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Our efforts culminated in a special meeting this past January of leading scientists, journal editors, and other interested members of the community. This workshop, held at NIH, was partly retrospective and partly prospective. The retrospective part was to look at five case histories, individual clinical trials, where the results either had or had not been disseminated rapidly. We tried to understand what had worked and what had not worked in each of those individual instances, and then synthesize that information into some common ideas.

A critical part of that meeting was the participation of several leading journal editors who indicated their willingness to take special steps to expedite their peer review whenever a finding affecting a life-threatening disorder occurs. The journal editors also agreed to be more tolerant with respect to situations in which some publication has occurred before a full scientific manuscript exists.

We will continue to refine this model, but we believe we are on the right track and have the means within the NIH to be selective in identifying those clinical trials that have this kind of result that demands rapid dissemination. Associated with each clinical trial is a solid review system of independent scientists, so we have a builtin peer review. Wherever practical, we will seek a further external peer review, either associated with a journal or an ad hoc one that we could assemble on our own. We will continue to work to make the entire process run faster. I am optimistic that the journals are with us on this. No doubt we will learn and further refine the procedure, but I think we have turned the corner with respect to having a means to deliver validated results into the hands of the practicing community and thus available to patients.

Senator HARKIN. Explain for me how come when I read this article it says, "according to a study published in today's issue of the New England Journal of Medicine"?

Dr. RAUB. That is an instance where the journal, recognizing and agreeing with the Cancer Institute that this is something that should be expedited, put aside its normal deadlines and made special efforts to get its review in place for this publication.


Senator HARKIN. In other words, you were pushing it and not them. In other words, you were in the lead in terms of getting the information out, and they decided they wanted to jump on board.

Dr. RAUB. Well, the Institute had to be the one to take the initiative, but the journal certainly did not resist it. It was cooperative as well.

Senator HARKIN. In other words, you were putting the information out regardless of what they did, regardless of what the New England Journal did.

Dr. RAUB. In this instance, every effort was put into a cooperative effort. Had the journal not been able or willing, the institute and the NIH would have had to think through another scenario. But we might very well have published an alert based on our own review in that circumstance. It didn't come to that, and I don't think many will in the future.


Senator HARKIN. The second area that I wanted to cover was the recommendations made by your advisory committee that included some that said that the NIH director should have substantially increased authorities, including final appointment power for senior NIH scientists and administrative staff, and for scientific appointments to NIH advisory committees, councils, and boards. It was also recommended that the NIH director's position should be a 6year term appointment.

What is the status of the recommendations made by the Secretary's Advisory Committee on the National Institutes of Health Director?

Dr. RAUB. To the best of my knowledge, Secretary Sullivan has not made final decisions about that package. I understand, though, that those issues or some of them have been central to his discussions with potential candidates for the position, including Dr. Healy. I expect that the Secretary's decisions will come forward as part of the final steps in the appointment process.

Senator HARKIN. We were going to, as you know, change the term to 6 years. It was dropped, and I'm wondering if that is something that ought to be legislatively enacted or not. Do you have any views on that?

Dr. RAUB. I don't know the current thinking within the Department on that, sir.


Senator HARKIN. Just a couple more.

Congress gave the Director the authority to transfer up to 1 percent of the funds from any institute or center to any other institute or center. The authority, as I understand, has not been used yet

Dr. RAUB. That's correct.

Senator HARKIN [continuing]. Although each institute and center has the 1 percent funds in reserve for possible use. I guess this is a two-part question.

Do you expect to use this authority? And second, is this a useful tool for the director to have and should we again try to provide that authority in 1992?

Dr. RAUB. If I may, I'll address those questions in reverse order to put it in context.

In my judgment, the authorities are extremely valuable. They have been valuable, as I will explain in 1 minute, this year, and I believe they will be of increasing value when Dr. Healy assumes her post.

Actually the appropriation carried two very special authorities. One was a $20 million discretionary fund within the appropriation to the Office of the Director, and the other was the 1-percent transfer authority.

During the first 5 months of this fiscal year, I put my principal attention on the discretionary fund and, as I indicated in the opening statement, have allotted a portion of that, in total about $6 million out of the $20 million, as a way of starting selectively some of these new activities that have an NIH-wide impact.

In addition, we have solicited from the institutes, centers, and divisions their ideas as to what aspects of their program might be extended or amplified by an allocation from that discretionary fund. We will begin a review of those soon, and hope to have for Dr. Healy a set of recommendations as to how she might proceed in the last half of this fiscal year with the allocation of what remains of the discretionary fund.

I indicated in a memorandum to the institute directors that, from my vantage point, it was not likely that I would be exercising in addition the 1-percent transfer authority during this period. The money remains in their individual accounts. We have also, of course, reminded them that the incoming director may have some ideas about utilizing those funds so that they should make sure that they have the flexibility.

The language that accompanied the 1-percent transfer authority put a higher threshold on it than the discretionary fund, indicating that the transfer authority ought to be used for things that have a very special or even emergency character. In my judgment, nothing in the first few months of this fiscal year got over the threshold. But I hope we will not judge the long term on just the last few months. I think it is an invaluable tool for the management of the organization.

Senator HARKIN. We will put that authority in again then next



Might I cover with you now for just a couple of minutes the indirect costs problem? I was reading this article in the paper this morning. As I mentioned in my opening statement, it is getting more and more publicity and it almost seems like it is getting worse. I had heard about flowers and a yacht, and now I hear about charging $10,000 for a set of silverware that was donated.

Now, fortunately, this was not under NIH-funded research. Right? I correct myself. It was uncovered by the Navy. Actually the lead inspection agency was the Navy and evidently they uncovered this. But I am informed that NIH has to cover the costs.

Dr. RAUB. Yes, sir.

Senator HARKIN. Well, I have a couple of questions. Is there any internal auditing agency or any internal arm that you have at NIH that could uncover these and find out what is going on? Why do we have to rely upon the U.S. Navy to go in there and find out that they are charging NIH $10,000 for a set of silverware that was donated?

Dr. RAUB. The short answer to that is no, but may I take a few minutes and explain how the system works?

Senator HARKIN. Sure.

Dr. RAUB. Indirect costs are guided by what are called the cost principles contained in Circular A-21 issued by the Office of Management and Budget. As the name implies, the cost principles are the conceptual guidance to be used in establishing indirect cost


There then is a group of individuals in the Department of Health and Human Services and certain other departments, mostly with accounting/auditing backgrounds, who review with each university,

within the scope of their cognizance, the cost elements that are to be considered part of the indirect cost pool, approve or disapprove them, and on the basis of those approved, establish the rates.

The Office of Naval Research has audit cognizance for Stanford and a number of other major research institutions. The Defense Contract Audit Agency oversees some others. Actually, the Department of Health and Human Services has audit cognizance for most of the institutions of higher education, but that unit is not with the NIH. It is based in higher levels of the Department associated with the Office of the Secretary.

There is, however, a reciprocity among the agencies in respect to those audit rates, and as I often like to say, the OMB sets the rules, the auditors set the rates, and the agencies pay the bills. We have, as a matter of policy over the years, honored in full indirect cost rates, whether they were negotiated by our own Department, by the Navy, or by the Defense contract audit group.

We have no independent audit means that would identify problems or even be authorized to identify problems in any individual institutions.

Senator HARKIN. Would you repeat that, please Dr. Raub?

Dr. RAUB. I say we have no independent audit means that would authorize NIH to look at the indirect cost system or structure of any given institution.

Senator HARKIN. Wouldn't the inspector general's office of HHS be involved in this?

Dr. RAUB. The cost allocation function within HHS that sets rates is, as I say, based in higher levels of the Department associated with the Office of the Secretary. The Office of the Inspector General has oversight authorities to do investigations into any alleged or apparent improprieties.

Senator HARKIN. Let me understand this completely. Here we have Stanford University that charged $10,000 for a set of silverware that was donated. That $10,000 was paid by you, not you personally, paid by NIH.

Dr. RAUB. At least in part.

Senator HARKIN. In part because it was an indirect cost.

Dr. RAUB. As a rate, it would have been applied across all sponsored research. So, the National Science Foundation, the Department of Energy, the National Aeronautics and Space Administration, any organization funding research at Stanford, would have theoretically funded a part of it.


Senator HARKIN. There is no way to check to see whether they are legitimate or not. You just pay the bill. NIH just pays the bill.

Dr. RAUB. That is correct. We have counted upon the audit systems in our Department and elsewhere to be sure that those rates are valid.

Senator HARKIN. In HHS.


Senator HARKIN. So, they should audit these. They have an audit system to audit this.

Dr. RAUB. Yes, they have.

Mr. WILLIAMS. Mr. Chairman, if I might just clarify one point here. At the Office of the Secretary level, as Dr. Raub has pointed out, there is a division of cost allocation which is part of the Office of the Assistant Secretary of Management and Budget. It is that group which negotiates the indirect cost rates at institutions where the Department has cognizance, those universities where we are the predominant payor of research. In the case of Stanford, the Defense Department had cognizance. We have cognizance in other universities. The Division of Cost Allocation negotiates the rates with the universities, and those rates are then applied in the NIH grants.

The inspector general, as you started to indicate, is then responsible for auditing the accounts once they are completed. The Division of Audit inside the inspector general has the responsibility for actually auditing the accounts once they are completed.

In sum, there are two functions at the Office of the Secretary. One is negotiation of rates. The second is the auditing of the accounts, which is done by the inspector general.

Senator HARKIN. Somehow we have to get a handle on this, and I would like to find out who in Stanford wrote this up. Some individual someplace had to fill out a form or sign his or her name to some request for reimbursement for indirect costs and listed that item. Someone had to do that, and I want to find out who that person is. Someone has to be responsible.

Somehow this subcommittee is going to look into it. You pay the bills, but we fund the money. I am sure that Senator Specter would join me in saying we do not like appropriating money for things like this. We have a lot of demands on this money. And how much of this is going on out there? I don't know. It seems like every day it gets worse, and I am wondering what else we are going to be finding out here.

I am not chastising you. I am just saying I am trying to find out and trying to get some help in sifting through all this.

The inspector general suggested that we might consider a cap, cost sharing with the institution or-this is what I wanted to talk to you about, Dr. Raub-providing one lump sum payment to the researcher who then would negotiate with his or her institution as to the required overhead payment. Would that be logical, or should we pursue that course?

Senator SPECTER. Mr. Chairman, before that question is answered, may I just support you on your proposition that we do have to get to the bottom of it and do what we can to cut back on those costs?

If I may add, having interrupted for just a moment, there are a number of other competing subcommittees, and I have to go to the floor at this moment. I would like to submit some questions for the record.

Senator HARKIN. Absolutely.

Senator SPECTER. Thank you, Mr. Chairman.


Dr. RAUB. Before getting into the specific items you raised, Mr. Chairman, I wanted to stress that from our vantage point, I wanted to assure you that we are no happier than you or the sub

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