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4 Supporting Research Through NTH and ADAMHA As previously discussed, nearly half of all financial support for health sciences research comes from federal sources (see Chapter 2~. Of this, about 78 percent is disbursed through the National Institutes of Health (NIH) and the Alcohol, Drug Abuse, and Mental Health Administration ~- The NIH has become a world-renowned and highly respected biomedi- cal research organization with a mission to uncover new knowledge that will lead to better health for everyone.) Currently, NIH consists of 13 categori- cal institutes, 2 support divisions, 4 specialized centers, the Clinical Center, the Fogarty International Center, and the National Library of Medicine, all located primarily on a 300-acre tract in Bethesda, Maryland (Figure 4-1~. Unlike some foreign governmental support for medical research, only a small proportion of federally sponsored biomedical research actually is conducted in U.S. federal laboratories. Nearly 80 percent of the NIH budget is allocated to research and training at universities and other research institutions, both in the United States and abroad.2 Most of these funds are allocated through peer review processes that include the views of scientists and others throughout the country. Therefore, the NIH is a decentralized organization with scientific priorities determined by individual investigators, Congress, and other interested parties. The ADAMHA is responsible for advancing scientific knowledge to improve the understanding, prevention, and treatment of alcohol abuse and alcoholism, drug abuse, and mental health disorders.3 ADAMHA is 79

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80 National Heart, Lung, and Blood Institute National Institute on Deaf ness and Communicative Disorders National Institute of Allergy and Infectious Diseases National Institute of Dental Research National Library of Medicine National Center for H uman Genome Research Division of Researc h G ran ts FUNDING HEALTH SCIENCES RESEARCH NATIONAL INSTITUTES OF HEALTH National Cancer Institute National Institute of Neurological Disorders and Stroke National Institute of General Medical Sciences National Eye I net i tu te National Institute of Diabetes and Digestive and K idney Diseases National Center for Nursing Research Division of Computer Research and Technology National Institute of Aging National Institute of Arthritis and M u scu loskeletal and S k i n D i ~ eas es National Institute of Environmental H eel t h S ci e noes National Institute of Child Health and Human Development Clinical Center National Center for Research Resources Fogarty International Center FIGURE 4-1 The institutes, centers, and divisions of the National Institutes of Health. composed of three separate institutes: the National Institute on Alcohol Abuse and Alcoholism, the National Institute on Drug Abuse, and the National Institute of Mental Health (Figure 4-2~. In addition to conducting and supporting biomedical and behavioral research and research training, ADAMHA is responsible for demonstrations, clinical training, treatment, prevention, and public information activities on public health problems

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SUPPORTING RESEARCH THROUGH NIH AND ADAMHA ALCOHOL, DRUG ABUSE AND MENTAL HEALTH ADMINISTRATION 1 1 1 11 1 1 NATIONAL INSTITUTE NATIONAL INSTITUTE ON ALCOHOL ABUSE ON AND ALCOHOLISM DRUG ABUSE 81 NATIONAL INSTITUTE OF MENTAL HEALTH FIGURE 4-2 The research institutes of the Alcohol, Drug Abuse, and Mental Health Administration. related to its mission. The peer review process and programs for research and training support are in most ways identical to NIH. Federal funding programs for supporting research and research training outside of federal laboratories are primarily grants, cooperative agreements (financial assistance awards), and contracts (acquisition awards). At NIH and ADAMHA these are referred to collectively as "extramural" programs and fall into five major categories: research grants, research and develop- ment (R&D) contracts, research training awards, cooperative agreements, and construction authority (NIH only). R&D grants have been and con- tinue to be the cornerstone of NIH and ADAMHA extramural support for health research since the expansion of the NIH extramural programs began in the mid 1940s. ALLOCATIONS FOR NIH AND ADAMHA The policy change following World War II to advance basic knowledge by supporting civilian R&D in academic institutions stimulated steady increases in the NIH budget (Figure 2-6~. This growth has resulted because of the emphasis society has chosen to give to health research and because of the subsequent legislation that created numerous new institutes and expanded the extramural programs of NIH. The most rapid budget growth occurred between 1955 and 1965 a period of expansion. From the late 1960s to 1980, budget growth leveled off and may be referred to as steady state. During the 1980s, congressional appropriations to NIH increased an average of 10 percent per year, resulting in a 2 percent per annum real growth in the NIH budget (Figure 4-3. However, much of the increases of the past few years can be attributed to the growth in funding for AIDS research.

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82 10 9 8 5 4 3 2 1 o FUNDING HEALTH SCIENCES RESEARCH DOLLARS (Billions) 77 78 79 80 81 82 Constant 1988 $ 7~ 83 84 85 86 87 88 89 90 91 YEAR ~+- Constant $ less AIDS ~~~ Current $ FIGURE 4-3 NIH appropriations with and without allocations for AIDS research from 1977 to 1991. (Appendix Able A-7) Note: Constant dollar calculations are made using the BRDPI deflator. Allocations among NIH extramural and intramural programs and pro- gram management have not changed significantly since the late 1970s (Figure 4-4~. Extramural programs account for nearly 80 percent of the NIH budget. The intramural program has remained at 10 to 12 percent of the budget over the same period. Program management, which includes the Office of the Director, Division of Research Grants, and the National Library of Medicine, has been receiving successively smaller percentages of the NIH budget, falling to 7 percent in 1989 from nearly 10 percent in 1977. Although appropriations for ADAMHA grew and paralleled those of NIH throughout the 1970s, the agency budget was cut in the early 1980s. Cuts in social sciences research and nonresearch community programs, recommended by the Reagan administration and enacted by Congress in the early 1980s, drastically reduced total ADAMHA appropriations.4 Only recently have appropriations for ADAMHA surpassed the 1979 level. The President's budget proposal for fiscal year 1991 requests more than $2.8 billion for ADAMHA (Figure 4-5~.5 Community programs have been and continue to be the largest portion of the ADAMHA budget, ranging from 53 to 61 percent of the ADAMHA budget over the past 10 years (Figure 4-6~. Obligations for research grew from 17 percent to 33 percent of the budget in the same period. When

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SUPPORTING RESEARCH THROUGH NIH AND ADAMHA 83 measured in constant 1988 dollars, there has been an average annual growth of 3.5 percent in this part of the budget since 1977 (Figures 4-5 and 4- 6~. However, there have been wide annual variances in research support, ranging from a 12 percent cut in 1981 to an 18 percent increase in 1987.5 Recently, the rapid growth in ADAMHA's research budget reflects the government's priority for combating drug abuse through basic research. Since these two agencies are the primary federal sponsors of health sciences research, this chapter examines their research support programs. Although the support programs for research projects cannot be separated easily from training and facilities (Chapters 5 and 6), the committee tried to isolate them for the purposes of this review. 1b this end, this chapter explores the policies that have affected the levels of support as well as the number and types of research project support programs available from NIH and ADAMHA The chapter also examines the characteristics and trends of the scientists performing research sponsored by NIH and ADAMHN NIH DIRECT OPERATIONS Appropriations for research support divisions, extramural grant man- agement, and for the National Library of Medicine (NLM) have not kept pace with inflation. In constant 1988 dollars, funding for program support 1 00% 75~ 50% 25% 77 78 79 80 81 82 83 84 YEAR Extramural ~ Intramural 85 86 87 88 89 _ Operations FIGURE 44 Allocation of NIH budget from 19M to 1989. (Appendix liable A-8)

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84 1 000 800 600 400 200 FUNDING HEALTH SCIENCES RESEARCH DOLLARS (Millions) - , ,+ O 1 1 1 1 1 77 78 79 80 81 82 : t 1 1 1 1 1 1 1 1 83 84 85 86 87 88 89 90 91 YEAR ' 8'' constant 1988 $ -+- current $ FIGURE 4-5 ADAMHA research allocations from 1977 to 1990. (Appendix liable A-9) 100% 75% 50% 25% 0% sir air Sir Mar air Wrier air ~ ~ ~ 1~ . d606~d 77 78 79 80 81 =3 Community Programs Training 82 83 84 85 86 87 88 89 YEAR Research Projects Program Support FIGURE 4 ~Allocation of ADAMHA budget from 1977 to 1989. (Appendix A-10)

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SUPPORTING RESEARCH THROUGH NIT AND ~ . . 85 and management has declined by 30 percent. Likewise, the NLM budget has declined by 17 percent. Funding for the Office of the Director has remained fairly constant at 0.6 to 0.7 percent of the entire NIH budget. Intramural Research The largest portion of NIH funds for direct activities is allocated to the intramural research programs in the 13 institutes. Intramural program activities include basic research, clinical research, scientist training, com- munication of scientific findings, development of policies on biomedical research priorities, and translation of research findings into more effective medical care.6 Although none of these functions is unique to the intra- mural program, the intramural program is distinct in the federal portfolio of support for health research. The key features of the intramural pro- gram include freedom from competitive grant procedures; unique research resources, including the Warren Grant Magnuson Clinical Center; and research related directly to the individual institute missions. Whereas the intramural programs were allocated sizeable portions of the NIH budget during the early postwar expansion, allocations for the intramural program were stable throughout the 1980s at 10 to 12 per- cent of the total NIH budget (Figure 4-4~. Some institutes, such as the National Cancer Institute (NCI) and the National Institute of Environmen- tal Health Sciences (NIEHS), invest heavily in their intramural programs, whereas others, such as the National Institute of General Medical Sciences (NIGMS), have no significant intramural programs. In constant dollars, funding for the intramural programs has increased from $521 million in 1977 to $757 million in 1990 (Figure 4-7~. This reflects a 2 percent per year real growth in the intramural budget that parallels the overall growth in the NIH budget over the same period.6 During the 1980s, there was speculation that the intramural research program was not performing at the level of quality characteristic of it in the past. Whereas the NIH campus served as a primary training ground for health scientists in the 1950s and 1968s, there were signs in the 1980s that the NIH was beginning to have difficulty attracting and retaining outstand- ing basic scientists and clinical investigators. These deficiencies have been attributed to relatively low government salary scales, noncompetitive fringe benefits, and the other bureaucratic constraints of working in a federal agency. In response to these concerns and to the suggestion that the intramu- ral program could benefit by shifting to the private sector, the Institute of Medicine (IOM) conducted an in-depth review of the program in 1988.6 The IOM study committee concluded that the intramural program has

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86 1 000 800 600 400 200 O FUNDING HEALTH SCIENCES RESEARCH DOLLARS (Millions) _ --_ _ ,/ , ~,0 - ,- ~,I,, +, -+ + ,,,,+-- 1 1 1 1 1 1 1 1 1 1 1 1 1 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 YEAR ' '' ' '' Constant 1988 $ ~+- Current $ FIGURE 4-7 NIH obligations for intramural research from 1977 to 1991. (Appendix A-8) previously made and continues to make valuable contributions to under- standing basic biological and disease processes. Despite NIH's difficulties in coordinating activities across institutes effectively and in responding efficiently to new challenges or crises, the IOM study committee also con- cluded that the federated organizational structure of NIH has helped meet the nation's biomedical research needs. In order to maintain the intra- mural program's excellence and credibility and to improve deficient areas, the study committee recommended some changes in NIH administration as well as in the scope of responsibilities of scientific administrators directing the intramural programs. The recommendations of the Institute's NIH intramural study commit- tee were as follows: 1b increase administrative efficiency, the committee recommended that the Secretary of Health and Human Services delegate to the director of NIH the authority to make decisions on administrative matters without being subject to review by the Office of the Assistant Secretary for Health. ~ increase NIH's ability to respond more effectively to emerging issues, new opportunities, and crises not confined to any single institute, the committee recommended that Congress annually appropriate a $25 million director's fund to be used to address these issues. ~ enhance the quality of the intramural program, the committee

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SUPPORTING RESEARCH THROUGH NIH AND ADAMHA 87 recommended that a formal review panel be established to evaluate each institute's scientific directors and intramural programs quadrennially. To be competitive, the committee believes that NIH has to exercise greater flexibility in the labor market and therefore recommended that Congress authorize NIH to develop and implement a demonstration project to overcome current staffing deficiencies. To attract high-level scientists from outside government service, the committee recommended that Congress charter a foundation to permit private support for endowing 10 chairs for distinguished investigators. . . ~ attract junior-level investigators, the committee recommended that Congress authorize and appropriate funds to create an NIH Scholars Program in which outstanding young investigators at the assistant professor level are appointed on a competitive basis to independent, nontenured positions in the intramural program. This committee concurs with the intramural study committee that these measures will enhance the intramural program as the flagship of U.S. biomedical research. NIH Extramural Programs: R&D Grants R&D grants, particularly investigator-initiated research project grants (RO1), continue to be the cornerstone of the NIH extramural program (Bible 4-1 and Figure 44~. As growth in the NIH budget slowed during the 1970s, competition for grants intensified, and the number of new and competing renewal grants awarded by NIH fluctuated annually. Through the 1970s the number of proposals funded ranged from as few as 3,500 in 1976 to 5,900 in 1979 (Figure 4-8~; this number did not follow any particular pattern but depended on the cumulative grant portfolio and funds available in any particular institute. Initially, the 1976 Report of the President's Biomedical Research Panel brought to light the issue of fluctuating numbers of NIH and ADAMHA research project grant proposals being funded annually.7 By the end of 1970s, these fluctuations had increased and had caused even deeper notions of instability In the support of biomedical research. The 1979 and 1980 reports by the Health and Human Services (HHS) Steering Committee for the Development of a Health Research Strategy reexamined these concerns about the future of federal support for new as well as ongoing health research in light of impending federal budget constraints. These reports called for 5-year plans and evaluative procedures to be established for all of the health-related agencies in HHS.~9 The 1979 Steering Committee report also emphasized the need to stabilize the science base by making investigator-initiated research projects the first priority in the NIH and ADAMHA research budgets. As a result, Congress and the Executive

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88 FUNDING HEAL:IH SCIENCES RESEARCH TABLE t1 NIH Research Grants by Kind and Type, 1988 (dollars in thousands) Kind of Grant and CodeNumberAmount _ _ _ Total25,754$4,727,320 Research projects20,&673,764,791 Traditional (R01)16,8712,564,198 Research program projects (P01)770634,809 New investigator research (R23)26011,920 SBIR (R43, R44)46054,334 MERll awards (R37)596140,829 Outstanding investigator (R35)7446,985 FIRSI awards (R29)1,227108,253 Other (R22, U01, P42)609203,463 Research centers621573,578 Specialized (P50)192164,531 Core grants (P30)176165,586 General clinical (M01)78102,159 Comprehensive (P60)3647,920 Biotechnology resource (P41 U41) 70 36,697 Primate research center (P5i) 7 33,300 Animal resource (P40, U40) 42 12,064 RCMIs (G12) 19 11,010 Other (P20) 1 310 Other research 4,266 388,952 Biomedical research support 1,110 90,918 & development (S03, S07, S10) RCPAs (K) 1,443 94,586 Cooperative clinical (R10, U10) 331 80,268 Minority biomedical support 102 83,407 (S06, S11, S14) Other 1,280 83,407 Represents awards, not obligations. SOURCE: U.S. Department of Health and Human Services. 1989. NIH Data Book 1989. National Institutes of Health Publication No. 90-1261. Bethesda, Md. Branch agreed on a policy that specified the minimum number of new and competing grants NIH and ADAMHA would be required to fund each year-"stabilization policy." The 1979 Steering Committee report suggested that the minimum number of competitive research grant awards for fiscal year 1981 be 5,000 for NIH and 569 for ADAMHA-4 From 1981 to 1988 increasing mini- mum numbers of new and competing research grants to be awarded were specified in either report or statutory language accompanying congressional appropriations bills. Whereas the initial NIH base was established at 5,000, the administration requested funding for only 284 awards for ADAMHA in 1981-only half the recommended level. However, this was modified

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SUPPORTING RESEARCH THROUGH NIH AND ADAMHA 89 upward by Congress to 345. Throughout the 1980s, the number of new and competing proposals to be funded became an integral part of the federal budget ritual. By 1987 grant awards exceeded 6,400 for NIH and ADAMHA awarded nearly 600. In 1988, the last year of stabilization, NIH funded 6,200 grant awards. Despite added appropriations from congressional committees, the funds available were never adequate to fund fully the agreed upon number of awards. In order to comply, NIH and ADAMHA were forced into a policy of reducing ongoing research commitments (continuing awards for already approved and funded grants) as well as the amounts paid to new and competing awards in what is commonly referred to as "down- ward negotiation" a recent practice for reconciling NIH and ADAMHA research grant commitments to annual appropriations by making across- the-board reductions in all grant awards. Downward negotiation is a eu- phemism, for little if any negotiation actually occurs between the scientist and NIH or ADAMHA Rather, these decisions concerning the overall proportions of the previously committed funds to be withheld in order to fund the required annual level of new and competing awards are made between the NIH or ADAMHA and the Office of Management and Budget (OMB). Actually, downward negotiations are administrative budget cuts In the grant awards. This policy has placed additional burdens on scientists, 21 18 1 5 12 9 3 o NUMBER (Thousands) 1. STABILIZATION | 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 YEAR (~at ) Grant Applications Grants Awarded FIGURE 4-8 Number of grant applications submitted to NIH and the number of grants awarded from 1970 to 1991. (Appendix A-11)

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106 1 000 800 600 400 200 FUNDING HEALTH SCIENCES RESEARCH DOLLARS (Millions) - - o Ll I I I I I I I I I 77 78 79 80 81 82 83 YEAR - Constant 1988 $ 84 85 86 87 88 ~+~ Current $ FIGURE 4-21 NIH obligations for research and development contracts from 1977 to 1989. (AppendLx liable A-12) 10 percent (Figure 4 9).11 In constant dollars, NIH obligations to R&D contracts have been halved over this period (Figure 4-21~. This shift may have been caused by the stabilization policy's emphasis on grants, where many R&D contracts may have become grants to reach the congressionally mandated quotas. R&D CENTERS The NIH supports nearly 600 centers designed to consolidate related research efforts and resources into a single administrative and program- matic structure. Centers serve as well as a vital institutional resource for multidisciplinary research. The funds provided through center grants are used for salaries of key staff, operation of shared resources and services, and center administration. These funds also may be used to recruit new talent to the center, to fund investigators who previously have not obtained competitive peer-reviewed federal funding, to provide interim research support for center investigators, and to obtain new shared resources. Specialized Centers, Center Core Grants, and General Clinical Re- search Centers (GCRCs) comprise the bulk of the centers program (Table 4-1~. Whereas these centers are primarily for research, other centers support research resources, such as primate and other specialized animal

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SUPPORTING RESEARCH THROUGH NIH AND ADAMHA 107 colonies, as well as biotechnology resources. Centers and other research grants, including Biomedical Research and Support Grants, Career De- velopment Awards, and Cooperative Clinical Grants, now account for 18 percent of the NIH extramural budget compared to 22 percent in 1978 (Table 4-1 and Figure 4-9. The application and review processes for clinical and research centers differ slightly from those of investigator-initiated grant applications. The applicants generally submit a letter of intent. Although the center applica- tions are subjected to peer review by the appropriate institute, the review process also commonly involves site visits. Criteria for review include inter- disciplinary coordination, commitment of parent institution, qualifications of the director, impact of the center on the knowledge in the field, staff expertise and needs, shared resources needs, and the quality of the research protocols that will be performed in the center.20 The GCRC program is designed to support defined areas within aca- demic medical centers dedicated to patient-related research. These centers can be composed of specialized in-patient and out-patient facilities, labo- ratories and equipment, and mainframe computers. These are staffed by specialized personnel, such as biostatisticians, computer systems managers, research nurses and dieticians, and research laboratory technicians. The GCRCs have been instrumental in collecting and analyzing data in vaccine-related clinical research for several bacterial and viral immunogens, and they have provided the infrastructure for the major efforts underway to perform clinical investigations on AIDS. In fact, budget increases since 1986 for the GCRC program were earmarked almost entirely for AIDS research (Judith Vaitukaitus, personal communication). However, the number of GCRCs supported dropped from 93 in 1970 to 78 in 1988, and budget allocations to the GCRCs over this period do not reflect any real growth (Figure 4-22~. In 1989 the IOM undertook a study on NCI's Center Core Grant program.20 These core grants provide about 20 percent of NCI's grant support in cancer center institutions. By maintaining cohorts of specialized research scientists and clinicians, the centers are successful in obtaining funds from other federal agencies and nonprofit organizations. Whereas the number of centers supported by NCI has stabilized since the late 1970s, budget allocations have declined continuously when measured in constant 1988 dollars (Figure ~23~. The IOM cancer study committee concluded that the NCI centers program would be in serious jeopardy if measures were not taken to reverse the continual erosion of funding for centers. This study committee recommended the following: . The NCI should strengthen its core support of cancer centers in

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108 FUNDING HEALTH SCIENCES RESEARCH order to exploit fully the application of these advances in the prevention and treatment of cancer and its consequences. The director of NCI should take immediate steps to avert a crisis in the funding of the program during the 1989 fiscal year. The committee recommended further that the directors of NCI and NIH, with the secretary of DHHS, work with the appropriate committees of Congress to develop an adequate budget for the program's 1990 fiscal year. The NCI should develop a systematic program plan to ensure adequate fiscal, managerial, and organizational resources; coordination with related programs; and effective scientific oversight for the cancer centers program. The director of the NCI should consider how best to increase representation of the cancer centers program in NCI planning and decision- making processes, including regular representation of the centers at the NCI executive committee meetings and creation of an external advisory committee to review their multidisciplinary programs. The director of the NCI should strengthen substantially the man- agement capabilities of the cancer centers program unit. That unit must be able to plan, monitor, evaluate, and implement the cancer centers program adequately. 700 600 500 400 300 200 100 DOLLARS (Millions) NUMBER of CENTERS ,+ it' - .. . ,/- - . . . . . . . . . .. ~ ~ ~ ~ ~ ~ ~ ~ ~ ::. ~. * ~ ~ ~ O 1 1 1 1 1 1 ~ 1 1 ~1 1 1 1 1 1 O 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 YEAR ~ GCRCs - +-- All Centers 700 600 500 400 300 200 100 Constant 1988 $ FIGURE 4-22 NIH support for research centem from 1970 to 1988. (Appendix lible A-16)

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SUPPORTING RESEARCH THROUGH NIH AND ADAMHA DOLLARS (Millions) 140 120 100 80 60 40 20 109 NUMBER of CENTERS ' '/ ,, . -- 4~ 1 -.~-Y' / ./ . . . . . .... .. O , , , , , , , , . . 1 1 1 1 1 1 1to 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 8889 YEAR -+- Number of Centers - Constant 1988 $ 80 70 60 50 40 30 20 10 FIGURE 4-23 National Cancer Institute support for cancer centers from 1972 to 1989. (Appendix Bible A-17) RESEARCH ADMINISTRATION Grants Management The Florida Demonstration Project As the federally sponsored research system has grown and aged, it has acquired a myriad of administrative, managerial, and financial proce- dures. These procedures seemed necessary and appropriate at the time the sponsored programs began or when they were recommended by Congress, federal agencies, state governments, universities, and participating scientists and engineers. Although all of these groups contributed to the accretion of bureaucratic requirements, there has been a recent movement by them to try to increase efficiency and productivity in all sectors of the American economy, including the research sector. A model program, designated Phase I of the Florida Demonstration Project (FDP), therefore was designed to test the efficacy of standardizing and simplifying the financial and administrative requirements of grants as a means of enhancing research productivity.2i 22 This program was intended to reduce the administrative burden on grantees by streamlining procedures and reducing costs in the sponsored project system. The demonstration began in April 1986 and ended in December 1987. Nine campuses of the Florida State University System and Miami University participated in the demonstration along with five federal agencies: the Department of

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110 FUNDING HEALTH SCIENCES RESEARCH Agriculture, the Department of Energy, NIH, the Office of Naval Research, and the National Science Foundation. At the outset there were four primary program objectives: (1) stan- dardize postaward administration of federal research grants among the federal agencies to the extent possible; (2) eliminate most federal prior ap- provals for budget reallocation; (3) simplify research project management procedures; and (4) allow an investigator's collective research program to be one administrative and accounting unit rather than separate units. However, many elements of the sponsored project system were to remain intact, such as the basic framework for federal stewardship and account- ability, and there were to be no changes in the federal agencies' project proposal, proposal review and evaluation, and project award mechanisms, and methods for reimbursement of direct and indirect costs. The Government-University-Industry Research Roundtable (GUIRR) of the National Academy of Sciences was primarily responsible for develop- ing the FDP. The FDP was evaluated initially in August 1986, followed by two questionnaire evaluations in November 1986 and April 1987.22 These evaluations of the project showed the following results: (1) less time was needed for final action on such project management items as extensions, budget changes, and travel changes; (2) paperwork and administrative tasks decreased throughout the system; (3) principal investigators had more flexi- bility, responsibility, and control, which the investigators believed increased their own laboratory productivity; (4) federal sponsoring agencies showed a greater trust in the universities' administrative capabilities; (5) relationships between the principal investigators and university administrators as well as between university and federal administrators improved; and (6) scientific and financial accountability were maintained. The project now has entered Phase II and has been redesignated the Federal Demonstration Project. TNenty-six institutions have been added to the original ten for further evaluation of this project, which began October 1, 1988. Biomedical Research Support Grants One program that is tied closely to NIH research project grant awards is the Biomedical Research Support Grant (BRSG) program sponsored by the National Center for Research Resources (formerly known as the Division of Research Resources). Unlike the investigator-initiated research projects that are awarded through a competitive system using peer review, BRSGs are awarded to institutions according to a formula. Rather than requiring institutions to submit proposals for specific projects, the BRSG program provides funds to those research institutions engaged heavily in biomedical research. Thus, the BRSG program provides proportionately

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SUPPORTING RESEARCH THROUGH NIH AND ADAMHA 111 more funds (up to a maximum of $500,000) to institutions that previ- ously have demonstrated the strength of their research efforts through the competitive grants system. The flexibility accorded the institution in determining the use of the funds is the unique characteristic of the BRSG program. Recipient in- stitutions are required to have a designated program director, to have an advisory committee to oversee use of the funds, and to advertise the availability of these funds within the institution. With the exception of a few minor restrictions, the use of the funds is left to the discretion of the institution. Many institutions establish peer review panels to evaluate proposals requesting BRSG funds for research or shared equipment. The latitude granted to the institutions for the use of these funds gives them more flexibility to fund emerging areas of research or new investigators be- fore they can be fully competitive in the traditional research project grant (R01) system. The BRSG program has come under increasing attack in the budget preparation process over the past few years and has been identified as one program to trim in order to reduce the NIH budget. In fact, the program was trimmed from $55 million in 1989 to $44 million in 1990. It is slated for yet deeper cuts in the 1991 budget, in which only $17 million is allocated to the program. It is not clear to the committee why there have been repeated attempts to eliminate this program. The committee can only speculate that NIH may not favor local control of these funds, which are not subject to national peer review. However, the committee strongly endorses this program because it allows all institutions to enhance their own health research programs according to institutional needs. The BRSG program may be an increasingly valuable grant mechanism for maintaining career stability for mid level scientists if the number of research grants awarded becomes more unpredictable. INCREASING COSTS OF ANIMAL USE The cost of acquiring and caring for laboratory animals has continued to increase since 1978. In large institutions the costs of maintaining cen- tralized animal facilities usually are included as part of per diem charges for animals. For example, at one university per diem charges for mice rose from 5.5 cents in 1978 to 14 cents in 1987 an increase of over 150 percent while the Consumer Price Index rose by 74.1 percent during that time. Over the same period, the per diem charges increased for dogs (from $3.60 to $8.61), for monkeys ($1.05 to $2.71), and for cats (from $1.30 to 3.20~.23 ADAMHA estimated that new regulations concerning animal care would cost in the neighborhood of $40,000 to $70,000 per grant on the care of primates and dogs.24

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112 FUNDING HEALTH SCIENCES RESEARCH The scientific community is very concerned about the increasingly stringent federal regulations for animal experimentation and the effect these regulations have on the increasing costs of doing research. Pressure from animal rights groups to tighten these regulations has had and will continue to have a profound effect on the numbers and kinds of animals used in health sciences research. Although scientists are actively involved in seeking alternatives to animal testing, they feel certain types of systems biology experimentation must be performed in animals. The committee fears as well that curbing all animal experimentation directly or indirectly by imposing unrealistic regulations will slow scientific progress in fighting human disease. INDIRECT COST RECOVERY During World War II, the federal government entered into contractual agreements with research universities in mutually beneficial partnerships. As a result, the government was able to capitalize on research results by supporting scientists at these institutions. Not only were the direct costs of performing the research supported, but the indirect or overhead costs of the research were reimbursed as well. Thus, it became federal policy to reimburse institutions for the ancillary costs of performing federally sponsored research.25 The institutional indirect cost rate is negotiated annually on an indi- vidual basis with one of the sponsoring federal agencies, and this rate is honored by other agencies sponsoring research at the institution. The Office of Management and Budget circulars A-21 and A-110 set the government- wide accounting principles for direct costs and indirect costs of sponsored research at colleges and universities.26 The indirect costs are calculated as an average cost of research on a prorated share of all overhead costs in proportion to the ratio of sponsored research expenditures (all sources) to the total expenditures of the university, rather than the marginal costs of a research project. Indirect costs are subdivided into the following seven categories: (1) operation and maintenance expenses, (2) use charges for buildings and equipment, (3) library expenses, (4) sponsored projects administration, (5) general administration, (6) student administration and services, and (7) departmental administration. Whereas the costs associ- ated with the first three categories can be documented, the latter four administrative cost components are the least definitive and most difficult to evaluate in terms of individual research projects. Although the costs as- sociated with operations, maintenance, and use allowance are more easily documented, they are no less controversial in these extremely tight fiscal times. Before 1966 indirect costs were fixed by Congress. Since then the

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SUPPORTING BESEECH THROUGH NIH ED 1 00% 75% 50% 25% 113 of 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 YEAR Direct Cost ~ Indirect Cost FIGURE 4-24 Proportion of direct and indirect costs for NIH research grants from 1970 to 1988. (Appendix Bible A-19) policy changed, and the average rate has climbed from 25 percent to more than 31 percent for NIH-sponsored research (the range is 7 to 100 percent) (Figure 4-24~. This reflects a shift in federal policy from direct support for facilities through facilities grants to a policy of indirect cost recovery. In effect, universities and colleges have been forced to increase indirect cost rates in order to maintain or update facilities. However, individual investigators perceive rising indirect cost rates as a threat to the available pool of funds for the direct costs of health research. Indirect costs for facilities renewal is covered in more detail in Chapter 6. SUMMARY AND CONCLUSIONS From this review of the funding trends for the various programs of research support, the committee concluded that the stabilization policy was successful in maintaining support for investigator-initiated research project grants. As a result of the emphasis on research project grants, this portion of the extramural budget grew from 51 to 67 percent between 1977 and 1990, rising from $2.5 billion to $3.9 billion. Consequently, in order to meet increasing annual targets of new and competing grant awards, funds had to be taken from commitments to ongoing research projects as well as by reducing new awards through downward negotiation. Funds also were

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114 FUNDING HEALTH SCIENCES RESEARCH diverted from other programs specifically research centers and contracts- and resources for training declined steadily throughout the 1980s. The committee further concluded that scientists responded to these growing problems by increasing their number of applications to maintain research programs. Although the total number of grants supported has grown from 15,500 to more than 20,000 since 1977, the often-cited award rates and pay lines have dropped steadily over this period. These declines have been caused by several factors including the substantial increase in the volume of applications; and lengthening award periods. These declines also have been caused in part by the fact that study sections have been approving steadily increasing percentages of the applications and assigning increasingly higher (lower-numbered) priority scores. Additional conclusions were drawn by the committee from an analysis of the effects of the lengthy application and review process for research grants. The review process for new NIH/ADAMHA grant applications takes a minimum of 9 months. Without intermediate feedback steps, those applications requiring modification and resubmission can take as long as 18 months. A misunderstood or poorly written proposal, even if it involves meritorious work, may lead to loss of support for a successful laboratory with important ongoing projects, and although it is technically possible to restore funding by resubmitting amended proposals and clarifying the parts that were unclear, in reality, support has since disappeared. The committee believes that, in these cases, people are fired and the projects halted, and by the time support is later restored, it is often too late to salvage talent and other resources. The committee was concerned that the frailty of this system hinders long-term research planning and can affect career investigators adversely. It also prevents timely work in new areas and in those sectors in which health crises require faster-paced research activities. Thus, despite the historically unbroken trend of increasing annual funding, the committee concluded that the episodic nature of funding (in terms of interruptions), downward negotiations, and the progressively de- creasing likelihood of receiving awards have fostered perceptions within the academic community that careers in health sciences research are unstable and unpredictable. These perceptions are exacerbated by delays in deter- mining federal budget allocations, fluctuating funding patterns within NIH and ADAMHA, and reductions in awards for ongoing projects. Perhaps partly because of these problems, the length of time that principal inves- tigators receive continuous RO1 grant support from the NIH/ADAMHA sponsored research system has been cut in half, from more than 13 years In the l950s to less than 6 years in the 1980s. In addition, as the federally sponsored research system has grown and aged, it has acquired a myriad of administrative, managerial, and financial

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SUPPORTING RESEARCH THROUGH NIU ED ~ 115 procedures that have increased bureaucratic requirements. The Florida Demonstration Project is commendable in its goal to reduce administrative burdens and increase laboratory productivity of the scientific work force. The committee concluded that health sciences research requires an environment that identifies, encourages, and develops creativity. Such an environment requires stable support for scientists and flexibility in allocating resources to meet changing demands. When the environment is positive, supportive, and reasonably predictable and optimistic, it encourages the recruitment and retention of talented health sciences researchers. REFERENCES 1. U.S. Department of Health and Human Services; Public Health Service. 1989. NIH Almanac. Publication No. 89-5. Bethesda, Md.: National Institutes of Health. 2. U.S. Department of Health and Human Services; Public Health Service. 1989. NIH Data Book Publication No. 90-1261. Bethesda, Md.: National Institutes of Health. 3. U.S. Department of Health and Human Services; Public Health Service. 1988. ADAMHA Funding Mechanisms for Grants and Awards. Rockville, Md.: Alcohol, Drug Abuse, and Mental Health Administration. Seggel, R.L. 1985. Stabilizing the Funding of NIH and ADAMHA Research Project Grants. Washington, D.C.: National Academy Press. 5. U.S. Department of Health and Human Services; Public Health Service. ADAMHA Data Source Book, F Y 1988. ADAMHA Program Analysis Report No. 89-18. Rockville, Md.: Alcohol, Drug Abuse, and Mental Health Administration. 6. Institute of Medicine. 1988. A Healthy NIH Intramural Program: Structural Change or Administrative Remedies? Washington, D.C.: National Academy Press. 7. U.S. Department of Health, Education, and Welfare; Public Health Service. 1976. Report of the President's Biomedical Research Panel. DHEW Publication No. (OS)76-500. Washington, D.G 8. Institute of Medicine. 1979. DHEW's Research Planning Principles: A Review. Washington, D.C.: National Academy of Sciences. 9. Institute of Medicine. 1980. DHEW Health Research Planning, Phase II: A Review. Washington, D.C.: National Academy of Sciences. 10. Moskowitz, Jay; Associate Director for Science Policy and Legislation, National Insti- tutes of Health. 1989. Presentation at ALAS Symposia on Research and Development in the FY 1990 Federal Budget. Washington, D.C.: April 1989. 11. U.S. Department of Health and Human Services. 1988. Extramural [lends, FY 1778-87. Bethesda, Md.: National Institutes of Health, Division of Research Grants. 12. U.S. Department of Health and Human Services; Public Health Service. 1985. DRG Peer Review [bends; Workload and Actions of DRG Study Sections, 1975-1985. Bethesda, Md.: National Institutes of Health. 13. U.S. Department of Health and Human Services; Public Health Service. 1986. DRG Peer Review [lends; Member Characterisitcs: DRG Study Sections, Institute Review Groups, Advisory Councils and Boards, 1977-1986. Bethesda, Md.: National Institutes of Health. 14. U.S. Department of Health and Human Services; Public Health Service. 1988. The health of biomedical research institutions: Report of the regional meetings. Proceedings of the 57th Meeting of the Advisory Committee to the Director, National Institutes of Health, Bethesda, Md. June 27-28, 1988.

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116 FUNDING HEALTH SCIENCES RESEARCH 15. U.S. Department of Health and Human Services; Public Health Service. 1988. NIH Advisory Committees: Authority, Structure, Function, Membem. Publication No. 88-11. Bethesda, Md.: National Institutes of Health. 16. U.S. General Accounting Office: Biomedical Research: Issues Related to Increasing Size of NIH Grant Awards. Report No. GAO/HRD-88-90BR; May 1988. 17. U.S. Department of Health and Human Services; Public Health Service. 1985. Academic Research Equipment and Equipment Needs in the Biological and Medical Sciences. NIH Program Evaluation Report No. 85-2769. Bethesda, Md.: National Institutes of Health. 18. U.S. Department of Health and Human Services; Public Health Service. 1984. The extramural awards system. Proceedings of the 50th Meeting of the Advisory Committee to the Director, National Institutes of Health, Bethesda, Md. November 19, 1984. 19. U.S. Department of Health and Human Services, Public Health Service: Age [lends of ADAMHA Principal Investigators. ADAM HA Program Analysis Report, No. 88-10. Rockville, Md.: Alcohol, Drug Abuse, and Mental Health Administration. 20. Institute of Medicine. 1989. A Stronger Cancer Centers Program. Washington, D.C.: National Academy Press. 21. Hively, W. 1988. Getting rid of red tape. American Scientist 76:241-244. 22. National Academy of Sciences; Government-University-Research Roundtable. 1988. Unpublished evaluation documents. 23. National Research Council. 1988. Use of Laboratory Animals in Biomedical and Behavioral Research. Washington, D.C.: National Academy Press. 24. Holden, C. 1989. A preemptive strike for animal research. Science 244:415-416. 25. Association of American Universities. 1988. Indirect Costs Associated with Federal Support on University Campuses: Some Suggestions for Change (Draft). Washington, D.C.: AAU Ad Hoc Committee on the Indirect Costs to the Executive Committee of the AAU. 26. Office of Management and Budget: Principles for Determining Costs Applicable to Grants, Contracts, and Other Agreements with Educational Institutions. OMB Circular A-21. Washington, D.C. (Revised February 1979.)