A new Medical Research Future Fund (MRFF), intended to grow to $20 billion, will have its earnings allocated by the National Health and Medical Research Council (NHMRC). The fund will be created from multiple sources, including $5 of the new $7 patient charge for GP visits, an uplift in the Pharmaceutical Benefits Scheme co-payments, and savings from not indexing Medicare Rebates and the Private Health Insurance Surcharge.

Norton Rose Fulbright partner Bernard O'Shea says that this fund will result in a "significant boost to the level of research funding for the academic sector with an expected consequence of new technologies to be commercialised".

"The other side of the ledger will be of great interest to the sector," he adds. "This will largely be dictated by the mandate given to the Future Fund as to how the [fund] is to be invested. It would be a very significant departure from existing investments under the control of the Future Fund to see these dollars coming back into local entities seeking to commercialise health-related technologies."

The fund has the potential for both increased NHMRC funding as well as greater certainty of funding in the short term, but Mr O'Shea says there must be some concern that this is regarded as a complete solution to research funding in this sector. This might not be as attractive in the medium to longer term – even if this is premised on the existing level of NHMRC funding remaining intact (noting that the budget states that the MRFF monies are in addition to existing funding).

"Perhaps the best news for the commercial sector is that the R&D concession appears to have been left intact (apart from what appear to be minor adjustments to reflect the reduced company tax rates)," he said. "This however is counter-balanced by the cessation of Commercialisation Australia and the Innovation Investment Fund."

Mr O'Shea also says that there is no specific mention in the budget to address the well-recognised commercialisation gap for those looking to commercialise emerging research, as well as nothing to suggest that research which is actually translated into practice will be rewarded. While "the avowed intent of the MRFF is to fund research directed to delivering improved health and medical outcomes for all Australians", he adds that "it will be interesting to see how this manifests itself in practice."

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