From the Hill – Fall 1998

Drive to double R&D spending gains momentum

The spotlight on the importance of national investments in R&D has shifted and intensified recently. In a June 8 commencement speech at the Georgia Institute of Technology, House Speaker Newt Gingrich (R-Ga.) endorsed a doubling of federal funding for scientific research during the next eight years. On June 25, Senators Bill Frist (R-Tenn.) and John Rockefeller (D-W. Va.) introduced a bipartisan bill to double federal funding for civilian R&D during the next 12 years. The legislation has now been approved by the Senate Commerce, Science, and Transportation Committee and sent to the full Senate for action.

The Frist-Rockefeller bill, called the Federal Research Investment Act (S. 2217), supplants a bill introduced last year by Senators Phil Gramm (R-Tex.), Joseph Lieberman (D-Conn.), Pete Domenici (R-N.M.), and Jeff Bingaman (D-N.M.). That bill, S. 1305, had stalled in the Senate Labor and Human Resources Committee. The four cosponsors of S. 1305 are now backing the Frist-Rockefeller bill, which differs in a number of ways from S. 1305.

The new legislation would gradually increase federal support for basic scientific and precompetitive engineering research in 14 civilian agencies during the next 12 years. (S. 1305 had supported an increase in 12 civilian agencies during a 10-year period.) S. 2217 would increase funding by 2.5 percent annually above the rate of inflation and, assuming a 3 percent inflation rate, would bring the total federal investment in civilian R&D to $67.9 billion by 2010. Whereas S. 1305 would have made specific annual allocations to the National Institutes of Health (NIH), the Frist-Rockefeller bill stresses the interdependent nature of research and calls for a more balanced allocation of money among research agencies. The legislation still requires, however, that funding conform with the congressionally imposed cap on discretionary spending.

In an attempt to ensure continuing U.S. dominance in science and technology, the bill mandates that the nation’s civilian R&D investments should never fall below 2.1 percent of the overall federal budget, its FY 1998 level.

The Frist-Rockefeller bill also includes language to ensure accountability among the 14 civilian agencies. It requests that the National Academy of Sciences (NAS) conduct a comprehensive study to develop methods for evaluating federally funded R&D programs. The NAS report is to act as a framework for the Office of Management and Budget, in consultation with the Office of Science and Technology Policy and the National Science and Technology Council, to measure program performance and recommend any necessary changes.

On August 6, Rep. Heather Wilson (R.-N. Mex.) introduced a companion bill, H.R. 4514, which was referred to the House Science Committee. Because the Science Committee has been focusing on its federal science policy study and has said that policy questions must be dealt with before budgetary issues, no action was expected during this session.

R&D faring well in FY 1999 appropriations process

Although R&D has emerged as a high priority for the House and the Senate, as of mid-September it was still unclear to what degree that support would translate into increased funding for FY 1999, which began on October 1.

Two factors were complicating the appropriations process: the tight cap on nondefense discretionary spending that Congress is facing and the threat by the White House to veto as many as seven of the House-passed bills because of cuts to programs that are considered administration priorities. Here is a summary of how R&D is faring in the appropriations process thus far.

Total federal R&D would increase 1.1 percent to $76.9 billion in the House bill. Nondefense R&D would rise by 3.3 percent to $36.9 billion, which is far higher than the 1 percent increase for all nondefense discretionary programs. Defense R&D would decline slightly to $40.1 billion. The Senate, in general, would be more generous than the House. For example, it would increase the Department of Energy’s (DOE’s) R&D budget by 10.3 percent and the Department of Agriculture’s (USDA’s) by 9.1 percent. However, because the Senate had not yet drafted an NIH bill, a final figure could not be tabulated.

Basic research is clearly favored by both chambers and has done well in the appropriations process so far. The House would provide $16.9 billion, or 7.4 percent more than last year. The basic research programs at NIH, the National Science Foundation (NSF), and DOE would get increases of 8.9 percent, 11.3 percent, and 6.8 percent, respectively. The National Aeronautics and Space Administration’s (NASA’s) basic research in Space Science and Life Sciences and Microgravity Applications would increase, even as development programs such as the Space Station would see cuts. The Senate would provide significant increases for basic research at NSF, DOE, USDA, and NASA. The House appropriation for Department of Defense (DOD) basic research would stay level at $1 billion, whereas the Senate would provide a 6.1 percent increase, including a new $250-million account for DOD biomedical research.

The applied research funding picture is mixed. The House would keep USDA R&D at the same level as in FY 1998, whereas the Senate would increase it by 9.1 percent. The House would make deep cuts in the National Oceanic and Atmospheric Administration (NOAA) and the National Institute of Standards and Technology within the Department of Commerce, whereas the Senate would give NOAA a 4.5 percent increase. Environmental research at the Environmental Protection Agency would receive a small increase in the House and Senate. R&D at the Department of Transportation and NASA would be lower priorities, the latter because of congressional frustration at continuing delays in the Space Station project.

Research tax credits expire once again

Although Congress allowed the research and experimentation tax credits to expire on June 30, it most likely will reinstate them this fall, and bills have been introduced that would extend the credits permanently and increase the number of organizations that can claim them.

The credits are designed to provide companies with added incentives to increase their overall level of research funding as well as to spend money in research areas that they might not otherwise have invested in. During the past 10 years, Congress has allowed the credit to expire eight times.

Under the law that just expired, a company doing research could benefit in one of two ways. It could claim a 20 percent “regular” tax credit for the portion of its qualifying research activities that exceeded a base amount. The base amount was equal to a company’s average gross receipts for the preceding four years, multiplied by its “research intensity” (the ratio of research expenditures to revenues) during the 1984-88 statutory base period. If a company’s research intensity was less than its historic base amount, it could claim the “alternative incremental credit.” This credit allowed firms to claim one of three rates (1.65 percent, 2.2 percent, or 2.7 percent), depending on the amount of qualifying research expenses that exceeded 1 percent of their revenues.

In addition to these credits, another kind of credit under the expired law encouraged academic research. Universities and nonprofit organizations had been able to claim a credit for contract research as long as that research did not have a specific commercial objective.

In November 1997, Rep. Nancy Johnson (R-Conn.) introduced H.R. 2819, which would permanently extend the research credit and increase the three-tiered alternative credit rates to 2.65 percent, 3.2 percent, and 3.75 percent. Sen. Orrin Hatch (R-Utah) introduced a companion version to Johnson’s bill, S. 1464.

In March 1998, Sen. Pete Domenici (R-N.M.) introduced a bill, S. 2072, that would permanently extend the research credit and allow companies to choose any four consecutive years within the past 10 years, instead of the 1984-1988 period, as their base period in calculating the regular credit. The bill would also extend the basic research credit to DOE national laboratories.

S. 1885, introduced by Sen. Alfonse D’Amato (R-N.Y.) in March 1998, would create a medical innovation tax credit to allow academic medical centers and qualified hospital research organizations to claim a 20 percent credit for clinical testing research expenses. It would be limited to research activities conducted within the United States. H.R. 3857, introduced by Rep. Amo Houghton, Jr. (R-N.Y.) in May 1998, would allow qualified nonprofit collaborative research consortia to claim the 20 percent regular credit. Neither bill includes language to permanently extend the research tax credit.

The most recently announced legislation, S. 2268, introduced by Sen. Jeff Bingaman (D-N.M.), includes aspects of the various bills described above. Bingaman’s bill would also make the research credit permanent and revise the terms of the alternative incremental credit. Rather than use the three-tiered rates, companies could claim a marginal 20 percent credit for increases in research over an eight-year moving base, as well as a flat 3 percent credit for their average base amounts. The bill also eases the process for small and start-up firms that have not had time to establish a base period to claim the credit. In addition, S. 2268 would modify the basic research credit to include federal laboratories, as defined by the Stevenson-Wydler Technology Innovation Act of 1980, in its definition of qualified research organizations. The Bingaman proposal would also encompass nonprofit collaborative research consortia.

Although the existing credits are likely to be reinstated, proposals to make the credits permanent will have an uphill climb in Congress, largely because any decreases in federal revenues would have to be offset by gains elsewhere under the balanced budget law.

Protection of human subjects in research questioned

While patient advocates and scientific organizations are lobbying to boost government investment in biomedical research and the director of the National Cancer Institute has called for a fivefold increase in the number of clinical trials, the system charged with protecting human subjects involved in medical research is in jeopardy, according to the Department of Health and Human Services (HHS) inspector general’s office.

“Research and medicine have changed dramatically in the past decade. However, our system for ensuring human subject protections has not kept up with these changes,” said George Grob of the HHS inspector general’s office at a June 11 House Subcommittee on Human Resources hearing. Other witnesses at the hearing, however, immediately took exception to HHS’s analysis.

HHS believes that the Institutional Review Board (IRB) system for protecting human subjects has become outdated by scientific advances and the changing nature of research. Many IRBs lack the scientific expertise necessary to adequately assess proposals, and advances such as genetic testing and gene therapy involve complex ethical issues that members of IRBs may not be aware of or able to handle. To deal with this issue, Grob recommended enhancing education for research investigators and IRB board members.

In addition, Grob said, the Office of Protection from Research Risks (OPRR) at NIH generally does not evaluate IRB effectiveness. OPRR’s oversight is limited almost entirely to an up-front assurance by an institution that it will adhere to federal requirements. The Food and Drug Administration (FDA) focuses mostly on IRB compliance with procedural requirements, not effectiveness.

Federal IRB regulations, now two decades old, require that all federally funded research or experiments involving a drug or medical device in need of FDA approval be reviewed in advance by an IRB. Until the 1980s, most research involving human subjects was federally funded and conducted at one site by one investigator. Now there are multicenter clinical trials involving thousands of subjects across the country and even the world. As the amount of research has increased, so have IRB workloads. Initially located in hospitals and academic institutions, IRBs have now been formed by pharmaceutical companies and contract research organizations. Even for-profit IRBs have been established.

In addition, industry-funded research has increased, creating possible conflicts of interest for institutions in need of money. Hospitals, in an era of managed care and capped payments, face cost pressures. Clinical research, especially that supported by industry, is an important source of revenue and prestige for many medical institutions. The HHS inspector general’s office found that several hospital IRBs were located in grants and contracts offices.

In an effort to deal with these potential conflicts, HHS has recommended that additional members be added to IRB boards, including people without scientific backgrounds or links to a particular institution. Both the Pharmaceutical Research and Manufacturers of America (PhRMA) and the American Association of Medical Colleges objected to this proposal. A PhRMA representative at the hearing said that the IRB system is “sound and working well” and that there is no evidence that IRBs would benefit from additional members.

Gary B. Ellis, director of NIH’s OPRR, pointed out that any federally funded research involving human subjects must pass through six or more layers of review and that there is only a “slight” possibility that a “catastrophic failure in human judgment” could occur in such a process.

Ellis believes that Congress should be more concerned about privately funded studies involving human subjects, such as those in fertility and weight loss clinics. Although there is currently no federal oversight of these clinics, the National Bioethics Advisory Commission has been asked to advise the National Science and Technology Council by the spring of 1999 on whether the existing system should be extended to cover the private sector.

Private venture to sequence human genome launched

The announcement of a private venture to sequence the entire human genome at less cost and in less time than the huge federal effort is raising some concerns in Congress as well as among scientists.

In May, Craig Venter, president and director of the Institute for Genomic Research, announced a joint venture with Perkin-Elmer to sequence the genome. He said the venture could do it at one-tenth of the cost and four years earlier than the federally funded Human Genome Project. On June 12, the House Science Committee’s Subcommittee on Energy and Environment heard key players’ views on how the venture might affect the government’s 15-year program. To members wondering why the federal government should continue to fund a project seemingly being taken over by the private sector, defenders of the federal effort cited two reasons: quality and access.

Maynard Olson, a University of Washington medical geneticist, predicted that the private sector product would contain more than 100,000 “serious” gaps and that a “significant” fraction of the pieces would be misassembled. Francis Collins, director of NIH’s National Human Genome Research Institute, agreed, arguing that because of the inherent difficulties of the approach being used by Venter, problems would by inevitable. Venter will use “shotgun whole-genome sequencing,” a strategy in which tiny pieces of randomly cut DNA fragments are decoded and then put back together like a complex jigsaw puzzle. Collins said that the government’s more methodical, step-by-step sequencing of the human genome will ensure accuracy of 99.99 percent or better. Ari Petrinos, head of DOE’s Human Genome Project research, added that it is important that data be “of a quality that provides the greatest scientific information and utility.”

Scientists are concerned that Venter’s initiative will limit fair and timely access to biologically important parts of the human genome. Venter has said that the venture will release data to the public every three months. But this level of access would differ greatly from standards set by the international sequencing community, which require data release within 24 hours and discourage patenting. The company formed by Venter and Perkin-Elmer, which makes high-tech machines for genetic analysis, will patent 100 to 300 genetic sequences. “It would be morally wrong to hold the data hostage and keep it a secret,” Venter told the Washington Post in May.

Olson warned against overreacting to the Venter announcement, saying it was merely “science by press release.” “Show me the data,” he said, and urged that a vigorous public effort be maintained. Meanwhile, Tony L. White, chief executive officer of Perkin-Elmer; David Galas, a former DOE official; and Olson, Collins, Venter, and Petrinos all encouraged Congress to increase funding for the Human Genome Project. The private venture will only hasten the completion of the human genome sequencing, they said. Rep. Ken Calvert (R-Calif.), the subcommittee chairman, assured them that Congress would not cut funding for the project.

Clinton climate change plan takes some heat

The U.S. General Accounting Office (GAO), in a preliminary analysis, has criticized the administration’s plan to combat rising levels of greenhouse gases in the atmosphere. The report has buoyed members of Congress who are skeptical about global warming.

The administration’s plan was introduced in October 1997, two months before the United Nations climate change conference in Kyoto, Japan. The Kyoto Protocol that emerged from the meeting established the ground rules for a treaty that would create binding restrictions on industrialized nations’ emissions of greenhouse gases. Members of Congress have attacked the plan for a variety of reasons, among them the economic costs of achieving the reductions.

At a June 4 hearing of the Senate Committee on Energy and Natural Resources, Victor Rezendes, GAO’s director of energy resources and science issues, said that the administration’s plan lacks specific quantitative goals for greenhouse gas reductions and fails to describe how the numerous federal agencies involved would coordinate their activities. He said that it is uncertain how the tax credits and R&D activities proposed by the administration would contribute to the protocol’s implementation.

Administration officials at the hearing disagreed with GAO’s conclusions. Daniel Reicher, DOE’s Assistant Secretary for Energy Efficiency and Renewable Energy, argued that the administration’s plans are well developed and detailed. David Gardiner, an assistant administrator with the Environmental Protection Agency, supported Reicher and referred to performance goals outlined in the Climate Change Technology Initiative included in the administration’s FY 1999 budget request.

Despite the administration’s protests, the GAO analysis is likely to make Congress more resistant to taking steps to deal with global warming. The House and Senate appropriations committees have agreed to cut funding from the president’s budget request for energy-efficiency programs and carbon-reduction technologies. The bills reflect the committees’ conclusion that there isn’t enough evidence that global climate change is a problem.

Cite this Article

“From the Hill – Fall 1998.” Issues in Science and Technology 15, no. 1 (Fall 1998).

Vol. XV, No. 1, Fall 1998