Information Trading: How Information Influences the Health Policy Process (1997)

David P. Steven's

Examination of the information trading that surrounded reauthorization legislation for the National Institutes of Health (NIH) in the 104^th Congress provides a window on the political process that drives biomedical research funding in this era of limited federal budgets. NIH continues to be an icon of the American health care system and its research establishment. However, even NIH, an institution that has traditionally benefited from bipartisan and enthusiastic support, will have to do better at demonstrating its value, given the commercial pressures associated with the new national health care market and the political pressure to balance the federal budget.

Introduced by Senator Nancy Landon Kassebaum, the Chairman of the Senate Committee on Labor and Human Resources, S. 1897—the National Institutes of Health Revitalization Act of 1996—made its way successfully through the Senate in the closing moments of the 104^th Congress. Nevertheless, it saw no activity in the House of Representatives. Crafting the law that defines NIH— the reauthorization process—has been an increasingly complex process in recent years. For more than 15 years passage of the law that reauthorizes NIH has not been achieved in the congressional ses-

sion in which a reauthorization bill was introduced. Although the details may vary, it is likely that the themes that prevailed in political discussions around funding for biomedical research during the 104^th Congress will predominate in the foreseeable future.

NIH was founded in 1930. It moved to Bethesda, Maryland, in 1938 as extramural funding of medical research began to expand. With the onset of World War II the urgency and magnitude of the health needs of American troops gave modern biomedical research its seminal boost. NIH produced the first extramural contracts to universities, research institutions, and hospitals (Starr, 1982).

The momentum in biomedical research did not end with the war. Consistent growth of federal support for NIH continued at a remarkable pace in the half-century after the war. During that period NIH funding doubled every 5 years (Varmus, 1995).

This momentum cannot be sustained into the next century because of two pressures on research funding. First, expanding federal entitlements have reached a level that creates pressures that limit growth of the discretionary portion of the federal budget. Support for NIH is part of that discretionary budget. Second, the constant erosion of purchasing power brought about by inflation is unremitting.

Mandatory spending in the federal budget—so-called entitlements—increasingly drives the budgetary process. Entitlements constitute that portion of federal spending that obligates the payment of benefits to anyone who meets explicit eligibility requirements established by law. Examples of entitlements include Social Security, Medicare, and Medicaid. In 1995, mandatory spending constituted 65 percent of the federal budget. This left little wriggle room in the discretionary budget, which is only 17 percent of the total federal budget (Rimkunas, 1994). Unmodified, mandatory spending will increasingly encroach on domestic discretionary spending.

In addition, inflation gnaws at NIH funding. The Biomedical Research and Development Price Index (BRDPI) is the price index for biomedical research (Jones and Sanderson, 1996). It reflects the weight of the expenditures that are driven by the unique costs of biomedical research and accounts for many variables including indirect costs and the costs of high technology. It is one of the many components that define the overall inflation rate. BRDPI has always exceeded the gross domestic product (GDP), generally by a ratio approximating 3:2. This has broad political as well as policymaking implications—a kind of budgetary Hobson's choice—as research competes with elderly, disabled, and poor people for public support, to maintain steady state, biomedical research will require a persistent and disproportionate claim on federal resources.

Given the need for increasing budgetary restraint, on the one hand, and the unremitting nature of inflation, on the other, biomedical research funding was well treated by the 104^th Congress. The Continuing Resolution for fiscal year 1996 allayed early concerns engendered by the budget-cutting strategies of both the Congress and the Clinton Administration. In a year that saw the government close because of the budget battle, Congress awarded NIH not only funding for the agency but a remarkable 5.7 percent increase as well.

This largesse is unlikely to be sustainable. First, political pressure to balance the budget builds considerable resistance to the reduction of funding for competing sources to provide increases for NIH. Second, many elected members who have come to be seen as stewards of NIH retired at the end of the 104^th Congress. Notable among them were Senators Nancy Landon Kassebaum and Mark Hatfield. Both of these strong supporters of NIH were powerful and effective chairs of committees of jurisdiction—the Labor and Human Resources Committee and the U.S. Department of Health and Human Services (HHS) Appropriations Subcommittee, respectively. They left behind successors whose positions on funding for biomedical research were less assured.

Given the growing financial constraints in the broader budgetary context, the politics of biomedical research funding are shifting so that new emphases emerge. As a result, the information trading that characterized the political process surrounding S. 1897 in the 104^th Congress came down to two principal sources of political tension. The first was the debate between earmarked research funding versus investigator-initiated funding. The second was the tension between proponents of clinical research versus proponents of basic research. On both issues, NIH found itself on the opposite side of well-organized and articulate advocacy groups in the research community.

The taxpayer gains access to the politics of research funding by way of his or her elected member's advocacy for specific disease-focused research. Over the years, dozens of earmarks for specific research initiatives have been introduced into the laws authorizing NIH. Traditionally, this process was marked by appearances before appropriations hearings of a parade of advocates, often with diseases for which none but the cold-blooded could refuse funding. With ever more limited dollars, this has put well-intentioned members in a very difficult position. The dilemma has become compounded by increasing awareness of the chasm between good legislative intentions on the one hand and actual triumph over disease on the other. In defense of earmarked research funding, however, some have argued that, to a large extent, the aggregate research budget is but a composite of accumulated earmarks. Yesterday's war on cancer may be today's strong and well-funded National Cancer Institute.

In recent years NIH has come to resist new earmarked funding. In testimony in hearings before the Senate Labor and Human Resources Committee, NIH leadership presented arguments against new earmarks (Hall, 1996). This position was anchored in the prin-

ciple that a strengthened peer-review process provides the best mechanism for the effective allocation of tight resources to biomedical research. They argued for a process whereby federal dollars flow through institutes that, in turn, parcel out the funds, on the basis of peer-review, to investigators with the most promising research ideas.

An additional concern underlying resistance to earmarked research funding reflects the expectation that, going into a future marked by severe budgetary restraint, newly authorized earmarked funding may not necessarily be matched by appropriation of adequately increased dollars. This could leave NIH with the dilemma of relatively fixed appropriation levels that are spread over an expanded array of programs provided by ambitious authorizing legislation.

S. 1897 was introduced with no disease-focused earmarks. Although dozens of advocacy groups argued strongly for their issues, only a few well-articulated proposals found their way to S. 1897 as amendments in the Labor and Human Resources Committee markup. Four well-articulated interests were successful: an initiative for Parkinson's disease research, a set-aside specifically for pediatrics research, enhanced funding for diabetes, and support for a program in pain research. During markup, committee members repeatedly expressed their ambivalence about earmarked funding. Nevertheless, all disease-specific amendments that were proposed were passed by voice vote. It is still difficult for members to say no to strategically crafted appeals for earmarked research funding.

It is informative to review the story of the Parkinson's disease initiative as an excellent example of a successfully orchestrated strategy. It also demonstrates how a compelling earmark can take on a life of its own and even help push the broader legislation along to Senate approval.

This initiative was successful, in large measure, due to the efforts of a grassroots advocacy organization, the Parkinson's Action Network, which is headed by an articulate and astute leader who herself is a person with Parkinson's disease. With vigorous support from this group, Senator Mark Hatfield introduced a bill in the Senate to establish centers for Parkinson's disease research, spe-

cially targeted grants for Parkinson's disease research, and other educational and coordinating strategies. Under this proposed legislation, the centers and special grants would be named for Morris Udall, a popular congressman whose career had been shortened by the disability of Parkinson's disease.

In hearings, representatives of NIH took the position that focused funding for Parkinson's disease, although well-intentioned, would not be as effective as broader funding for degenerative neurologic diseases. They reasoned that investigator-initiated research into the pathophysiology of degenerative diseases of the brain would be more likely to provide a high yield than a disease-focused strategy (Hall, 1996). This argument for investment in basic research was convincing to Senator Kassebaum, who was not among the 61 co-sponsors of the Udall bill. On the other hand, all but two members of the Labor and Human Resources Committee were among the co-sponsors. It came as no surprise, therefore, that a somewhat modified version of the Udall bill was added to S. 1897 as an amendment during markup.

The Parkinson's disease amendment provided momentum to the progress of S. 1897 through the Senate. Few were optimistic that this bill would pass the Congress because of several obstacles: it was reported back to the Senate late in the session, the press of appropriations legislation preoccupied the 104^th Congress in its closing moments, and there was little interest in the House of Representatives for taking up the NIH bill. However, in spite of these issues, S. 1897 was moved along by several countervailing efforts. They included vigorous lobbying by the Parkinson's Action Network, the enormous appeal of the link of this issue with a popular member of Congress, and the widespread nature of Parkinson's disease among elected members and their families.

In addition to the push by Parkinson's disease advocates, there were energetic efforts by advocates from other representatives of the biomedical research community and the personal commitment of Senator Kassebaum to see the adoption of administrative efficiencies that were proposed in her bill. These all contributed to the ultimate passage of S. 1897 in the Senate by unanimous consent. In the end, the Parkinson's initiative—resisted by NIH because of its

earmarking strategy—was a substantial force that, with allies, came close to ensuring the success of the larger reauthorization bill. It was all the more ironic that support for a disease-specific earmark contributed so substantially to the success of a bill that was originally crafted to free NIH from numerous legislative mandates.

Budgetary constraints and the dramatic expansion of knowledge in basic biomedical science have combined to create a heightened struggle between proponents of funding for basic and clinical research. Basic research is the pursuit of fundamental biomedical knowledge. Clinical research is patient-focused research. The latter seeks to relate basic research to patient care. The successful pursuit of basic genetic mechanisms of disease in particular has increasingly been fueled by the commitment of NIH peer-review study sections. There is the prevailing sense that this research strategy is hot on the trail of the molecular explanation of disease. As the queue for limited research dollars has lengthened because of these new and productive areas of inquiry, clinical investigators have found themselves nearer the back of the line.

The issues surrounding funding for clinical research received considerable attention in a hearing before the Senate Committee on Labor and Human Resources in May 1996. This hearing, entitled ''Funding for Biomedical Research in the Era of Health Care Reform," provided many groups the opportunity to present to Congress the case that academic health centers (AHCs) are in jeopardy in the current health care environment. AHCs and their representatives argued that their academic mission—research and education in addition to patient care—made them more expensive competitors for managed care contracts. The Association of American Medical Colleges weighed in on these discussions as effective advocates for their constituents. They presented the first data regarding the threat of managed care to cross-subsidies for research from fees paid for clinical care (Cohen, 1996). Additional information came from a study performed by Lewin-VHI. That study provided compelling data regarding the potential risk to training of future clinical inves-

tigators posed for AHCs by the economic exigencies of the marketplace (Mechanic et al., 1996).

There was strong pressure from other constituencies within the academic medical community to give greater priority to clinical research. In response to this, Senator Hatfield introduced a bill that would set aside substantial funds for new grants targeted for clinical investigators. It was the result of vigorous efforts by representatives of the American Federation for Clinical Research to champion this cause. In addition, its advocates were able to muster support from more than 100 other interest groups. Ultimately, most of the components of this clinical research bill were written into S. 1897 as a result of negotiations between Senators Hatfield and Kassebaum.

NIH has attempted to accommodate these issues. The NIH director appointed an Advisory Committee on Clinical Research to explore policy options related to clinical research and other issues that surround the changes in the health care environment. The pace of their deliberations produced results too late to offset the thrust of the Hatfield Clinical Research bill (NIH Director's Panel on Clinical Research, 1996).

Should this component of the reauthorization bill survive in future versions, it is likely that further issues, including the role of health insurers in funding clinical care associated with clinical research, will find their way into these discussions.

Information trading played a role in the 104^th Congress in two other areas: the influence of small business and abortion politics, including fetal tissue research and human embryo research.

Small business enjoyed a dominant presence in the 104^th Congress. The politics of NIH funding was no exception. Under existing law, NIH and 10 other agencies must spend 2 percent of their budgets on the Small Business Innovation Research (SBIR) pro-

gram. This program provides a set-aside for grants specifically based in small businesses. This proportion would increase to 2.5 percent in 1997. Many academic researchers have objected to this set-aside because of their contention that evaluation scores achieved by SBIR grants have generally been less competitive than those for proposals that come from investigators based in academic settings, RO-1 grants. John Porter, Chairman of the House DHHS Appropriations Subcommittee, sought to introduce a section into the House DHHS appropriations bill (H.R. 3755) that would require the median evaluation scores of grants made by the SBIR program to be comparable to those for proposals for RO-1 grants in similar fields. Following meetings with representatives of small business and the biotechnology industry, however, Porter withdrew his proposal.

Controversy surrounding fetal tissue research and human embryo research found little voice in the formal discussions around S. 1897. These issues that are of concern to opponents of abortion have been the source of considerable debate in previous discussions surrounding NIH funding. For example, the Continuing Resolution that funded NIH for fiscal year 1996 contained a prohibition against human embryo research. Although the possibility of prohibitions against fetal tissue research were raised in staff discussions around the Parkinson's disease research amendment to S. 1897, the issue did not materialize in the Labor and Human Resources Committee markup.

Despite an increasingly budget-driven environment and more stringent competition for a portion of the ever-smaller discretionary slice of the federal budget, NIH continues to benefit from its special favored status in Congress. Nevertheless the debate over NIH reauthorization in the 104^th Congress brought to light some of the growing tensions around allocating limited dollars for competing worthy endeavors.

The debate underscored once again, how effective grassroots organizations advocating for increased funding for a special condition—in this case Parkinson's—are not only able to shape legislation through well-researched and packaged information, but are also able to be an important force in making sure that a particular piece of legislation does not get stalled as it continues to move through Congress. Such efforts are greatly helped when the advocacy campaign is linked to a well-known and well-regarded individual afflicted with the condition under consideration.

The 1995 to 1996 congressional debate over NIH reauthorization sounded a warning bell for future support of public goods such as research and teaching in a more market-oriented, competitive environment. The research mission for academic medicine going into the next century will be caught in the pincers of limited federal budgets on the one hand and the health care market's indifference on the other. Those who value biomedical research for society's or their own gain must be sensitive to the directions of this debate in Congress and will have to find a clear and compelling voice in these continuing discussions.

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Hall, Z. 1996. Statement before the Senate Committee on Labor and Human Resources, Hearing on Reauthorization of the National Institutes of Health, Oversight Hearings on the National Institutes of Health in Preparation for the Agency's Reauthorization this Year, S. Hrg. 104-465, pp. 57-59. Washington, D.C.: U.S. Government Printing Office.

Jones, R.F., and S.C. Sanderson. 1996. Clinical revenues used to support the academic mission of medical schools, 1992-1993. Academic Medicine 71:299-307.

Mechanic, R., A. Dobson, and S. Yu. 1996. The Impact of Managed Care on Clinical Research: A Preliminary Investigation. Final report to U.S. Public Health Service. Contract No. 282-92-0041. Fairfax, Va.: Lewin-VHI, Inc.

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