$100,000 grant to an investigator, you pay the university $170,000 because 70 percent of the direct costs are given to the university as indirect costs.

Congressman Dingell held hearings on a tragedy at Stanford University this year where they found that those indirect costs had been misspent by Stanford, and it is a nightmare, money being spent on a yacht, et cetera. This is your biomedical research funding that you appropriate every year.

PREPARED STATEMENT

As I have heard each witness come up here today and tell you that they want a 15- or 20-percent increase in NIH's budget, we agree that the pie has to get bigger but not necessarily in a separate appropriation. If you investigate those indirect costs and reduce them to a maximum of 50 percent, you will probably save close to $1 billion that is being given to universities now to pay for their indirect costs.

Thank you very much. We appreciate the time. [The statement follows:]

STATEMENT OF DR. JESS THOENE

Mr. Chairman, members of the Subcommittee, the National Organization for Rare Disorders (NORD) represents the _interests of an estimated twenty million Americans with rare "orphan diseases." Because these illnesses are not considered "major" public health threats, they are often a low priority to the research community and many patients suffer without hope of recovery. However, there are more than 5,000 orphan diseases. Most are chronic, disabling and often fatal. The pain caused by these disorders is very real and the lives of rare disease patients truly depend upon advances in biomedical research.

In response to congressional direction, the Department of Health and Human Services created the National Commission on Orphan Diseases in 1987. I was pleased to serve on the Commission which submitted its final report to Congress in 1989. The main recommendation of the Commission was that a central office for rare diseases should be created within the office of the Assistant Secretary_for Health, to coordinate the federal government's efforts on rare disease research. This recommendation was made after we found duplication and waste of precious research dollars simply because one department of government did not know what other departments were doing on behalf of rare diseases.

We simply ask that the federal government provide a home for orphan diseases; some place we can turn to for answers, a caring staff to complain to when the bureaucracy is impenetrable, a place to track the progress of research, and an authority to coordinate the splintered programs of the federal government that seem to operate in a vacuum. For example, the commission found that NIH would support a multi-million dollar clinical trial on a new treatment, but the FDA would not accept the data because they had not approved the protocol. The central office should have the authority to red flag orphan disease research grants, and if they are funded, to coordinate academic scientists' efforts with FDA's stringent research criteria.

Last year Senator Metzenbaum and Rep. Waxman put the Central Office for Rare Diseases in the reauthorization of the Orphan Drug Act. However, President Bush vetoed the legislation, and we were told by the administration that the NIH had voluntarily set up an Office for Rare Diseases (within the NIH Director's Office) which should suffice. We understand from various sources that initially NIH's fiscal year 1992 budget contained $2 million for the rare disease office, but at HHS the sum was cut to $500,000 and then to $200,000. Finally, OMB deleted the entire line item, including the clinical database that would enable us to locate clinical studies for specific rare diseases. Thus the President's fiscal year 1992 budget contains no funding at all for this vitally important office.

Mr. Chairman, we are asking only for what we need: $500,000 not $2 million, just to get this office started. We know it will generate substantial cost savings in future years. This tiny sum of money is so minuscule we have no idea why it should have been deleted from the budget, especially in light of the hope that this program represents to our twenty million patients.

If we don't have a staffed, funded and operational office for rare diseases, more money will be wasted and more lives will be lost.

The Commission also found that 47 percent of biomedical researchers feel it is difficult to find a sufficient number of rare disease patients to participate in a research project. On the other hand, 76 percent of rare disease patients reported it is difficult to obtain information about research projects that they might want to participate in. This is why we need a clinical database at NIH. Considering the millions of dollars that have been spent by the government on an AIDS clinical trials database, we think our request is a bargain. Moreover, there are only approximately 70,000 living AIDS patients in the United States, while there are 20 million with orphan diseases, most of whom want to participate in research projects if only they could locate scientists studying their disease.

It is truly unfortunate that people with rare "orphan diseases" continue to fall through the cracks of our health care system. Unfortunately, the needs of our patients often conflict with public policy decisions that are made for broad populations of people. It seems we are always the exception to the rule, and this is why we are asking you to help solve this unique problem by not permitting the federal government to break its promise for a rare disease office at NIH.

We also want to thank this Committee for restoring NIH's target of 6,000 RO1 grants. Extramural grants are the life blood of our nation's biomedical research effort. We have repeatedly asked Congress to enlarge the overall research funding pie rather than change the size of the slices each year. This year we are particularly saddened at the revelations about misuse of indirect cost funds by Stanford University. We suspect, however, that similar breeches of trust may be found at other universities. Moreover, there is so much money spent on auditing and administering indirect costs that we feel something should finally be done this year to control these expenditures once and for all.

At some universities a $100,000 grant costs the government $180,000 or more because of runaway escalation of indirect costs which are of little direct benefit to academic scientists or patients. If you could reduce these costs across the board and award standard indirect cost percentages to all universities in a region, millions of dollars could be saved which could then be put back into the direct costs of additional RO1 grants. We would go so far as to suggest that limiting indirect costs to around 50 percent of direct costs will save many of millions of dollars that could be used to fund more biomedical research grants that are desperately needed.

Mr. Chairman, each year voluntary health agencies, patients and scientists come before your committee pleading for increased NIH funds. Since little federal funds are targeted to orphan disease research our requests are similar. The difference is that we believe Congress could save substantial funds from indirect costs which should be targeted for direct research expenditures, and at the same time correct a system that has been abused and misused for many years. We don't think any $600 toilet seats should be hidden in indirect costs for biomedical research. Scientists are angry, patients are desperate for medical breakthroughs, and our national debt keeps rising. We ask you to redirect the dollars wasted on indirect costs and assure that they are spent wisely in the laboratory and clinic.

Thank you.

GENE THERAPY EXPERIMENTS

Senator ADAMS. Thank you very much. We are aware that OMB simply removed that line item, but could you for the benefit of the record and for the others here give a definition of what you define as a rare disease?

Ms. MEYERS. The Federal law, the Orphan Drug Act of 1983 defines it as a disease or condition that affects fewer than 200,000 Americans. Some of these are well known, like muscular dystrophy, cystic fibrosis, and others are neurofibromatosis, epidermolysis bullosa, very rare diseases that hardly anyone knows about.

The gene therapy experiments at NIH right now that are going on are on a rare disease called severe combined immune deficiency, and you can see how important it is that when you find a method to treat a rare disease it can then be extrapolated into more common diseases.

Senator ADAMS. Thank you very much. We appreciate your testimony.

STATEMENT OF DR. GAIL CASSELL, AMERICAN SOCIETY FOR MICROBIOLOGY

Senator ADAMS. Our next witness is Dr. Gail Cassell, the American Society for Microbiology. I hope I pronounced your name correctly.

Dr. CASSELL. Yes; it is actually Cassell, but that is OK.

The American Society for Microbiology, with a membership of over 38,000, indeed appreciates the opportunity to express our views on the proposed 1992 budget of NIH. We have actually submitted written testimony, but I am here today to emphasize our concern. Not surprisingly, you have already heard our concerns expressed by many of our colleagues earlier this morning. However, I would just like to reemphasize a couple of our concerns. One is to also reemphasize the cost effectiveness of biomedical research in health care, which, as you have heard this morning, can no longer be questioned.

I would just like to leave you with a couple of what I consider to be shining examples, one of which was used recently by Dr. Leon Rosenberg, dean of the medical school at Yale. That is, with regard to polio, as you have heard this morning, in fact had the vaccine not been developed in 1950 the health care cost for caring for those individuals which would have otherwise been affected by polio in the year 1990 alone would, in fact, amount to the entire investment made in NIH since World War II.

Furthermore, as you may have heard earlier this week from Dr. Tony Fauci, Director of NIAID, the recent introduction of a new vaccine for Hemophilus influenza in fact when administered over a 3-year period will amount to health care savings costs of $1 billion when, in fact, the Institute itself estimates that they actually only invested approximately $17 million in order to bring this product about. Therefore, again, I would remind you that biomedical research is indeed cost effective.

Now to readjust the issue of biotechnology which, as you have heard this morning, is now an uncontested major economic force. Thus, it is not surprising that the current administration has emphasized research and development and biotechnology as a critical priority in the 1992 budget. They have recommended an overall increase in R&D of 13 percent. However, I would like to point out to you that the proposed increase for NIH is only 6 percent, which, I might add, is the least amount proposed for R&D in any agency. To us, this is disturbing when one considers that 80 percent of current biotechnology research is actually funded by NIH. While it is true that NIH's budget has grown despite overall Government spending austerity, the increases, as you have heard this morning, have not kept pace with the real cost of research and the expansion of our research capacity. Again, as you have already heard, never before in history have the opportunities for major medical advances been so great.

However, this country has provided the groundwork for these advances. Why should we allow other countries to beat us to the real payoff?

PREPARED STATEMENT

The current trends clearly indicate that without immediate substantial increases and stability in NIH appropriations, the United States will no longer be the leader in health care research and delivery or the economic gains that derive from it. It is for these reasons that the American Society for Microbiology joins with the ad hoc group for biomedical research funding in recommending a budget of $9.8 billion for NIH in fiscal year 1992.

I would welcome your questions concerning this recommendation or any aspect of this testimony. Thank you.

[The statement follows:]

STATEMENT OF DR. GAIL H. CASSELL

Mr. Chairman and Members of the Subcommittee, my name is Gail Cassell and I am Chairman of the Committee on Medical Microbiology and Immunology of the Public and Scientific Affairs Board (PSAB) of the American Society for Microbiology (ASM). I am also Professor and Chairman of Microbiology at the University of Alabama, Birmingham. The ASM is the largest single biological life science society in the world with an active membership of over 38,000. On behalf of the ASM, I wish to thank the Chairman of the Senate Appropriations Subcommittee on Labor, Health and Human Services, Education and Related Agencies for the opportunity to express the views of the ASM on the fiscal year (FY) 1992 budget for the National Institutes of Health (NIH). Biomedical research is an incredible story of success due in large part to the foresight and generosity of this Subcommittee and Congress. Major medical advances made since 1950 have included vaccines against polio, rubella, measles, hepatitis and the discovery of molecular biology and recombinant DNA technology. No doubt every American is the beneficiary of these and many other scientific achievements.

But the war against human disease is not over, and it must continue to be waged with substantial and sustained Investments in federal support for biomedical research. Many battles lie ahead, and both progress and victories will depend on strong federal investment in our nation's scientists to acquire new knowledge and greater understanding of disease processes.

The quantity and particularly the quality of individuals being drawn to biomedical research careers are both decreasing at a time when the knowledge base, new questions, new diseases, and International competitors are all increasing dramatically. It seems clear that young Americans are reluctant to commit themselves to a career with such limited opportunities, regardless of their personal interests. Who could blame them? Foreign graduate students are beginning to dominate at many U.S. institutions, much like the situation that has existed for many years in graduate engineering schools. This country cannot afford to let this happen.

Admittedly, the National Institutes of Health has received favorable treatment in this time of fiscal austerity. However, the research opportunities have never been greater or more costly, creating the need for increased spending. The opportunities that exist in science today to improve human health far exceed what the funds requested for NIH for FY 1992 will permit.

Research Project Grants Support

Individual research project grants are the single most important mechanism to achieve continued scientific progress, and we are grateful that Congress included additional funding and a commitment in the FY 1991 appropriations bill to support a goal of 6,000 new and competing grants in each of the next 4 years, reaching a total of 24,000 research project grants. We appreciate this clear indication that Congress strongly supports growth in the biomedical research enterprise. Continued real growth in the NIH budget will be necessary to maintain the momentum, competitiveness and vitality of the biomedical research endeavor and to build on knowledge gained by the nation's investments in research.

The instability in funding research grants in recent years has been demoralizing to many scientists and discouraging to students considering a career in biomedical research. A substantial number of high quality grant applications that span the research continuum from basic research to clinical investigation continue to go unfunded. It is noteworthy that investigators who are at the highest risk of having their grant applications unfunded are those undertaking new and innovative approaches and those whose research has not yet had the opportunity to attain maturity. At an expected 22%-26% rate of funding, many excellent projects will not receive essential support.

While NIH's budget has grown despite overall government spending austerity, the increases have not kept pace with the real costs of research and the expansion of our research capacity. The extraordinary advances that have been made in understanding biology mean that more complex and costlier scientific problems must be undertaken creating demands for new resources. The growth in the annualized average cost of a research project grant (in constant dollars) has been only 1.7% since 1980, a rather low figure considering the growth in the scientific, technological as well as regulatory complexity of research. During the past few years, more than 23 additional administrative regulations have been imposed including tighter regulations on the performance of chemical hoods and costs of new facilities. A consequence of these new regulations is to increase research costs and to decrease funds devoted directly to laboratory research. It is estimated to cost $537 million to comply with the new animal welfare rules and research facilities will incur about 87% of the total cost. Although the Biomedical Research Deflator Price Index (BRDPI) (5.7%) may be considered a reasonable measure of the effects of inflation on the costs of personnel and supplies, as research becomes more complex, the BRDPI may not reflect the true costs of research.

We concur with Congress that NIH should carefully examine its financial management to ensure that the most effective use is made of limited resources. Although there is need for thoughtful, sound planning to provide for sustainable growth in the NIH budget, careful assessment is needed of changes proposed to restrict the yearto-year growth of the costs of grants. Under the proposed plan, for example, the size of grants funded in 1991, both competing and noncompeting, will be reduced substantially from study-section recommended levels to hold cost increases in line with the BRDPI. Funding is also not sufficient in the FY 1991 appropriation to fund 6,000 grants and awards must be reduced to fund 5,785 new and competing grants this year.