Congress Moves to Increase NIH Budget; Secure Indirect Cost Recovery

Twitter icon
Google icon
LinkedIn icon

Congress Moves to Increase NIH Budget; Secure Indirect Cost Recovery

Senate Appropriations Approves $2 Billion Increase for NIH

There are positive signs that funding for scientific research will not only be maintained, but will once again increase. Earlier this month, the Senate Appropriations Committee overwhelmingly approved $36.1 billion for the National Institutes of Health for the upcoming fiscal year. If approved intact, it will mark the third consecutive year that the NIH receives a $2 billion increase. The House Appropriations Committee already approved a $1.1 billion increase.

Additionally, both the House and Senate submitted identical bills expressly prohibiting the White House from altering the formula used to calculate indirect costs (facilities and administration, or F&A) for research. That language was also included in the stopgap budget Congress passed to run the government through Dec. 8, 2017.

The Senate’s 29-2 vote was a bipartisan rebuke of the administration’s proposal to return the NIH to 2002 spending levels by cutting funding by $7.5 billion, or 22 percent.

Following the Senate vote, the Association of American Medical Colleges (AAMC) issued a statement on the Senate Labor-HHS Appropriations Bill: “We especially applaud the Committee for again championing a nearly $2 billion increase for NIH-supported medical research at medical schools, teaching hospitals, and other research institutions, and for preserving NIH support for the facilities and administrative infrastructure that makes that groundbreaking research possible. Together with their House counterparts, the Committee’s leadership has been key in ensuring that sustained growth in the NIH budget remains a national priority, and these efforts not only offer a lifeline to patients across the country, but also strengthen local economies and our global competitiveness.”

“We are encouraged that congress remains steadfastly unified in their support for NIH research, which continues to be a major engine for the biomedical sector of the U.S. economy and a jewel in the national crown leading the world in scientific discovery,” says Kevin B. Mahoney, executive vice president and chief administrative officer, and executive vice dean of Integrative Services at Penn Medicine.

Mark C. Wells, AIA, assistant dean for facilities at the University of Wisconsin School of Medicine & Public Health, says the negative repercussions of cuts of the magnitude that the administration proposed “would be unimaginable,” particularly for public universities, which have seen state funding drop precipitously. “Where would those researchers go? What would they do? You can say industry would pick up the difference, but how long would it take? What about that lag time?”

Wells says he is heartened by the Senate’s most recent action. “I am grateful that NIH is being supported.”

The most encouraging action to date is Congress’s commitment to maintaining funding for indirect costs. Tom Price, secretary of health and human services, had argued against the funding because, he said, indirect costs do not directly contribute to research. But researchers argue that they have no other sources of revenue to cover the F&A costs that make research possible.

“Academic medical centers around the country rely on the necessary inclusion of indirect costs to partially cover the infrastructure burden of maintaining research buildings and staff, with all of the associated local jobs, that are required to allow cutting edge research to take place,” says Mahoney. “These valuable infrastructures would be quickly shuttered, and medical advances stymied, if the NIH budget or the associated indirect support were cut dramatically as the administration has proposed.”

“The proposal was to remove the F&A rate entirely, which would be catastrophic,” says Tim Mandrell, consulting lab animal veterinarian and retired director of the University of Tennessee Health Science Center. “To keep up, you have to invest in new equipment and facilities, and part of that is to recruit and retain the best and brightest. Retention is especially a key thing. If a young researcher is having trouble getting the support he or she needs, with a track record attracting funding, that makes them very marketable to go someplace else.”

It is not just the total funding figure that is important to research institutions, but the formula that is used to calculate the institution’s reimbursement rate.

“Maintaining the indirect formula as is allows us to plan in a consistent environment,” says Mahoney. “Facilities planning, which requires a long-term vision, is nearly impossible under the constant threat of a changing indirect reimbursement formula.”

Tradeline Partner-level Sponsors

It might not be a bad idea to revisit the formula at some point, but this is not the time to do it, says Mandrell.

“Some would argue that the formula may not be as equitable for all institutions, because when you look at public vs. private, small vs. large, academic institution vs. contract institutions, the formulas are all across the board,” he says. “Smaller institutions have the most to lose, I believe, because they truly rely on that funding as part of their operating budget. They have more vulnerabilities to maintain infrastructure and invest in new infrastructure because they rely so heavily on those dollars for everything.”

But with the rollercoaster of federal funding over the past few years, predictability is the highest priority at this point, says Mandrell.

“From a consistency standpoint, keeping it as it is now would be good, so there would be no surprises,” he says. “Congress digging in its heels is probably doing the smart thing.”

The Senate and House bills also increase funding for Alzheimer’s research by about 29 percent, bringing the total to $1.8 billion. That is good news for the University of Wisconsin, which is focusing much of its NIH-supported activity on Alzheimer’s research.

“We are taking human subjects, and interviewing, testing, and imaging them,” says Wells. “This is health outcome research. We are seeing a growth in that from a facilities perspective, in the need for more dry lab space.”

The White House had also proposed slashing funding for the Office of Public Health Preparedness and Response, which tracks outbreaks of disease, by 9.7 percent; the National Center for Emerging and Zoonotic Infectious Diseases, a branch of the Centers for Disease Control and Prevention, by 11 percent; the CDC’s Center for Global Health by 18 percent; in addition to cuts in the CDC’s Emergency Operations Center and Select Agents Program. But Congress rejected all.

The House and Senate must now reconcile their two versions of the budget.

By Lisa Wesel

For more information on the above report, please contact the Tradeline Editor

Project Data
Completion Date: 
September, 2017