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Herman J. Woltring
02-01-1992, 07:04 PM
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Herman J. Woltring, Eindhoven/NL

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Health InfoCom Network News Page 29
Volume 4, Number 25 December 25, 1991

Managing The Costs of Biomedical Research
from National Institutes of Dental Research

The changing nature of biomedical research has led to spectacular advances in
fields such as molecular biology, immunology, and neuroscience, among others.
But with these advances has come an increased needs for costly research
facilities and sophisticated scientific equipment and techniques. The
National Institutes of Health (NIH) is now confronting the economic realities
of conducting costly biomedical research and the prospect of pronounced
restraints on growth in funding. At the same time, inflation has had a strong
negative influence on biomedical research in that it erodes NIH's ability to
pursue scientific opportunities.

In measuring the effect of inflation on biomedical research, NIH uses the
Biomedical Research and Development Price Index (BRDPI), developed by the
Department of Commerce. The BRDPI measures the effects of changes in costs
associated with personnel, equipment, and supplies specifically use in
biomedical research.

Over the past decade, the cost of research project grants has increased by 98
percent, from an NIH average of $97,800 per grant in FY 1980 to $193,900 in FY
1989. In addition, the number of new and competing renewal applications grew
dramatically, from 14,142 in 1980 to 19,535 in FY 1989. The number of
applicants submitting new and competing renewal applications increased as
well-from 12,090 in FY 1980 to 16,397 in FY 1989. These figures testify to a
flourishing national biomedical endeavor-at rapidly escalating costs. In the
interests of containing these costs, while providing funding to as many
investigators as possible, the NIH developed the financial management plan
called for by the House and Senate Appropriations Committees in the FY 1991
funding bill. This plan incorporates the following policies:

The average length of research project grants will be fixed at 4 years.

The average cost of competing research project grants will increase in
consonance with the BRDPI.

NIH will establish the indirect cost rate negotiated for the initial
(competing) year of research project grants as the funding rate for all years
of the recommended period of support.

The concept of "approving" grant applications will be abolished, and in its
place, a "success" will be adopted.

Research training will be supported at levels recommended by the National
Academy of Sciences to the extent possible without jeopardizing NIH's ability
to provide increases in trainee stipends.

Funding for "other mechanisms"-including contracts, centers, contruction, the
intramural research programs-will increase to reflect inflationary costs to
the extent possible within overall budget constraints.

These policies are described in more detail in following paragraphs, along
with specific measures undertaken by NIDR.

Length of Grants

While NIH grants were funded for an average of 3.3 years in FY 1980, the
average length had grown to about 4.3 years in FY 1990. NIH is recommending
that Institutes begins to move to holding grants to an average of 4 years to
preserve funding continuity for individual investigators and ensure that
sufficient number of competing awards are made each year. NIH Institutes will
be able to make some awards for projects extending longer than 4 years as long
as their research portfolios also contain a sufficent number of shorter-term
grants such that the 4 year average is achieved. This provision is expected
to have little immediate impact on NIDR policies, as the average length of
NIDR grants is slightly less than 4 years.

Cost of Grants

Initial Review Groups (IRGs), or "study sections," will continue to provide
NIH Advisory Councils, Boards, and Institutes with information about the
relative scientific merit of proposed projects, appropriate support levels and
duration. Review guidelines will be strengthened for IRG reviewers, and
emphasis will be placed on close examination of proposed budgets. With
respect to research costs, IRGs will be asked to scrutinize percent effort in
relation to the work scope, possible overextension to research staff,
justification for equipment and the addition of personnel in future years, and
potential overlaps with existing grants.

To hold cost increases in line with the BRDPI, NIDR staff will need to adjust
the initially recommended amounts so that, on the average, the cohort of
competing grants in any one fiscal year will not increase by more than the
BRDPI over the cohort of competing grants in the previous year.

The future-year commitments of these grants usually provide for an
inflationary increase of about 4 percent. Exceptions are made in special
instances: e.g., clinical studies that have necessary expansion in the second
year to allow for patient enrollment. Grantees are informed on the Notice of
Grant Award that no further adjustments are anticipated for the future years,
thus eliminating the uncertainly experienced in the past with greatly
fluctuating "downward negotiations."

Indirect Costs

The indirect costs of conducting research-which include expenses such as
building space and maintenance, utilities, security and fire protection,
library services and resources, and payroll, accounting, and other
administrative services-have dramatically outpaced the direct costs of
research over the past decade. NIH is adopting new measures to contain these
costs without jeopardizing the ability of grantee institutions to conduct
research. Under the new NIH financial management plan, the indirect cost rate
negotiated for the initial (competing) year of a grant will remain the same
for all years during the recommended period of support.

Success Rate

While the purpose of peer review continues to be evaluation of the scientific
merit of research proposed for funding, several changes have been made in
procedures. The Appropriations Reports issued by the House and Senate
encouraged NIH to modify its peer review system to eliminate the category of
"approved" but unfunded research grant applications. Accordingly, NIH will
abolish the practice of "approving" grants applications, and in its place,
adopt the "success" rate. The success rate refers to the number of
applications funded divided by the number of applications reviewed by the

Research Training

To ensure that research training stipends keep pace with the cost of living
NIH has requested and received approval from the Public Health Service to
increase stipends for all National Research Service Award trainees and fellows
consistent with Congressional appropriations for FY 1991 and with programmatic
needs outlined in the NIH prepared Review of the National Institutes of Health
Biomedical Research Training Programs of October 1989. This request has
provided stipend increases of 2.4% to 9.4%, depending on the years of previous
experience and the reported disparities with corresponding housestaff

Research Centers

The House Appropriations report called upon NIH to fund approximately 640
center grants. Although there was no comparable provision in the
corresponding Senate report, several NIH Institutes and Centers, including
NIDR, were instructed through the report language accompanying their FY 1991
appropriations to provide support for additional centers. These additional
centers bring the overall number of center grants to a level that exceeds the
ceiling provided by the House report. NIH recognizes the need to manage the
costs of centers. However, cost control can be achieved by the total amount
of funds made available for centers rather than by establishing a celling on
the numbers of centers. Setting an arbitiary cap on the number of centers
that can be funded jeopardizes the flexibility of NIH to take advantage of the
different research and resource center environments and their
multidisciplinary teams to attack problems requiring a more nearly
comprehensive and longer-term approach.

To manage the costs of its research centers, including the clinical core
centers, NIDR will impose direct cost ceilings on new solicitations as

Research Centers in Oral Biology $750,000

Categorical Centers $500,000

Clinical Core Centers in Oral Health Research $300,000

As suggested in the NIH financial management plan, NIDR is encouraging
complementary funding from other sources. These sources may include public or
private agencies or institutions, industry, and foundations. If applications
for proposed projects have similar merit but vary in cost-competitiveness,
funding decisions are now more likely to favor those projects which are
supplemented by non-NIDR funds.

Other Strategies

All NIH Institutes, Centers, and Divisions have been instructed to strive for
a balanced research portfolio with an appropriate mix of research project
grants, center grants, training centers, and other mechanisms. NIH also is
devising strategies to deal with unexpected public health crises, such as the
AIDS epidemic, which may require immediate and extensive availability of