data from Finance PBS, Outcome 2

 

Budget commitments 2016-17

$m

2017-18

$m

2018-19

$m

2019-20

$m

2020-21

$m

2021-22

$m

2022-23

$m

2014-15 20 500 1,000
2015-16 10 53.23 130.34 224.26
2016-17 60.88 121.56 214.91 386.37
2017-18 60.88 121.56 214.91 386.37 642.89
2018-19 121.56 214.91 386.37 642.86 645.95

From the Budget Papers it appears that, to June 2019, at least $182.44 million has been made available via the MRFF for research.

The actual level of funding committed is considerably more because some commitments extend over several years. The figure for total commitments to date is given as $1.72 billion over 10 years in the Priorities consultation paper. It is not known when this paper was prepared, so it is not clear if these total commitments include those made in the 2018-19 Budget, which includes $240 million over five years for the National Health and Medical Industry Growth Plan.

The questions to be answered are:

  1. Is this an accurate estimate of funds provided to date?
  2. To what extent do the funds distributed align with the agreed research priorities?

Where did the funding go?

The $1.72 billion in spending to June 2018 is outlined in some detail in Appendix B, Table C of the priorities consultation paper.

Table 5: MRFF committed and unallocated funding (as of 30 June 2018): Data from MRFF 2018-20 Priorities Consultation Discussion Paper

2016-17

$m

2017-18

$m

2018-19

$m

2019-20

$m

2020-21

$m

2021-22

$m

Total

$m

Committed 18 143.4 222.4 317.4 357.0 222.0 1,717.6
Available 18 143.4 222.4 392.7 650.2 645.9 2,072.5
Unallocated 0 0 0 75.3 293.3 423.9 792.4

The discrepancies between Table 4 and Table 5 are largely explained by the reprofiling of some funding on the basis of when it was given out.

Table 5 highlights that (even assuming the returns on investment to be as high as predicted for the years 2019-20 to 2021-22), only a little more than a third of possible funds remain uncommitted for the next three years. Realistically, given the contingencies associated with the continued growth in capital and investment earnings, the funds available could be considerably less than $792.4 million.

These data were checked against the list of funding commitments provided on the Department of Health website and the media announcements from the Health Minister over the past 12 months. These lists are more up-to-date, but it is sometimes hard to track spending because project areas are grouped (eg the National Health and Medical Industry Growth Plan), in some cases matching funding is required or expected (eg the Australian Brain Cancer Mission), and because it appears some projects are a subset of others (eg it is assumed that the Australian Genomic Cancer Medicine Program is funded through the Genomics Health Futures Mission).

Table 6: MRFF research initiatives and funding: information from Department of Health website

Project Funding
Million Minds Mental Health Research Mission $125m/10 yrs
Keeping Australians out of hospital $18.1m
Targeted health system and community organised support $39.8m
Biomedical Translation Bridge $22.3m/4 yrs
International Clinical Trial Collaborations $42m/5yrs
Clinical Trial Activity: rare cancers, rare diseases and unmet needs $366m
Tackling antimicrobial resistance in aged care facilities $5.9m
Next Generation clinical researchers $78m
BioMedTech Horizons $35m
Rapid Applied Research Translation (AHRTCs and CIRHs) $10m
Accelerated research development to foundations and research funds $11.5m
Lifting clinical trials and registries capacity – Clinical Trials Networks $5m/4 yrs
National security against pandemics research $2m/2 yrs
Australian Preventative Health Partnership Centre $10m
Industry researcher exchange and training $32m/4 yrs
National Health and Medical Industry Growth Plan

Genomics Health Futures Mission

Frontier Health and Medical Research Program

Clinical Trials – expanded rare cancers, rare diseases and unmet needs trials + International Clinical Trial Collaborations

Targeted Translation Research Acceleration Program

Industry research collaborations and biomedical and medical technology programs

$1.3b

-$500m/10 yrs

-$240m/5 yrs

-$248m/5 yrs

 

-$125m/9 yrs

-$94m/4 yrs

Maternal Health and First 2000 Days $17.5m
Targeted Translation Research Accelerator for chronic conditions $125m/9 yrs
Australian Medical Research Advisory Board $20m/4 yrs

There is clearly some duplication here – for example it’s not clear what is included under the National Health and Medical Industry Plan that is repeated (at least in part) elsewhere in Table 6, sometimes with slightly different nomenclature. This means it is not possible to deduce the sum of spending commitments from this information.

Some major funding commitments have been made well into the future (for example, the Million Minds Mission is funded to 2028-29). This provides needed funding certainty but does rely on the funds being there a decade from now.

The $50 million funding committed to the Australian Brain Cancer Mission sits under Rare Cancers, Rare Diseases and Unmet Needs.

How well do the funding commitments align with the priorities?

Table 2 in the consultation paper shows that several 2016-18 Priorities were either not addressed (eg National Institute for Research) or only addressed indirectly or in part (eg clinical quality registers, drug effectiveness and repurposing) or not addressed through the MRFF (eg national infrastructure sharing scheme).

How well the other funding commitments align with the priorities is a matter of perception: in some cases, quite well; in other cases, only tangentially.

There is also an imbalance in funding between the Strategic Platforms: 45.9 per cent of all current funding is allocated to initiatives aligned with the Strategic and International Horizons Strategic Framework and a further 31.4 per cent is allocated to initiatives aligned with Trials and Translation.

An analysis performed by Research Australia in March 2018 looked at how the funding announcements in 2016-17 and 2017-18 mapped against the Priorities.

This might be a more independent assessment than that in the consultation paper, although less up-to-date. It found that (as at March 2018) of 19 Priorities, six had been funded, ten had received no funding, and three had been partially or possibly funded and/or it was not clear that the funding was completely consistent with the Priority as established.

More worryingly, Research Australia found funding announcements totalling $24.5 million that could not readily be matched to any of the Priorities.

The situation gets much more complicated when efforts are made to align recent Ministerial announcements of research funding (see Table 7) with the broad funding categories in Table 6 and the 2018-20 Priorities. The announcements for calendar year 2018 total $1.01 billion, of which at least $923.65 million was provided via the MRFF (note that the Ministerial media releases used to develop Table 7 may not cover all research announcements).

Without access to detailed information about the projects funded, it is not possible to assess their alignment with MRFF Priorities. What can be determined is that some Priorities (such as anti-microbial resistance and Aboriginal and Torres Strait Islander health) have received minimal funding. The funding that is provided for Maternal Health and the First 2000 Days does not appear to be specific for Indigenous mothers and babies (the Indigenous First 1000 Days program is funded through the NHMRC and other partners).

There is no way to know if all the projects announced by the Health Minister and funded via the MRFF were contestable and formally reviewed and approved. The timing for some is clearly coincident with outside events (eg the announcement by the Health Minister of $3 million from the MRFF for stillbirth research on 4 December, the day the Senate stillbirth report was released).

Table 7: Ministerial research funding announcements 2018

Bracketed funding [$] indicates no funding source given in announcement.

Date Announcement Funding
18 Jan Ataxia, rare diseases $2.1m
18 Jan 21 Next Generation clinical researchers $12m
24 Jan Rare cancers, rare diseases $26.6m
1 Feb Managing chronic pain in primary care [$0.5m]
2 Mar Endometriosis (Accelerated Research Program) $2.5m
6 Mar Australian Brain Cancer Mission $50m
15 Mar Central Australian Academic Health Science Centre $6.1m
26 Mar Epilepsy research [$2m]
11 Apr Parkinson’s Disease (Biomedical Translation Fund) $7.75m
18 Apr BioMedTech Horizons program $10m
14 May Melbourne Academic Centre for Health Research $6m
16 May Monash Partners Academic Health Science Centre $6m
16 May Australian Genomics Mission $500m
17 May Antimicrobial resistance in aged care $1.2m
17 May Artificial heart technology $1.3m
29 May Research hub to prevent anxiety and depression [$5m]
4 June New clinical trials for MND [$2m]
13 June Eating disorders
18 June Cerebral Palsy Alliance Research Foundation $2m
27 June Support for asthma patients [$8m]
6 July Sydney Health Partners and SPHERE to expand research projects $12m
13 July Biomedical Translation Bridge program – research projects $22m
17 July SA Academic Health Science and Translation Centre $6.1m
18 July Australian Genomic Cancer Medicine Program $50m
21 July Maddie’s Vision for research on bone marrow failure [$1m]
25 July CanTeen for clinical trials, Online Support platform, operation of National Youth Cancer Services [$52m]
27 July Research to improve mental health in elderly [$5m]
1 Aug Stem cell research [$3m]
6 Sept Prostate Cancer Research Alliance [$6m}
11 Sept New clinical trials, rare cancers and rare diseases $10m
15 Sept Olivia Newton John Cancer Research Centre $1m
6 Oct National Stroke Foundation for stroke rehabilitation $1m
22 Oct Gut health research [$4m]
18 Nov Dementia and ageing research $185m
4 Dec Stillbirth research $3m
15 Dec Rare childhood brain disorders [$3m}

What is happening to NHMRC funding?

The failure to date of the Health Minister to deliver the mandated report to Parliament on how the spending profile for the MRFF adds to other categories of Commonwealth funding for medical research and innovation means that there is no way to know whether MRFF funding is being used to supplant NHMRC funding.

There has been little change in NHMRC funding since the 2014-15 Budget (see Table 8). Given that research costs and competition for funding have both been increasing, the net effect is that NHMRC funding levels have declined since the MRFF was established.

Table 8: NHMRC Medical Research Endowment Account funds since establishment of MRFF: data from Department of Health PBS


Conclusions

The MRFF has clearly provided additional research funding: something of the order of $1.7 billion has been committed since 2016-17 when funds first started to roll out. Some of this funding is in long-term commitments through to 2028-29.

There is no way to know the extent to which this funding is boosting NHMRC and other funding sources or simply supplanting funding previously provided through other mechanisms.

For example, the funding provided for the Advanced Health and Research Translation Centres and the Centres for Innovation in Regional Health could be viewed as a continuation of funding for primary health care research previously provided under the Primary Health Care Research, Evaluation and Development Strategy which was abruptly cancelled in late 2015.

Similarly, the $185 million provided for dementia and ageing research can be seen as follow-on funding to replace the $200 million for dementia research provided via the NHMRC in the 2014-15 Budget.

Research funding from sources other than the NHMRC has been cut in recent years, most recently when $328.5 million was cut from university research block grants funding in the 2018-19 Mid-Year Economic and Fiscal Outlook. Commonwealth Government spending on research and development is now at a four-decade low of 0.5% of GDP.

On the basis of publicly available data and information it is hard to see how the MRFF will improve this situation in the future. Although Budget Papers continue to promise that the MRFF will be fully funded as per the original 2014 commitment, the failure of the Coalition Government to deliver the full quota of Budget savings has never been fully acknowledged and there have been no announcements of income from other sources.

At the same time, even though investment returns have been better than predicted, they will need to improve considerably in order to generate the promised income of $1 billion per year.

Even if the MRFF does have $20 billion and generates the income predicted in the Budget Papers, most of the funds available over the forward estimates and beyond are already committed.

The research activities and collaborations and research fellowships that are supported by the MRFF will undoubtedly deliver more vibrant research communities in the short-term and better health and healthcare in the long-term.

But this investment will be eroded if the funding is not allocated in accordance with the Strategy Platform and the Priorities that are set by public and expert consultation. The MRFF must not be regarded by Government as a convenient “slush fund” for politically-motivated announcements.

A viable and valuable future for the MRFF requires greater transparency than currently exists around its funding resources, mechanisms and goals.

Perhaps the Pre-Election Economic and Fiscal Outlook will provide more accurate data about the financial status of the MRFF.

Before then, there is plenty of time for the Health Minister to fulfil his duties and report to Parliament on the functioning of the Fund whose benefits he is so keen to champion.

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