9.

R&D Programs

The Federal Government supports a wide range of health R&D activities. The object of this research, no matter what its form, is the production of knowledge. Some research is designed to yield information on health itself, or on diseases and disabling conditions. Some is designed to produce new tools, technologies, to intervene in disease processes, or to counteract the effects of disease. Some research evaluates those tools; other research investigates the use of technology and other aspects of the health care delivery systems. Much of the existing research serves multiple purposes, and some yields results that are more valuable to other fields than to the field the research was designed to address.

R&D have given the health care system and this country a great deal of beneficial information and many effective technologies, but are activities fraught with uncertainties. These activities can also be expensive ones-billions of dollars are spent on health R&D each year in this country by the Federal Government alone. The expenditure of Federal funds for R&D is an investment in the future-and much of this investment represents a public good. Therefore, it is important that moneys for health R&D be spent as wisely as possible and in accord with a balance between public and scientific priorities.

R&D support by Federal agencies can be viewed from two perspectives: process and substantive. The former involves questions of what methods are used to make administrative decisions regarding selection of priorities, program direction, or projects to be funded within each agency. The issues relate to selection and pursuit of goals and to the methods employed to assist in efforts to allocate resources. The latter perspective, "substantive" performance, involves questions and issues pertaining to the agencies' performance or sponsorship of research that examines the allocation of techno

logical or other resources in the health care sys

tem.

Since this OTA assessment focuses on the use of cost-effectiveness analysis/cost-benefit analysis (CEA/CBA), the chapter concentrates on questions dealing with that analytical technique. Four Federal agencies' activities in regard to CEA/CBA from both of the aforementioned perspectives are examined. If an agency does not support or use CEA/CBA, the methods and procedures it does use are discussed briefly. Although the distinction between the process and substantive perspectives of research support is at times unclear, an attempt is made in the discussion below to separate them as clearly as possible and to note the similarities when the situation requires.

Research Classifications.-Health R&D is an umbrella term used to describe a wide range and diversity of activities. A single scientist focusing on an extremely narrow topic within the field of biomedical science is doing health research. The same can be said of the analysts that are examining the performance of a patient screening program, developing physician productivity measures, or working on any number of other health care issues.

To help describe the primary focus of healthcare-related R&D, the range of activities is often broken into four loosely defined categories: 1) basic research, 2) applied research, 3) application (or transfer) research, and 4) health services research. The demarcations between these four research categories are not clearly defined. Nevertheless, the classifications play an important role in the process of setting health care research priorities, allocating and distributing funds, and evaluating outcomes or products of R&D efforts. At several levels in the health care decisionmaking and policy process, the intended purpose of a given research effort is im

portant. There is constant tension in the decisionmaking process between those who advocate the allocation of funds for increased support of basic research, those who feel more work is needed in applying more fully the knowledge and technologies that exist (application or transfer research), and those who cite a pressing need to examine what is already in place and how well it is working or how to make it work better before adding more to the system (services research). As a result of these different perceived research needs, the research "label" that is affixed to a given health care program or initiative can be quite important to its ultimate success in the resource allocation proc

ess.

For purposes of the discussion below, the Federal health care R&D effort is divided into two broad general categories: 1) biomedical research, and 2) health services research. Biomedical research includes basic, applied, and, to a degree, application or transfer research. Health services research includes work done on technologies or systems that are still considered to

BIOMEDICAL RESEARCH-NIH

NIH is not the only Federal agency to conduct or fund biomedical research. The Veterans Administration, the Office of Naval Research, the National Science Foundation (NSF), the Department of Energy, and others are involved to varying degrees in a range of biomedical research activities. NIH, however, is by far the largest single provider of biomedical research funds in the United States. NIH covers a wide range of scientific activity and uses peer review, as well as program and project evaluation, processes that are similar to those of other Federal agencies that support health care R&D.

NIH is an agency of the Public Health Service (PHS) in the Department of Health and Human Services (DHHS). Its mandate, stated in broad terms, is to improve human health by increasing understanding of the processes underlying health and acquiring new knowledge to prevent, detect, diagnose, and treat disease and disability.

be in the development, transfer, and application stages, as well as on technologies or systems that are in widespread use. Actually, the lines of definition in terms of where biomedical research activities end and where health services research begins are rather blurred. This is because it is rare for a technology or innovation to proceed in a linear process from basic research to widespread application. It is also unlikely that a single agency or other institution will have an innovation under its purview for the full range of developmental needs that are part of producing a usable end product.

In the discussion that follows, the National Institutes of Health (NIH) is used to represent the biomedical research process. The National Center for Health Services Research (NCHSR) and the Health Care Financing Administration (HCFA) are the examples of Federal agencies that sponsor health services research. And the National Center for Health Care Technology (NCHCT) is the example of an agency whose activities incorporate or relate to both types of R&D.

NIH pursues this mission via an array of intramural programs conducted at NIH and through an extensive network of extramural grants and contracts to private and public institutions in the United States and other countries. Its budget in 1980 will be approximately $3.4 billion, which represents approximately 68 percent of the Federal obligations for health R&D. Forty-one percent of total national health R&D support (Federal and State Government, industry, and private nonprofit organizations), is provided by NIH (1978 estimates) (446).

NIH is organized into 11 institutes, the National Library of Medicine (NLM), and 6 research and support divisions. Two of the institutes (the National Cancer Institute (NCI) and the National Heart, Lung, and Blood Institute (NHLBI)), as well as NLM, have "bureau" status; the other institutes are "division" level organizations. These various semiautonomous orga

nizations are coordinated through the Office of the Director of NIH.

There are several levels of control and input in the resource allocation process for biomedical research.1 Every year, NIH is subjected to numerous examinations of its allocation of research support, its selection and implementation of research priorities, and its requests for funds for the upcoming year(s). This process extends from congressional hearings on NIH budget authorization and appropriation levels to the study section advisory groups that meet three times each year to evaluate the technical and/or scientific merit of research proposals. Furthermore, it is not unusual for an ad hoc presidential or congressional panel, commission, or task force to express its opinions and conclusions regarding the quality, quantity, or usefulness of NIH's efforts. These "advice-giving" groups can carry considerable weight in the priority-setting and allocation process. Another group that can affect the amount of support given a particular research area are the scientists themselves. The thousands of scientists who continue to initiate and support various types of research, submit grant and contract proposals, and remain in an area of research for extended periods of time can have considerable bearing on national research priorities.

Congress plays, and has played, a significant role in the creation, expansion, and contraction of research efforts at NIH. Its budget-setting and oversight authority are powerful levers in the decisionmaking and allocational process.

Strickland (586,587), Ward (612), and others (91,367) have noted that medical research is a national policy issue that entails all the political pushing and shoving that is characteristic of other national allocational issues. The allocation of funds for medical research is neither just a budgeting exercise nor a purely scientific decision that is, or will be, made only by the scientific community. In part, this is because medical

'NIH is frequently praised for its contribution to the fields of science and medicine, and its achievements in these areas have been described as extraordinary. Yet in recent years, the charge has been leveled that its accomplishments have not been great enough given the large sums of money that have been channeled its way. It is beyond the intent or capabilities of this study to enter this debate.

research, technological advances, new treatments and cures, and the health care research system itself have come under the scrutiny of the general public. Reader's Digest, Ann Landers, 2 Marcus Welby, M.D., disease-oriented interest groups, and others have turned millions of Americans into supporters or critics of various aspects of biomedical research, in particular, and the health care system, in general.

Congress is in the position, both constitutionally and politically, to exercise a great deal of control over the priority-setting and allocation process at NIH through its "power of the purse." Maldonado sums up congressional influence via "the appropriating art" (379):

Health budget review and development fall under the jurisdiction of the subcommittees on Labor-HEW (of the House and Senate committees on appropriations). The subcommittee on Labor-HEW has authority* to (1) recommend the appropriations or funding level in support of program or research activities (or their termination); (2) through the report vehicle, earmark funds for specific programs or projects, set program directions, instruct, warn, and exhort; (3) accept or reject proposed impoundments (rescissions and deferrals); (4) approve or disapprove transfer of unexpended balances; and (5) conduct studies and examinations of agency/department operations and organizations.

The appropriations subcommittees have traditionally played a prominent role in health policy by "earmarking" funds for specific activities, and "requesting" or "expecting" that a certain "emphasis" or direction be taken.** In summary, they set program direction, emphasis, and budget levels for health.

A number of other forces operate both within and outside Government to ensure that a given health care issue receives attention in the deci

'An example of the tremendous response that can be generated by "popular" authors, TV shows, publications, etc., is given by Robert Q. Marston regarding the debate between those who did not want a "cancer crusade," and those who did. He cites the fact Ann Landers stimulated more than a million responses to a statement in one of her columns in 1971 asking for support of the cancer crusade (382).

*W. H. Brown, Rules of the House of Representatives, pp. 349-351, 393, 396-399, Washington, D.C.: U.S. Government Printing Office, 1975 (71).

**R. F. Fenno, The Power of the Purse: Appropriations Politics in Congress, Little, Brown, Boston, 1966. (199).

sionmaking process. The executive branch can marshall a considerable collection of expertisefrom NIH, the Food and Drug Administration (FDA), HCFA, special task forces of experts, and numerous advisory councils that are part of the R&D process-to provide advice to the policy process. The scientific community, the many disease-oriented organizations (e.g., the American Cancer Society, the Cystic Fibrosis Foundation) and professional organizations (e.g., the American Medical Association, the American Hospital Association) provide a mix of voices that add to the diversity of views on various health care issues. At any time, on any given health care issue, there are likely to be coalitions within both the legislative and executive branches of Government that have the support or opposition of the many nongovernmental interest groups-all urging special consideration for their programs on the research agenda. For a detailed description of this process, see Rettig's (510) and Strickland's (587) accounts of the "war on cancer" declared in 1971 by President Nixon.

Rarely are formal decision-assisting techniques, especially CEA/CBA, explicitly used to make decisions at this broad political or societal level of the policy process. Although the preceding discussion has been based on NIH, much of what was said about decisions at this policy level pertains to the health services research system, as well.

Peer Review Allocation and
Evaluation Mechanisms

NIH and each institute within NIH must decide how to divide available resources among: 1) extramural grants, 2) contract research, and 3) intramural projects initiated by scientists within NIH. In the case of extramural grants, further consideration must be given to the allocation of resources for investigator-initiated research grants and large, complex multidisciplinary research team efforts such as center and program project grants. To some extent, NIH priority-setting and research selection is based on the relative merits of basic, applied, or transfer research in each institute's area and the budget the institute will receive.

The mechanism evolved at NIH to manage these many considerations is a peer review system. Most, if not all, of the Federal agencies that support health care research rely on some form of peer review to solicit expert opinion regarding the potential success of a proposed project. The peer review system of NIH consists of 2,200 primarily non-Federal scientists and lay advisors from across the Nation. These individuals are grouped into 130 peer review groups, advisory committees, councils, and panels (449), whose function is to provide NIH with expert opinions both on the scientific and technical merit of grant applications and contract proposals and also on program initiatives and policy issues.

Extramural Grants

The peer review system for grant applications used by NIH is based on two sequential levels of review, referred to as the "dual review system.” The first level involves panels of experts established according to scientific disciplines or current research areas for the primary purpose of evaluating the scientific and technical merit of grant applications. In the Division of Research Grants (DRG), discussed below, the panels are called study sections. Generally, however, the panels are referred to as initial review groups (IRGs).

The second level of review is by a national advisory council or board, referred to here as a "council." Council recommendations are based not only on considerations of scientific merit as judged by IRGs, but also on the relevance of a grant application to an institute's programs and priorities.

Receipt and Assignment of Applications.Grant applications submitted to NIH are received centrally in DRG. This Division, one of the research and support divisions at NIH, is not connected to the research institutes or responsible for funding or managing grant programs.

DRG screens incoming grant applications, determines the relevance of each application to the overall mission of NIH, and assigns acceptable applications to an appropriate IRG and to an