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Hard-Won Spending Authority Now Key
Director's Discretionary Fund To Mark 15 Years

By Carla Garnett

On the Front Page...

What do the Women's Health Initiative and the NIH Roadmap for Medical Research have in common? Besides having the potential to improve the health of billions of people worldwide, both have similar roots: seeds for them were sown by a relatively young — and comparatively small — spending authority, the Director's Discretionary Fund (DDF).


In fiscal year 2004, NIH director Dr. Elias Zerhouni presides over a DDF of more than $44 million — the largest Congress has ever allotted the agency. As budget negotiations began this spring for FY 2005, the fund — once an elusive goal for NIH leaders — marked its 15th year, and it's difficult to perceive how past directors managed without it.

Wanted: More Power, Flexibility

The idea for the NIH director to have direct authority over a modest portion of the budget existed long before it was ever brought before Congress. As early as 1988, when an Institute of Medicine committee was appointed "for a study to evaluate strategies to promote the continued excellence of the NIH intramural laboratories," the recommendation to beef up the NIH director's spending power was one of several offered "to address problems with minimal disruption to a successful enterprise."

At the next appropriation hearing, then-NIH director Dr. James Wyngaarden included a proposal for the fund in his opening statement.

"The urgency of the need for the director to have additional funds became clear much earlier, probably in Dr. [Donald] Fredrickson's era, but certainly in Dr. Wyngaarden's," says Dr. Ruth Kirschstein, senior advisor to the NIH director, who as acting NIH director from January 2000 to May 2002 oversaw the DDF process. "Before [the DDF], the director would have to go to Congress and ask for supplemental funding."

NIAID director Dr. Anthony Fauci recalls asking Congress for additional funds to address an emergency about 10 years ago.

"The discretionary fund is very important," he agrees. "Continually over the years, things spring up where you may have to move quickly and you may have all of your money already committed. We were dealing with a resurgence of drug-resistant tuberculosis among individuals infected with HIV. We needed to do some work really rather quickly, but the epidemiological awareness of this significant problem came about after we had put in our budget request and all of our money was committed to other very important HIV and non-HIV issues. We needed to jumpstart a program, and we had to go to Congress."

The budgetary process can take a long time from planning to appropriation to program implementation, he points out. "You have to plan your programs before you get a budget," Fauci explains. "So when you do get a budget, you already have commitments in place that you have made in anticipation of getting the budget. In the meantime, if something crops up that is unexpected or an emergency, you really have a difficult time reneging on the planning and the commitments that you have made. You cannot take money from what you have already committed to, but the money has got to come from someplace. That is why the Director's Discretionary Fund is so important."

Former NIH director Dr. Bernadine Healy and the late Rep. William Natcher (D-Ky.), who chaired the House appropriations subcommittee for NIH in 1991, were instrumental in setting the infant Director's Discretionary Fund to work for NIH.

The tin cup approach worked well for NIH director Dr. James Shannon, who served at a time when the NIH budget was in its "golden age," but it was not as effective when economic times became lean.

By January 1990, when NIH was conducting a protracted search for a new leader following Wyngaarden's departure, a blue-ribbon panel appointed to examine how to enhance the NIH director's job suggested providing a $20 million discretionary fund as "a mechanism to be used for risk-taking and for funding unusual ideas that might not make it through the peer review process," according to an NIH Record article quoting Dr. Samuel Thier, then-Institute of Medicine president and blue-ribbon panelist. The DDF would, the panel felt, counter the perception that the director had little leeway in disbursing NIH's finances.

Birth of the Shannon Awards

Congress did not agree in 1988 or 1989, but did approve of the idea for a discretionary fund in 1990. A portion of the $19 million inaugural DDF was already targeted: Special NIH components such as the Office of Research on Minority Health and the Office of Research on Women's Health — although initiated earlier — benefitted substantially from the first DDF.

"Getting ORMH and ORWH started were very important," Kirschstein stresses. "They were under way, but we did it on a shoestring."

However, it was midway through fiscal year 1991 when new NIH director Dr. Bernadine Healy, just weeks after being confirmed by Congress for the job, applauded the new authority at the annual appropriations hearings and announced her plan for the bulk of the DDF: Nearly $14.5 million was to be used to establish a new kind of grant.

"I would like to tell you how very important I think the discretionary fund is," said Healy, in response to a question from the late Rep. William Natcher (D-KY), who chaired the House appropriations subcommittee for NIH at the time. "Whatever size it is, it is a necessity, and a much treasured authority for the NIH director. What I would like to to create a new and very special category of award for this year that addresses, I think, an extraordinary and compelling need, and that is the stability in funding of the scientist and the science base out there. What I would like to do is create the James A. Shannon Director's Award to address a group of scientists that are right at the margin of funding."

Recalling the day, Kirschstein says, "Bernadine Healy was really the first to articulate why the discretionary fund was needed. She told Congress she specifically wanted it for the Shannon awards. In fact, she told them she would need more funds, that her idea would cost more in order to be done well. It was a time when funding was limited for grants."

NIH was funding only about a quarter of the grant applications it received. "We do not expect 1991 by any means to be a year in which we fund more than 25 or 26 percent of the applications," Healy explained to the congressional panel. "That is a skimpy success rate and we hope the Shannon awards will help even a little in sustaining as many as 300 to 400 scientists."

In every year, she said, there are competitive grant applications that just miss funding "by a hair" and which in all likelihood would make the cut in the next season, but would need a small sum to tide them over.

"Institutes attempted to pick [Shannon award winners] based on several factors — young investigators, new investigators," Kirschstein explains. "It was always a combination of highly creative projects, or those that might have just missed the pay line, or those that promised some critical impact on the disease. This was very much worthwhile, because some of these scientists — without this crucial funding — might have dropped out, or done something else. The Shannon awards offered them just enough of a start."

DDF Gets Smaller, but Grows

By June 1993, the last year in which NIH was reauthorized by Congress, the DDF had become permanent, institutionalized with the passing of the NIH Revitalization Act. The new law described several broad purposes for the fund: "research on matters that have not received significant funding relative to other matters, responding to new issues and scientific emergencies and acting on research opportunities of high priority; supporting research that is not exclusively within the authority of any single agency of such institutes; and purchasing or renting equipment and quarters for activities of such institutes."

The fund had already been used for 3 straight fiscal years and had risen steadily in influence, both extramurally and intramurally: Shannon awards accounted for nearly $15 million of the DDF's $17.9 million in FY 1992. In FY 1993, Congress appropriated just over $10 million to the DDF; $7 million of it was used to initiate an NHGRI intramural program. Projects vying for a slice of the DDF pie were being proposed routinely by all sectors of the NIH community.

Then came new NIH director Dr. Harold Varmus, who raised the level of competition. For FY 1994, he ordered a small review committee to evaluate the merits of DDF proposals submitted annually in early spring.

"The Director's Discretionary Fund has evolved over the years," notes Kirschstein, who as NIH deputy director under Varmus coordinated the review sessions, which also became a yearly process. "The manner by which it was best handled was developed with Dr. Varmus. And, he had much less money to work with — only about $6 million or so. The Shannon awards still accounted for the majority, but he also began to fund more, smaller proposals." The Wednesday Afternoon Lecture Series was inaugurated that year with the DDF as was a loan repayment program for clinical researchers from disadvantaged backgrounds. Both successful efforts have expanded and continue today.

Addressing Emerging Threats, Emergencies

If it was promoting cutting-edge science, then the DDF was also more closely reflecting both the director's priorities and the times: In FY 1996, Varmus used the DDF to support additional grants in spinal cord injury, a topic that had received broad interest when actor Christopher Reeve was paralyzed in an accident in 1995. In FY 1997, support from the DDF — along with funds from NLM — helped launch a computer network for the Multilateral Initiative on Malaria (MIM), a joint research endeavor for NIAID and the Fogarty International Center. Malaria had been acknowledged earlier by the international medical community as a growing health threat to a number of African nations. Varmus traveled in winter that year to Senegal to meet with 150 malaria experts at a conference that he felt developed a "blueprint for future research" on the disease; the DDF gave funding to MIM each of the following years in the Varmus era.

Largest-Ever DDF for Roadmap

To track the history of the DDF is to, in many ways, plot its future: NIH directors are still employing the fund — most of which is contributed by the institutes and centers — to support wide-ranging projects with potentially broad impact. Zerhouni used most of the nearly $20 million DDF in FY 2003 to help launch the NIH Roadmap, a three-pronged multidisciplinary vision for supporting and conducting medical research in the 21st century.

Perhaps the best measure of the DDF's success, however, is found in the numbers: the FY 2004 fund is at its largest level ever, more than double what it was when first instituted in 1991.

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