3
Examples of Leveraging Nonfederal Dollars for Research

Research funding approaches taken by federal agencies offer many examples of how nonfederal resources have been mobilized in support of federal research and development (R&D) programs. A number of examples of federal R&D programs that involve nonfederal funding are briefly described in Appendix A (many more exist that the committee could not document in the short time it had to gather information). Although these initiatives exhibit a wide variety of characteristics, most can be usefully grouped along two dimensions:

  1. The nonfederal resources in a federal R&D program may be required or they may be provided voluntarily.

  2. The responsibility for securing the nonfederal resources may fall to the applicant and his or her institution or to the federal funding agency.

These two dimensions provide a typology (see Table 3-1).

It is noted that most cases cluster in the upper left-hand and lower right-hand corners of this quadrant. This is because resources from industry, philanthropy, and other sources are not usually reported to federal agencies unless such reporting is required for matching purposes and because in some cases federal agencies cannot require the provision of funds from the private sector or from state and local government to be a condition of making an award.

This chapter provides some examples of each category of nonfederal support for federal research projects, with a number of additional examples described briefly in Appendix A (many more exist that the committee could not document in the short time it had to gather information).



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Strategies to Leverage Research Funding: Guiding Dod’s Peer Reviewed Medical Research Programs 3 Examples of Leveraging Nonfederal Dollars for Research Research funding approaches taken by federal agencies offer many examples of how nonfederal resources have been mobilized in support of federal research and development (R&D) programs. A number of examples of federal R&D programs that involve nonfederal funding are briefly described in Appendix A (many more exist that the committee could not document in the short time it had to gather information). Although these initiatives exhibit a wide variety of characteristics, most can be usefully grouped along two dimensions: The nonfederal resources in a federal R&D program may be required or they may be provided voluntarily. The responsibility for securing the nonfederal resources may fall to the applicant and his or her institution or to the federal funding agency. These two dimensions provide a typology (see Table 3-1). It is noted that most cases cluster in the upper left-hand and lower right-hand corners of this quadrant. This is because resources from industry, philanthropy, and other sources are not usually reported to federal agencies unless such reporting is required for matching purposes and because in some cases federal agencies cannot require the provision of funds from the private sector or from state and local government to be a condition of making an award. This chapter provides some examples of each category of nonfederal support for federal research projects, with a number of additional examples described briefly in Appendix A (many more exist that the committee could not document in the short time it had to gather information).

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Strategies to Leverage Research Funding: Guiding Dod’s Peer Reviewed Medical Research Programs TABLE 3-1 Typology of Federal/Nonfederal Funding Arrangements   Required Voluntary Awardee Level I. Cost Sharing or Matching Required of Awardees II. Voluntary Cost Sharing by Awardees Agency Level III. Nonfederal Funding Secured by Federal Agency IV. Nonfederal Funding Volunteered to Federal Agency COST SHARING OR MATCHING REQUIRED OF AWARDEES In federal parlance, cost sharing usually is defined as an arrangement in which a portion of a federal project’s or program’s costs are not borne by the federal government. Matching of funds is often considered to be a special case of cost sharing in which the federal government matches private or state funding for a program dollar for dollar (Feller, 1997). Matching also usually implies the provision of cash rather than in-kind contributions. However, these terms are not used consistently, even within federal policy documents. For example, in the Office of Management and Budget’s (OMB’s) Circular A-110, “Uniform Administrative Requirements for Grants and Agreements with Institutes of Higher Education and Other Non-Profit Organizations,” cost sharing and matching are treated as interchangeable terms. In this report, cost sharing will be used as the general term for all costs contributed to a research project by an awardee institution from sources other than the federal award. Matching is the special case of cost sharing in which the awardee institution must match federal funding dollar for dollar, either in cash or through in-kind contributions, or a combination of both. The amount of cost sharing may be a specific percentage of the total funding, a minimum or maximum percentage of the total funding, or it can be open ended. Industry or another nonfederal organization might be the source of the cost sharing. Cost sharing may be a condition of eligibility to apply for funds or it may be a criterion of proposal review, as many federal agencies require the applicant organization to pay part of the cost of an R&D project. As an eligibility condition, the applicant must show in the proposed budget where the required percentage of cost sharing is applied and must provide letters of commitment from the sources of cost sharing. In these cases, cost sharing is usually a fixed percentage or a minimum percentage. In other cases, cost sharing is encouraged rather than required, with one of the review criteria being the extent of university or industry commitment, either monetary or in kind (see, for example, U.S. Army Research Office, 2003). Matching award amounts can be increased during review, or a ceiling may be imposed on the amount of matching funds that can be provided in order to prevent a bidding war among applicants.

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Strategies to Leverage Research Funding: Guiding Dod’s Peer Reviewed Medical Research Programs Cost Sharing in Selected Federal Programs The appropriations laws providing funds to the National Science Foundation (NSF) require the recipients of grants and contracts to share in the costs of projects that are not specifically solicited by NSF. In accordance with this statutory requirement, NSF requires projects initiated by investigators to be cost shared at a level equal to 1 percent of the total cost (NSF, 2002a). Grantee institutions may either cost share a minimum of 1 percent on each project or cost share a minimum of 1 percent on the aggregate total cost for all projects (that is, share a greater percentage on some projects and not share at all on other projects). Although the 1 percent cost share is not included in the proposal budget, it must be accounted for in the awardee’s records and is subject to audit. At one time, the National Institutes of Health (NIH) required cost sharing on all grants, but this provision has been dropped in most cases (although there might be cost-sharing requirements for salaries funded through awards). The National Aeronautics and Space Administration (NASA) does not require cost sharing on research grants and cooperative agreements with universities and other nonprofit institutions, because “their activities generally do not produce benefits that can be measured as having significance apart from the benefit intrinsic in conducting research for NASA” (NASA, n.d.). NASA accepts voluntary cost sharing, but it is not supposed to be a factor in the decision to make an award. Cost sharing is not generally required or considered in the evaluation and selection process for grants and cooperative agreements awarded by the Office of Science at the Department of Energy (DOE), although it may be required in certain awards, for example, those for research equipment.1 CDMRP has a cost-sharing requirement, which is deemed to be met when recipients provide the equipment needed to support proposed research. In the case of training grants, the award covers only the trainee’s stipend. Mentoring time and other activities involved in the training are in effect in-kind donations provided by the Principal Investigator and his or her institution. This cost sharing is not included in the budget or accounted for by the awardee institution, which reduces the administrative burden on both the grantee and CDMRP.2 It is expected, however, that grantee institutions will share 50 percent of the cost of equipment purchased for a research proposal when individual equipment costs are equal to or exceed $5,000. 1   10 CFR Part 605, Office of Energy Research Financial Assistance Program, Section 605.13, Cost Sharing. See www.er.doe.gov/production/grants/605.html [accessed May 18, 2004]. 2   If the approved project involves the purchase of equipment costing $5,000 or more, however, the institution must share half the cost.

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Strategies to Leverage Research Funding: Guiding Dod’s Peer Reviewed Medical Research Programs NSF Engineering Research Centers and Other NSF Programs The NSF Engineering Research Centers (ERCs) Program was created in 1985 to develop a government-industry-university partnership that would strengthen the competitive position of U.S. firms in world trade. ERCs are university based, with 80 percent of their funding coming from NSF and 20 percent from industry, states, and other sources. Cost sharing is employed as a means of ensuring that the research and other activities of an ERC are considered important and relevant enough to justify investment by the center’s industrial members and to give industry a stake in the performance of the center. Cost sharing also is justified by the general principle that recipients should pay a portion of the costs when they stand to benefit from the project. According to current NSF policy, cost sharing can be used only as an eligibility requirement, not as a factor in the review process (NSF, 2002b). Additional voluntary cost sharing also is not considered in the peer review process; it is not included in the materials that are provided to peer reviewers. An ERC develops partnerships with member firms and other practitioner organizations (e.g., hospitals and state and local government agencies) to facilitate an exchange of information, provide mentors for students, speed technology transfer, and identify sources of financial support. Member organizations serve on the ERC’s Industrial/Practitioner Advisory Board and are expected to provide access to industrial facilities and personnel for ERC faculty and students, knowledge of industrial practice, and awareness of the areas that are in need of future technological innovation. Member organizations pay cash membership fees, generally on a sliding-fee scale according to the size of the firm. Members also may provide the center in-kind and sponsored project support or provide support directly to ERC faculty for sponsored projects that contribute directly to the center’s strategic plan. Some centers also receive cash and in-kind donations from nonmember organizations. Annual funding for centers ranges from $3.1 million to $19.4 million. NSF’s contribution ranges from $1.0 million to $3.0 million per year, averaging $2.5 million per year. Cost sharing at a level equal to 20 percent or more of the total amount requested from NSF must be shown and justified in the proposal budget. An awardee’s contribution to cost sharing is limited to items that, if charged to the project, would be allowable under applicable cost principles contained in OMB’s Circular A-110. Contributions may be cash or in kind, but they must be from a nonfederal source. In addition, contributions counted as cost sharing toward projects of another federal agency may not be counted toward meeting the cost-sharing requirement of an ERC award. Other NSF programs require cost sharing. They include center programs, such as Science and Technology Centers (30 percent), Materials Research Science and Engineering Centers (10 percent), Nanoscale Research and Engineering

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Strategies to Leverage Research Funding: Guiding Dod’s Peer Reviewed Medical Research Programs Centers (10 percent), and Industry/University Cooperative Research Centers (of variable percentages). They also include instrumentation awards, such as Chemistry Research Instrumentation and Facilities grants for departmental multi-user instruments (50 percent of costs over the first $100,000).3 National Cancer Institute Academic Public-Private Partnerships Recently, the National Cancer Institute (NCI) launched the Academic Public-Private Partnership Program (AP4), a new initiative aimed at combining the basic research skills within academic institutions, the scientific expertise of industry, the interests of disease-oriented charities and nonprofit groups, and the administrative support, resources, and discovery and development expertise of NCI. The purpose of establishing academic-public-private partnerships is to conduct novel cancer therapeutic, prevention, diagnostic, and imaging research to hasten the translation of research findings into clinical trials. The research will take place at academic centers with the advice and support of their industrial, nonprofit, and state government partners. The program is modeled after NSF’s Industry/University Cooperative Research Center Program, in which NSF’s share of the funding declines over time and the center is eventually fully supported by its nonfederal partners. NCI currently is issuing 1-year planning grants, but NCI intends to provide a 10-year grant of $450,000 per year in direct costs to university-based centers, with industry, nonprofit, and/or state and local government partners contributing at least $300,000 per year. The NCI contribution would drop to $337,500 in year 4, $225,000 in year 5, and between $100,000 and $200,000 in years 6 through 10.4 The 10-year grant is not renewable. National Institute of Allergy and Infectious Diseases Challenge Grants In this program, the National Institute of Allergy and Infectious Diseases (NIAID) matches funding from companies for product development that has commercial potential. The program was launched in fiscal year (FY) 2000 by a special appropriation of $20 million. The first solicitation, in FY 2000, resulted in challenge grants totaling $18 million to eight companies for the development of drugs and vaccines against major infectious diseases, such as malaria, tuberculosis (TB), influenza, and 3   Program Solicitation NSF 03-563, “Chemistry Research Instrumentation and Facilities: Departmental Multi-User Instrumentation,” July 3, 2004. 4   If the partnership can contribute at least $450,000 in nonfederal funding, NCI will provide $600,000 in years 1-3, $450,000 in year 4, $300,000 in year 3, and $100,000 to $200,000 in years 6 through 10.

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Strategies to Leverage Research Funding: Guiding Dod’s Peer Reviewed Medical Research Programs emerging and resistant infections.5 One project resulted in first new vaccine for TB to enter human clinical trials in more than 60 years. NIAID has issued another challenge grant solicitation looking for candidate products that are ready for further development. It calls for collaborative partnerships between government and the private sector to further develop already-identified products against NIAID Category A, B, and C high-priority pathogens and all stages of product development against Severe Acute Respiratory Syndrome (SARS), including vaccines, adjuvants, therapeutics, diagnostics, and research resources.6 Cost Sharing by Universities and Other Recipient Research Institutions Grantee institutions already share costs to the extent that indirect cost recovery does not cover the full expenses of research.7 OMB caps administrative costs, and some federal R&D programs do not pay the full indirect cost rate. Most major research universities have administrative costs that exceed the cap, and administrative costs have been steadily increasing because of new and expanded federal regulations, such as the Health Insurance Portability and Accountability Act (HIPAA); the USA Patriot Act and its requisite control of Select Biological Agents; environmental health and safety rules; and policies for the protection of human subjects in research (COGR, 2003; Goldman and Williams, 2000). State universities receive lower indirect cost recovery rates than do private universities, with the difference essentially becoming a state subsidy of federally funded research. According to an NSF survey, universities fund about 20 percent of the R&D conducted in their facilities, of which approximately half comes from indirect cost recovery (NSF, 2004). The other half comes from tuition, gifts and bequests, and endowments, much of which is already counted as cost sharing on federal awards. VOLUNTARY COST SHARING BY AWARDEES Cost sharing is usually one of the review criteria for a proposal rather than a condition of application eligibility in this small category. Some agencies, such as NSF, have stopped allowing open-ended cost sharing because of undesirable effects, which include the offering of cost sharing as a competitive tactic by 5   RFA-AI-00-010, “Challenge Grants: Joint Ventures in Biomedicine and Biotechnology,” February 10, 2000. 6   RFA-AI-03-016, “Challenge Grants: Biodefense and SARS Product Development,” September 22, 2003. 7   According to a recent RAND study, universities recover between 70 percent and 90 percent of their overhead costs in conducting federally funded research (Goldman and Williams, 2000).

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Strategies to Leverage Research Funding: Guiding Dod’s Peer Reviewed Medical Research Programs applicants, the appearance that a successful applicant “bought” the award, the unequal capacities of applicant institutions to provide cost sharing, the insertion of financial considerations into the peer review process, reduced ability to fund technically excellent proposals with low cost sharing, and the entrepreneurial use of cost sharing by program managers to stretch program funding to fund more grants (Feller, 1997). In 1999, NSF adopted a new cost-sharing policy in which the amount of cost sharing is specified and is treated as an eligibility criterion rather than a review criterion (NSF, 1999). U.S. Army Collaborative Technology Alliances In 2001, the Army Research Laboratory (ARL) awarded five cooperative agreements for Collaborative Technology Alliances in the areas of advanced sensors, power and energy, advanced decision architecture, communications and networks, and robotics.8 These five-year awards of $35 million each included an option of $20 million in additional funding for three more years. Each alliance is a consortium whose members have signed Articles of Collaboration. Each consortium has a lead company and a dozen or more other partners, divided between companies and universities. All are represented on a consortium management committee, along with a representative of ARL. According to the program announcement, the intent was: to create a critical mass of private sector and government scientists and engineers focused on solving the Army’s technology challenges, as well as supporting and stimulating dual-use applications of this research and technology to benefit commercial use.9 The program announcement also states that: Cost sharing is not required … however, it is strongly encouraged. During the evaluation of proposals, cost sharing will be evaluated as it relates to the evaluation factors set forth in the Program Announcement, based on the degree to which the proposed cost sharing enhances the proposal to result in added benefits to the program. NONFEDERAL FUNDING SECURED BY FEDERAL AGENCIES Technically, federal agencies cannot require nonfederal entities, such as companies and states, to provide funding for federal research programs. However, one type of arrangement that comes close includes cases in which an agency and 8   See www.arl.army.mil.alliances/ [accessed May 17, 2004]. 9   U.S. Army Research Laboratory, Program Announcement/Solicitation, “Collaborative Technology Alliances,” August 11, 2000. At www.arl.mil/alliances/final.doc [accessed May 17, 2004].

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Strategies to Leverage Research Funding: Guiding Dod’s Peer Reviewed Medical Research Programs an entity in another sector agree to a long-term funding arrangement that each side is committed to fund each year. Another arrangement includes awards that contain a provision to recoup federal costs stemming from the successful commercialization of a technology produced by federally funded R&D, with the recouped costs to be cycled back into the program for future research. An example of each kind of arrangement follows. Health Effects Institute The Health Effects Institute (HEI) is an independent nonprofit corporation chartered in 1980 to provide high-quality, impartial, and relevant scientific research on the health effects of pollutants from motor vehicles and other environmental sources. It is supported by the U.S. Environmental Protection Agency (EPA) and 27 automobile companies, which match the EPA contribution through a series of five-year agreements. Each company contributes in proportion to its North American sales. HEI has funded more than 170 studies and has published more than 100 research reports and several special reports that have included important research findings on the health effects of a variety of pollutants, including carbon monoxide, methanol and aldehydes, nitrogen oxides, diesel exhaust, ozone, and most recently, particulate air pollution. HEI also has been called on periodically to produce special reports that review an entire area of scientific literature on topics such as the health effects of asbestos, diesel exhaust, and oxygenates in fuel. To accomplish its mission, HEI: identifies the highest priority areas for health effects research; funds and oversees the conduct of high-quality research in these priority areas; provides intensive, independent review of HEI-supported and related research; integrates HEI’s research results with those of other institutions into coherent, broader evaluations of health effects; and communicates the results of HEI research and analyses to public and private decisionmakers. HEI is governed by a Board of Directors that is chaired by Richard Celeste, ex-governor of Ohio, and includes public figures in science and policy. The institute’s scientific work is overseen by two independent scientific committees. The Health Research Committee works with the institute’s scientific staff to develop and manage HEI’s research program, while the Health Review Committee, which has no role in selecting or overseeing studies, works with the institute’s scientific staff to evaluate and interpret the results of HEI studies and related research.

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Strategies to Leverage Research Funding: Guiding Dod’s Peer Reviewed Medical Research Programs A third committee, the Special Committee on Emerging Technologies, advises HEI on new technologies and fuels and their potential health and environmental impact. Its membership was selected to provide a broad range of technical expertise from government, industry, public interest, and academic organizations. HEI’s priorities for research and special reviews are guided by the five-year HEI Strategic Plan, which is reviewed and updated annually after consultations with HEI sponsors and other interested parties. This strategy of creating a jointly funded subsidiary was probably first employed in the establishment of SEMATECH in 1987. SEMATECH was funded with $100 million per year from the federal government, matched by a total of $100 million per year from nearly all the large semiconductor companies in the United States. Clean Coal Power Initiative The Clean Coal Power Initiative of DOE is a $2 billion, 10-year program of investment in joint government-industry projects to develop innovative technologies for coal-fired power plants. For this initiative, which is primarily a cost-sharing program, industrial sponsors must match the federal funding share by contributing at least half of the total amount of funds. There also is a requirement for repayment from commercially successful technologies that result from the effort, which will be used to fund additional clean coal research. According to DOE’s announcement of funding opportunity for the second round of funding ($280 million), DOE is inviting proposals that will be competitively reviewed and funded by cooperative agreements with “at least 50% cost sharing” (DOE, 2004). In 2003, DOE announced the selection of eight projects receiving $316 million in federal funds matched by more than $1 billion in private funds (there were 36 proposals submitted with more than $5 billion in matching funds). Proposals must include information on the awardee’s repayment plan that meets the following conditions: DOE expects repayment plans to be realistic and to provide a reasonable plan for achieving 100% repayment of DOE’s actual contribution to the project. Repayment may come from various revenue streams including, but not limited to, those from the demonstration project itself, royalties from sales and licensing of the technology in the United States and abroad, and/or any other source of funds the applicant chooses to propose. (DOE, 2004) Some private sector funders also seek recoupment. Genentech, for example, is collaborating with Accelerate Brain Cancer Cure (ABC2), a nonprofit foundation, on the development of new therapies for patients with brain cancer, in an arrangement in which the two organizations share expenses. Genentech uses the clinical network created by ABC2, and ABC2 shares royalties from any treat-

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Strategies to Leverage Research Funding: Guiding Dod’s Peer Reviewed Medical Research Programs ments that are approved for use.10 In another example, grants from the American Institute for Cancer Research (AICR) have a provision that allows AICR to share in any royalty income that might result from a patentable invention made in the course of research supported in whole or in part by its funds.11 NONFEDERAL FUNDING VOLUNTEERED TO FEDERAL AGENCIES Some federal agencies have the authority to accept contributions designated for specific purposes. NIH institutes, for example, receive a number of gifts and bequests each year for ongoing research on a particular disease or for a designated program. Increasingly, an agency and a nonfederal entity or entities, such as a company, foundation, or voluntary health agency (VHA), agree to support a new research initiative jointly. Several arrangements are possible, including the following: (1) some or all of the collaborators agree to pool their funds for the initiative; (2) the collaborators contribute in complementary ways, for example, each agreeing to fund a particular part of the whole initiative; (3) a nonfederal entity agrees to supplement a federal award; (4) a nonfederal entity piggybacks on a federal program by funding projects that receive high peer review ratings but that lack agency funds for support; or (5) nonfederal partners contribute in other ways, such as referring patients or encouraging members to provide biological samples for a federally funded project. Examples of each of these arrangements follow. Pooling of Federal and Nonfederal Funds NIH provides the best example of a case in which private funds have been added to federal funds for a program of research grants. Private organizations that fund medical research are aware that NIH is authorized by the Public Health Service Act to receive conditional gifts, or contributions, for specific purposes.12 The Office of the General Counsel of the Department of Health and Human Services has determined, however, that although this authority provides a mechanism to NIH for accepting funds from outside sources, NIH employees may not actively solicit funds to augment appropriated funds.13 NIH instead has begun working through the Foundation for the National Institutes of Health (FNIH) to 10   See the press announcement of the ABC2-Genentech collaboration at www.abc2.org/news_02252002.htm. 11   See AICR’s patent policy at www.aicr.org/research/patents.lasso. 12   Sections 231 and 405(b)(1)(H) of the Public Health Service Act, as amended (42 U.S.C. §§238,284(b)(1)(H). 13   NIH Policy Manual, Chapter 1135, “Gifts Administration,” Part E8, “Solicitation Prohibited.” See www.od.nih.gov/oma/manualchapters/management/1135/main.html.

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Strategies to Leverage Research Funding: Guiding Dod’s Peer Reviewed Medical Research Programs organize research collaborations, raise funds from private sources such as companies and foundations, and transfer the money to NIH. FNIH is a nonprofit charitable organization founded to support NIH in its mission. It is tax exempt under section 501(c)(3) of the Internal Revenue Code, and gifts to FNIH are tax deductible. Moreover, its congressional charter makes it the only acceptable financial intermediary for the third-party donation of funds to NIH.14 FNIH has been the mechanism for pooling private funds with NIH funds for several initiatives, including the Mouse Sequencing Consortium, the Multilateral Initiative on Malaria, Overcoming Barriers to Early Phase Clinical Trials, and the Osteoarthritis Initiative Public-Private Consortium (described below). Several more, modeled on the Osteoarthritis Initiative, are in development, including the National Institute on Aging’s (NIA’s) Alzheimer’s Disease Neuroimaging Initiative and NCI’s Image Database Resources Initiative of the National Cancer Institute. Each involves contributions from companies and, in some cases, foundations and VHAs that are made to a program of NIH-reviewed and NIH-funded grants. The Centers for Disease Control and Prevention (CDC) has a similar arrangement with the CDC Foundation, an independent nonprofit organization established in 1992 by Congress that can accept funding and create programs that help donors and CDC scientists achieve common goals. The foundation finds funding partners, negotiates funding arrangements, hires staff, manages program budgets, identifies experts, and generates reports to donors. On its website, the foundation currently lists 37 corporations and 23 foundations that were supporting programs initiated as of July 2000 or that are currently active, including 22 Global Health programs; 8 Promoting Healthy Lifestyles programs; and Research and Education Programs. In 2002-2003, the foundation had revenues of $17.1 million (of which $8.1 million was expended through cost-reimbursement agreements for programs) and expenses of $10.2 million. Osteoarthritis Initiative Public-Private Consortium The Osteoarthritis Initiative is a joint venture of NIH and pharmaceutical companies to pool funds and expertise for a public repository of osteoarthritis patient data, radiological information, and biological specimens. Scientists will be able to use this public resource to test much-needed biochemical and imaging markers of disease onset and progression, to further the development of osteoarthritis drugs, and to improve public health. Neither the federal nor private sector alone would be able to develop such a resource. 14   NIH Policy Manual, Chapter 1135, “Gifts Administration,” Part E5, “Receipt and Acceptance of Gifts.” See www.od.nih.gov/oma/manualchapters/management/1135/main.html.

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Strategies to Leverage Research Funding: Guiding Dod’s Peer Reviewed Medical Research Programs Scientists, health care providers, and drug companies need biochemical and imaging markers of the progression of osteoarthritis in order to diagnose, monitor, and develop and implement treatments for this condition more accurately than current methods of evaluating disease progression—such as x-rays and pain and function assessments—can. The data and specimen repository will establish standards of disease onset and progression against which potential biochemical and imaging markers can be evaluated. This ultimately will facilitate clinical trials of promising agents. Four clinical centers and a data coordinating center were chosen after competitive peer review in July 2002 of applications submitted in response to two Requests for Proposals Applications (RFPs). The clinical centers are at the University of Maryland School of Medicine, the Ohio State University, the University of Pittsburgh, and the Memorial Hospital of Rhode Island. The data coordinating center is at the University of California, San Francisco. The recruitment of 5,000 participants, who will be followed for five years, began in February 2004. The initiative is coordinated by the National Institute of Arthritis and Musculoskeletal and Skin Diseases (NIAMS) and NIA, with additional support from six other NIH institutes, centers, and offices. The private sector partners are Merck, Novartis Pharmaceuticals Corporation, and Pfizer. The private sector members of the consortium pool their resources through the FNIH along with NIH’s funds from the participating institutes and centers. FNIH is providing the management structure and also is recruiting, coordinating, and managing the private sector partners in the consortium. The initiative totals $8 million per year. Approximately 30 percent of the funding is contributed by the private sector partners. All partners have agreed that clinical data and x-ray information will be freely accessible to qualified scientists everywhere. For other resources that are limited (such as biological specimens), priority will be given to researchers who are studying promising biomarkers that will be made widely available for research and commercial use. Complementary Federal and Private Funding In some cases, nonfederal funders do not contribute directly to the federal funding of a research program. Instead, they agree to fund directly certain parts of the program, while the federal agency funds other parts. Type 1 Diabetes TrialNet In September 2001 the National Institute of Diabetes & Digestive & Kidney Diseases (NIDDK) established the Type 1 Diabetes TrialNet, with co-sponsorship by the National Institute of Child Health and Human Development (NICHD), NIAID, the Juvenile Diabetes Research Foundation International (JDRF), and the American Diabetes Association ADA). TrialNet is a collaborative network of

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Strategies to Leverage Research Funding: Guiding Dod’s Peer Reviewed Medical Research Programs clinical centers, experts in diabetes and immunology, and specialized laboratories and other facilities. The purpose of the network is to test new approaches to understanding, preventing, and treating type 1 diabetes. TrialNet will enable rapid preliminary testing of emerging therapeutic strategies for immunoprevention of type 1 diabetes, and the agents that prove most promising can then be quickly moved into larger scale trials. In addition, biological samples and other data collected from trial participants are being placed in repositories for use by many investigators. TrialNet also is formulating surrogate endpoints for diabetes and its complications. The Type 1 Diabetes TrialNet includes 18 clinical centers. NIH funds the 14 centers in the United States and Canada, while JDRF and ADA fund 4 centers in Europe and Australia. Supplementation of Federal Funding Some VHAs supplement, or augment, the funding of federal grantees. Typically, the private funding is used for purposes that the federal funds do not or cannot support. For example, the Charlotte Geyer Foundation provides one-year awards to researchers whose proposals have been reviewed by NCI and were ranked within ten percentage points of the NCI pay line. In theory, this type of supplementation could work both ways—that is, nonfederal funders could send meritorious project proposals to CDMRP for funding once their pay line has been reached. However, because CDMRP’s peer review system is one of its unique attributes, it is unlikely that it would be willing to sacrifice its own evaluation of proposals and replace it with that of another group. In either case, overall costs could be decreased if one review process were used by multiple funding sources. Muscular Dystrophy Research Centers In October 2003, NIAMS, the National Institute of Neurological Disorders and Stroke, and NICHD collaborated with the Muscular Dystrophy Association (MDA) to fund three new extramural centers for research on the muscular dystrophies. The institutes are funding the three centers—selected through competitive peer review—at $5 million each over five years, and MDA is providing up to $500,000 in supplemental funding per center per year for three years. The centers are located at the University of Pittsburgh, the University of Washington, and the University of Rochester. Mentored Clinical Scientist Awards in Nephrology The National Kidney Foundation provides monetary supplements to up to four recipients of Mentored Clinical Scientist Development (K08) Awards from NIDDK, making the awards more attractive by increasing pay.

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Strategies to Leverage Research Funding: Guiding Dod’s Peer Reviewed Medical Research Programs Piggybacking Arrangements A number of foundations and charitable organizations fund research proposals that receive peer review ratings that are high, but not high enough to receive federal funding. Through this arrangement, the private funder does not have to review the proposals at the funding cutoff level, 20 to 25 percent of which are successful and bring excellent results. Pathogenesis and Treatment of Cystic Fibrosis In 1995, NIDDK, the National Heart, Lung, and Blood Institute (NHLBI), and the Cystic Fibrosis Foundation (CFF) co-sponsored an RFA for R01 grants to conduct basic research on the pathogenesis of cystic fibrosis (CF) and its complications, applied cell and molecular biology research to understand CF better, translational research into new treatments for CF, and clinical research on CF and its potential therapies. According to the RFA: Projects with substantial scientific merit that are not funded by the NIDDK or the NHLBI are eligible for support by the CFF. Principal investigators will be responsible for forwarding copies of their summary statements and applications to the CFF for consideration for this award mechanism. It is anticipated that approximately 15 awards will be made [by NIH]. An additional $2 million will be committed by CFF to fund applications that are not funded by NIDDK or NHLBI.15 Private Nonmonetary Contributions The Alzheimer’s Association is partnering with NIA in a major expansion of the Alzheimer’s Disease (AD) Genetics Study, which will focus on volunteers from approximately 1,000 families in which multiple members have experienced late-onset AD. At least three members of each family will be asked to donate blood (for determination of their DNA) and provide medical, demographic, and family history information, in an effort to discover the risk factor genes for late-onset AD. The role of the Alzheimer’s Association and its network of local chapters is to inform families about the study and encourage their participation (NIH, 2003). Similarly, CFF played an integral role in Food and Drug Administration (FDA) approval of Pulmozyme in 1993 and of TOBI (tobramycin solution for inhalation) in 1997 by assisting in the recruitment of clinical trial participants.16 15   RFA-DK-95-006. 16   See www.cff.org/publications/files/cfinsidespreads.pdf.

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Strategies to Leverage Research Funding: Guiding Dod’s Peer Reviewed Medical Research Programs CONCLUSION Federal agencies that support R&D use a variety of mechanisms to leverage other funding. Most of these mechanisms fall into two categories. One set of mechanisms relies on requirements that awardees pay a portion of the costs of the project from nonfederal sources. This is called cost sharing or matching. The other set of mechanisms consists of voluntary collaborations that are made between federal agencies and nonfederal donors in supporting specific research initiatives of mutual interest. Cost-sharing or matching requirements are commonly used by agencies when industry involvement is desired for a project and industry stands to gain from the effort. These are typically technology development-oriented projects, often involving university-industry research centers. Cost sharing is usually not required in programs that support basic research and that are conducted by individual investigators or small research teams. NIH does not require matching except for several small challenge grant programs and facility construction projects. NSF requires a nominal 1 percent cost sharing on investigator-initiated awards, although it expects cost sharing of between 10 percent and 30 percent in its center programs and up to 50 percent for instrumentation and facilities awards. Voluntary co-funding and other forms of partnering have become more common. Some agencies—NIH and CDC—have mechanisms for accepting private funds that augment appropriated funds. These ventures are formed one by one as federal agencies and nonfederal funders see opportunities to leverage their funds by collaborating. These collaborations are unpredictable and take time to organize, and because each partnership is unique, a great deal of effort is required on the part of federal program officers. As such, there must be clear perceived potential benefit for each party to commit the requisite time and resources. REFERENCES COGR (Council on Governmental Relations). 2003. Report of the Working Group on the Cost of Doing Business. [On-line.] Available: www.cogr.edu/docs/codb final 6-02-03.doc [accessed June 30, 2004]. DOE (Department of Energy). 2004. Financial Assistance Announcement of Funding Opportunity, Clean Coal Power Initiative, DE-PS26-04NT42061. [On-line.] Available: www.fossil.energy.gov/programs/powersystems/cleancoal/ccpi/ccpi_sol_round2.pdf [accessed July 28, 2004]. Feller I. 1997. Matching Fund and Cost-Sharing Experiences of U.S. Research Universities: Final Report to the National Science Foundation. Bethesda, MD: COSMOS Corporation. Goldman CA, Williams T. 2000. Paying for University Research Facilities and Administration. MR-1135-1-OSTP. Santa Monica, CA: RAND. [On-line.] Available: www.rand.org/publications/MR/MR1135.1/ [accessed June 30, 2004]. NASA (National Aeronautics and Space Administration). n.d. Guidance for the Preparation and Submission of Unsolicited Proposals. [On-line.] Available: ec.msfc.nasa.gov/hq/library/unsold-Prop.html [accessed May 13, 2004].

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Strategies to Leverage Research Funding: Guiding Dod’s Peer Reviewed Medical Research Programs NIH (National Institutes of Health). 2003. “National Institute on Aging Steps Up Major New Initiative on Alzheimer’s Disease Genetics” (press release). [On-line.] Available: www.nia.nih.gov/news/pr/2003/1021a.htm [accessed August 2, 2004]. NSF (National Science Foundation). 1999. Important Notice 124, Implementation of the New NSF Cost Sharing Policy. [On-line.] Available: www.nsf.gov/pubs/1999/iin124/iin124.htm [accessed May 13, 2004]. NSF. 2002a. Grant Policy Manual, Chapter III, Section 330, Cost Sharing and Matching. [On-line.] Available: www.nsf.gov/pubs/2002/nsf02151/gpm3/htm [accessed May 7, 2004]. NSF. 2002b. National Science Foundation Policy Statement on Cost Sharing. NSB 02-188. [Online.] Available: www.nsf.gov/bfa/dga/policy/docs/cspolicy_1102.pdf [accessed May 7, 2004]. NSF. 2004. “U.S. Academic R&D Continues to Grow as More Universities and Colleges Expand Their R&D Activities” (NSF InfoBrief). NSF 04-319. Arlington, VA: National Science Foundation, Division of Science Resources Statistics. [On-line.] Available: www.nsf.gov/sbe/srs/infbrief/nsf04319/start.htm [accessed June 30, 2004]. U.S Army Research Office. 2003. Broad Agency Announcement DAAD19-03-R-0005, Institute for Collaborative Biotechnologies. February. [On-line.] Available: www.aro.army.mil/biotech/ [accessed May 17, 2004].