Biotechnology advocates fighting against a House spending bill thatcould reduce the amount of funding for Small Business InnovationResearch (SBIR) grants from the National Institutes of Health (NIH)lost a battle last week.

The House passed a fiscal 1997 appropriations bill that alterslanguage governing NIH review and allocation of the SBIR grants,which are funded through a set-aside program that totals 2 percent ofthe NIH's research budget. In fiscal 1995, 830 grants for $174million went to small companies to help commercialize their science.Nearly 80 percent of the SBIR grants were awarded to biotechnologyfirms.

SBIR funds are scheduled to increase to 2.5 percent of the NIHresearch budget in 1997.

The SBIR changes are contained in the House appropriations bill forthe departments of labor, health and human services and education.The spending legislation was sent to the Senate AppropriationsCommittee, chaired by Sen. Arlen Specter (R-Pa.), and could reachthe Senate floor later this month.

Biotechnology and SBIR advocates are counting on the Senate not toinclude the House revisions, shifting the showdown on the issue tothe House-Senate conference committee.

Carl Feldbaum, president of the Biotechnology Industry Organization(BIO), said the group is confident Specter will retain the currentprocess for judging the grants in the Senate version of theappropriations bill.

Feldbaum, who was Specter's chief of staff from 1988 to 1992, saidBIO and other industry advocates will meet with Rep. John Porter(R-Ill.), whose House subcommittee was responsible for the SBIRchanges, prior to conference committee meetings to plead their casefor deleting the new language.

"We want to strike the language," Feldbaum said. "It never shouldhave been changed."

The House spending bill alters the way SBIR grant applications areawarded by subjecting companies to the same review standards asacademic scientists applying for research grants.

The language changes are advocated by the Federation of AmericanSocieties for Experimental Biology (FASEB), which representsacademic interests.

With Congress chipping away at government spending, critics ofFASEB said the group is worried the SBIR set-asides will reducemoney available for basic science.

FASEB officials have said they are motivated by concern for themerit and quality of research funded by the SBIR grants.

Biotechnology advocates said based on scoring used by NIHreviewers to select academic research winners in 1995 very fewcompanies would have qualified for the SBIR funds, which areconsidered essential for firms to translate their science into products.The effect throughout the NIH of the House legislation was anestimated 85 percent reduction in SBIR grants.

Under the House bill, money not allocated under the SBIR programwould return to the NIH research budget for use elsewhere.

Porter's press secretary, David Cohn, said the issue involves ensuringNIH is funding the highest quality research, including that supportedby SBIR grants.

However, Ann Eskesen, president of the Boston-based InnovationDevelopment Institute _ a leading advocate for SBIR programs _said comparing company applications with those from academiciansis like comparing apples and bananas.

While university researchers are seeking funds to support basicscience, companies must demonstrate their proposals havecommercial applications, she noted.

The SBIR flap was nearly resolved last week when Eskesen andFeldbaum met with Porter Wednesday to persuade him to delete thenew language. He agreed, but FASEB officials convinced him to holdhis ground and keep the spending bill intact.

When the legislation was brought to the floor Thursday, Rep. JosephKennedy (D-Mass.) offered an amendment representing acompromise. But BIO officials and SBIR advocates considered it ill-advised and convinced him to withdraw it.

BIO and SBIR advocates are confident they can achieve a betteroutcome in the House-Senate conference committee. They said Porterhas been made aware of the impact on the SBIR program and iscommitted to resolving the issue.

In the meantime, FASEB and BIO officials have been makingproposals. FASEB has suggested keeping the SBIR grants at 2percent of the NIH research budget rather than boosting them to 2.5percent.

BIO has countered with a proposal to keep the SBIR programunchanged until the General Accounting Office can audit the grantsto determine if criticism of the quality of the applicants' research isvalid. n

-- Charles Craig

(c) 1997 American Health Consultants. All rights reserved.