The vast majority of drug development takes place within the private sector and not, as some claim, in government-funded laboratories, according to a new report.

Based on the case histories of 35 widely prescribed medications, researchers from the Manhattan Institute and Tufts University conclude in a report published today that almost all of the drugs they analyzed would not have been developed without private sector research. In 28 cases, researchers found that private sector research led to improvements in a drug’s clinical performance or to a better way of manufacturing the drug.

Researchers also said that such discoveries rely on a foundation laid by government-backed researchers, whose focus on basic science has identified opportunities for “applied science,” or the development of drugs, vaccines, and medical devices.

“They concentrate in very different dimensions of the scientific process,” a co-author of the report, Benjamin Zycher, a senior fellow at the Manhattan Institute, said of the two research sectors. Instead of adversaries, he described government-backed researchers and their counterparts in the private sector as “highly complementary.”

Dollar by dollar, the pharmaceutical industry outspends the government in drug development. According to the industry’s main lobbying group, the Pharmaceutical Research and Manufacturers of America, it costs $1.3 million to develop a new drug. In 2007, the group’s members spent $44.5 billion on research and development of prescription drugs, while the industry overall spent $58.8 billion. The same year, the National Institutes of Health allocated $28.6 billion in grants, some of which went to developing new drugs.

In recent years, critics of the pharmaceutical industry have argued that drug companies are merely profiting from government-supported research discoveries.

In a 2004 book, “The Truth About the Drug Companies,” a former editor-in-chief of the New England Journal of Medicine, Dr. Marcia Angell, argued that over the past two decades the pharmaceutical industry has focused more on marketing its wares, and less on producing new drugs.

Dr. Angell, a senior lecturer at Harvard University, traced that shift to a Reagan-era law, the Bayh-Dole Act, which enabled universities and small businesses to patent discoveries stemming from government-sponsored research.

“These laws mean that drug companies no longer have to rely on their own research for new drugs, and few of the large ones do,” she wrote in her book, which was cited in the report. “Increasingly, they rely on academia, small biotech startup companies, and the NIH for that.”

Mr. Zycher said Dr. Angell’s argument is a “curious” one.

“If they don’t come up with scientific innovation, what are they spending all this research and development money on?” he said, referring to pharmaceutical companies.

Senior officials at the NIH declined to comment on the financials of drug manufacturers, but they indicated that the report’s findings were consistent with the types of research the agency funds.

“The study provides more documentation and understanding of the relative contributions of government and industry to the drug discovery process,” the director of the NIH’s Office of Technology Transfer, Mark Rohrbaugh, said. He said that while government-funded researchers have focused on scientific inquiries such as mapping the human genome, the private sector has identified the need to develop treatments based on those discoveries. “The two systems are complementary to each other,” he said.

A former associate commissioner of the U.S. Food and Drug Administration, Peter Pitts, said it would be hard to say which sector’s work was more important.

“A discovery is a discovery,” Mr. Pitts, who now serves as president of the Center for Medicine in the Public Interest, said. “I think the most important thing to understand is that a lot of people think the government discovers drugs and the industry sells them, and that’s not true,” he said. “But industry and government need to work together to make sure drugs get to the public in a safe way,” he said.