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INTERIM REPORT

Approaches to Cost Recovery for Animal Research: Implications for Science, Animals, Research Competitiveness, and Regulatory Compliance

National Research Council



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Approaches to Cost Recovery for Animal Research: Implications for Science, Animals, Research Competitiveness, and Regulatory Compliance INTERIM REPORT Approaches to Cost Recovery for Animal Research: Implications for Science, Animals, Research Competitiveness, and Regulatory Compliance National Research Council

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Approaches to Cost Recovery for Animal Research: Implications for Science, Animals, Research Competitiveness, and Regulatory Compliance Approaches to Cost Recovery for Animal Research: Implications for Science, Animals, Research Competitiveness, and Regulatory Compliance A Report of the Committee on Cost of and Payment for Animal Research Institute for Laboratory Animal Research National Research Council National Academy Press Washington, D.C. 1998

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Approaches to Cost Recovery for Animal Research: Implications for Science, Animals, Research Competitiveness, and Regulatory Compliance NATIONAL ACADEMY PRESS 2101 Constitution Avenue, N.W.Washington, D.C.20418 NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with regard for appropriate balance. The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Bruce M. Alberts is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. William A. Wulf is president of the National Academy of Engineering. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Kenneth I. Shine is president of the Institute of Medicine. The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy's purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Bruce M. Alberts and Dr. William A. Wulf are chairman and vice chairman, respectively, of the National Research Council. This study was supported by Contract/Grant No. N01-0D-4-2139 between the National Academy of Sciences and the Department of Health and Human Services and National Institutes of Health. Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the views of the organizations or agencies that provided support for the project. Availability from program office as desired, 202-334-2590.

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Approaches to Cost Recovery for Animal Research: Implications for Science, Animals, Research Competitiveness, and Regulatory Compliance COMMISSION ON LIFE SCIENCES Thomas D. Pollard (Chair), The Salk Institute for Biological Studies, La Jolla, California Frederick R. Anderson, Cadwalader, Wickersham & Taft, Washington, DC John C. Bailar, III, University of Chicago, Illinois Paul Berg, Stanford University, Stanford, California Joanna Burger, Rutgers University, Piscataway, New Jersey Sharon L. Dunwoody, University of Wisconsin, Madison John L. Emmerson, Eli Lilly and Co. (Ret.), Indianapolis, Indiana Neal L. First, University of Wisconsin, Madison, Wisconsin Ursula W. Goodenough, Washington University, St. Louis, Missouri Henry W. Heikkinen, University of Northern Colorado, Greeley, Colorado Hans J. Kende, Michigan State University, East Lansing, Michigan Cynthia J. Kenyon, University of California, San Francisco, California David M. Livingston, Dana-Farber Cancer Institute, Boston, Massachusetts Thomas E. Lovejoy, Smithsonian Institution, Washington, DC Donald R. Mattison, University of Pittsburgh, Pennsylvania Joseph E. Murray, Harvard University, Wellesley Hills, Massachusetts Edward E. Penhoet, Chiron Corporation, Emeryville, California Malcolm C. Pike, Norris/USC Comprehensive Cancer Center, Los Angeles, California Jonathan M. Samet, The Johns Hopkins University, Baltimore, Maryland Charles F. Stevens, The Salk Institute for Biological Studies, La Jolla, California John L. VandeBerg, Southwest Foundation for Biomedical Research, San Antonio, Texas Staff Paul Gilman, Executive Director

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Approaches to Cost Recovery for Animal Research: Implications for Science, Animals, Research Competitiveness, and Regulatory Compliance PREFACE Accounting for the costs of an animal research facility has been a source of confusion and inconsistency causing friction among researchers, animal care providers and administrators. The principal issue in the debate is which of the costs of an animal research facility are direct costs that are to be charged to the investigator and which are indirect costs (facilities and administrative, or F&A costs) that are to be charged to the indirect cost pool. Principles for determining the allocation are set forth in an Office of Management and Budget (OMB) policy, Circular A-21. Federal agencies have interpreted this policy to mean that all costs associated with an animal research facility must be recovered as direct costs through animal per diem charges. However, if a researcher keeps animals in the laboratory, the F&A costs are recoverable from the indirect cost pool and often the researcher can avoid paying the institution's animal per diem charges. That interpretation of Circular A-21 encourages investigators to house animals in research laboratories - a practice that impedes institutional oversight, leads to inefficient and sub-optimal care and compromises research results. Good science depends upon good animal care, which can be delivered most efficiently and economically in centralized animal research facilities. Thus, some observers believe that the current interpretation of Circular A-21 is contrary to good science. The National Center for Research Resources, National Institute of Health asked the National Research Council (NRC) to appoint a committee to study this issue. The members of the Committee on Cost of and Payment for Animal Research were chosen by the National Research Council to represent a wide range of views on the interpretation of Circular A-21. The Committee 's charges were to develop recommendations to enable federal auditors and research institutions to allocate research animal facility costs congruently to the direct or F&A cost categories and to project the anticipated financial and scientific ramifications of implementing these recommendations at PHS funded institutions. Some members had worked for OMB or the Department of Health and Human Services and, in the past, may have supported the federal government's interpretation of Circular A-21; others, from industry or the Department of Defense, felt that the level of accounting detail required by the current interpretation of federal auditors was excessive and counter productive; university researchers endorsed efforts to promote high quality science while minimizing per diem charges; and animal research facility managers favored a Circular A-21 interpretation that fostered the support and development of centralized animal facility resources to provide efficient, flexible and inexpensive animal care in an environment conducive to high quality research. These views were sufficiently divergent that at the outset there was a serious question as to whether it could reach the goal of consensus. However, this report does represent such a consensus, lending considerable weight to the conclusions drawn and the recommendation made. This report has been reviewed by persons chosen for their diverse perspectives and technical expertise in accordance with procedures approved by the Research Council's Report Review Committee. The purposes of this independent review are to provide candid and critical comments that will assist the authors and the Research Council in making the published report as sound as possible and to ensure that the report meets institutional

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Approaches to Cost Recovery for Animal Research: Implications for Science, Animals, Research Competitiveness, and Regulatory Compliance standards of objectivity, evidence, and responsiveness to the study charge. The content of the review comments and draft manuscript remain confidential to protect the integrity of the deliberative process. We wish to thank the following persons for their participation in the review of this report: Linda C. Cork, Stanford University School of Medicine, Stanford, CA Delbert Glanz, Salk Institute for Biological Studies, La Jolla, CA Milton Goldberg, Council on Government Relations, Washington, DC Joseph R. Haywood, University of Texas Health Science Center, San Antonio, TX Robert O. Jacoby, Yale University School of Medicine, New Haven, CT David Korn, Association of American Medical College, Washington, DC Judith Lave, University of Pittsburgh, Pittsburgh, PA Cathy Liss, Animal Welfare Institute, Washington, DC John J. Lordan, Johns Hopkins University, Baltimore, MD Bruce S. McEwen, The Rockefeller University, New York, NY Norinne E. Noonan, Florida Institute of Technology, Melbourne, FL Charles Paoletti, Office of Naval Research, Arlington, VA John H. Richards, California Institute of Technology, Pasadena, CA Norman R. Scott, Cornell University, Ithaca, NY Frank A. Sloan, Duke University, Durham, NC Seeing this list after the report was accepted by Research Council, I was struck by the diversity of the backgrounds of the reviewers, again attesting to the rigor of the process of producing this report. Although the persons listed above have provided many constructive comments and suggestions, responsibility for the final content of this report rests solely with the author committee and the National Research Council. To the committee members, reviewers, and staff, I extend my deepest appreciation. Members of the committee devoted precious weekends, evenings and work hours, and endless energy to meet short deadlines. The reviewers also worked under short deadlines, and their efforts greatly improved the logic, coherence and comprehensibility of our report. I appreciate the guidance and support provided by the Institute for Laboratory Animal Research staff throughout. Kathleen Beil provided timely and important communications to the committee in arranging travel and lodging and in production of this report. Ralph Dell' s focus on the topic and his management of the review and publication were of inestimable value. Norman Grossblatt's editing made the report eminently more readable - a feature that will be appreciated by readers. Christian E. Newcomer, Chair Committee on Cost of and Payment for Animal Research