Tuesday, October 02, 2012

Researcher Alert: California Stem Cell Agency Tightening Budget Oversight on Grants

Some of California's top stem cell researchers are going to have to sharpen their spreadsheets if they want to win money from the state's $3 billion stem cell agency.

The agency is moving to beef up scrutiny of the high-profile, big-ticket grant applications that it will consider during the next several years. The effort may well extend to all grant programs. The move also makes it clear to researchers that the CIRM staff is in the driver's seat when it comes to budgeting on research projects.

The plan was laid out this week in a memo to directors of the California Institute for Regenerative Medicine (CIRM) by Ellen Feigal, the agency's senior vice president for research and development. She said,
“Increasing the importance of budgetary review will encourage applicants to propose rigorous, realistic and vetted budgets, and will further our mission to be good stewards of taxpayer dollars. These additions will not significantly increase the workload burden on GWG members (grant reviewers) and explicitly acknowledge that program goals, scientific plans, accurate budgeting and prudent spending are inextricably linked.”
The proposal comes before the CIRM directors' Science Subcommittee next Monday and would alter the closed-door grant review process in the following manner, according to Feigal's memo.
• “To assist GWG review, appropriate expertise on budget and financial matters (e.g., this could be in the form of a specialist reviewer, or can also be assigned to a GWG reviewer with the appropriate background and expertise), will review applications for sound budgeting and provide comments or questions to the GWG for consideration by the reviewers before the reviewer’s final scores are entered.
• “If the financial/budgetary matter potentially directly impacts on the design or feasibility of conducting the project, the GWG may consider this issue in the scoring; otherwise, budgetary and financial issues and questions will not contribute to the scientific score.
• “As appropriate, review summaries sent to the ICOC (the CIRM governing board) will identify scientific as well as budget or other issues. To the extent endorsed by the GWG, the review summaries will also identify potential resolution should the ICOC approve a given award with budget issues.
• “CIRM officers should be provided explicit discretion to consider the budget comments, as well as budget or other issues. To the extent endorsed by the GWG, the review summaries will also identify potential resolution should the ICOC approve a given award with budget issues.”
Feigal's memo clearly indicates that CIRM staff has experienced push-back from recalcitrant researchers when efforts have been made to bring costs under control. She noted that the agency's staff examines a research project's budget during the “prefunding” review that follows board approval. However, Feigal said, at that stage, “It is often challenging to make substantive changes to the budget, based on appropriateness of study activities and costs, given the ICOC approval at a given budget amount.”

The agency has already examined some budgets prior to board approval. One grant review in a $200 million-plus round this summer, for example, declared that costs to prepare regulation packages had “overlap” and were “excessive,” along with costs dealing with manufacturing and per patient expenses. That was for a high-scoring application by Antoni Ribas of UCLA, and he was not alone.

In her memo, Feigal listed other cases of budgetary shortcomings in recent applications:,
• “Budget does not align with the program deliverables and milestones. For example, the budget includes activities not relevant to project objective(s) or that are out of scope.
•”Budget does not contain adequate expenses for known costs. For example, an applicant may budget $100,000 for a GMP manufacturing run of a biologic in which it is generally accepted knowledge that the actual expenses are typically much greater.
•“Budget item significantly exceeds a known cost or seems excessive without adequate justification. For example, an applicant may propose a surgical expense of $100,000 per patient for a procedure with Medicare reimbursement set at $15,000.
•“Cost allocations are not done properly. For example, an applicant is developing the same therapeutic candidate for 3 indications, and is applying for CIRM funding for 1 of the 3, but is charging CIRM for the cost of the entire manufacturing run.”
Initially, the budgetary review would be used in disease team, early translational, strategic partnership rounds, and any new rounds “as deemed appropriate.” Feigal said, however, that “all applications for CIRM awards should be carefully examined for budgetary appropriateness.”

Our take: This seems to be a well-advised move, albeit one that is not likely to find favor with researchers accustomed to loose oversight. It moves budgetary review to an earlier stage and gives the CIRM directors a chance to weigh in on those matters prior to approval of grants, instead of creating a sense of entitlement on the part of recipients that may pop up following board approval of their applications. Indeed, the plan makes such good sense that it raises the question why it was not in place years ago.

A final note: Feigal's memo is an excellent example of the type of information that clarifies issues and helps CIRM directors make the best possible decisions. It provides some history, good evidence for a change and an explanation of benefits. Additionally, the memo is timely, having been posted on the CIRM website sufficiently in advance of next week's meeting to give affected parties and others time to comment and make constructive suggestions. The memo is also far superior to the Power Point presentations that are often submitted to the board minus any nuanced, written discussion of the issue at hand.

Next week's meeting will be based in San Francisco but also has teleconference locations in Irvine (2), La Jolla, Stanford, Pleasanton, Oakland and Los Angeles where the public and researchers can participate. The specific addresses can be found on the agenda.

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