• August 29, 2015

Will the Biomedical-Research Bubble Burst?

The United States still reels from the aftermath of the financial crisis. Many of us in the biomedical-research community, meanwhile, fear that our field may face a recession of its own in the not-too-distant future.

Reminiscent of the dot-com crash of the previous decade—and, indeed, of today's financial crisis, mainly precipitated by the implosion of the subprime-loan market—biomedical research is endangered by its precarious position atop a bubble of unsustainable financial practices. The unrestricted grant-making policies of the National Institutes of Health inflate the number of biomedical researchers in a fashion that cannot be matched by the availability of research funds and might eventually lead to a shortage of financial support for biomedical research.

The trouble begins with how lead scientists must often scrounge for money to keep their research programs alive. Grantees' home institutions—that is, universities and research institutes—typically pay principal investigators' salaries and start-up costs for a limited period of time, after which the lead scientists are expected to attract external backing that will cover their programs, including their salaries. Such a system allows universities and research institutions to hire more scientists and expand their research at little cost to the institutions themselves, while enhancing their own reputations and academic prestige. The system also provides universities and research institutions with a financial benefit: Overhead charges are deducted from grants raised by principal investigators. Thus, universities and research institutions have strong incentives to open ever-increasing numbers of such tenuous, grant-dependent, "soft money" tenure-track lines.

Enter the NIH—the primary agency that supports fundamental biomedical research in the United States—and other organizations, which provide money not only for materials, equipment, and stipends for research assistants, but also for the salaries of principal investigators once their start-up money has run out.

While the NIH Data Book does not provide detailed information about the increase in principal-investigator positions supported by NIH awards, the trend is nonetheless evident by the applications for career-development grants, which provide salaries for young investigators. The number of applications for these awards increased from 1,029 in 1997 to 3,340 in 2007. The success rate was consequently reduced from 51 percent to 31 percent.

Such an unbalanced incentive for universities and research institutes to continually bring new researchers onboard depends on the assumption that new money will keep getting into the system and that the flow of new money will satisfy ever-increasing growth. That, however, is rarely the case, whether one is dealing with start-up Internet companies, the subprime-loan market—or scientific research. In fact, the flexibility of the NIH budget and its potential growth are highly limited, as the NIH budget has been flat since 2003.

Because of the relatively low costs involved in opening "soft money" faculty positions, as well as institutional lust for expanding research and getting a larger piece of the NIH budget, it is expected that an increasing number of new, externally paid faculty positions will open and put increasing pressure on the NIH's extramural funding. This is the money that the NIH gives to research institutions and universities to support studies conducted outside of the institute.

Obviously, any future increase in available NIH funds is limited, so the inevitable result of this unbalanced growth is that, in the long term, the NIH will no longer be able to keep up with the demand for soft-money principal-investigator positions. Studies will run short on funding, research centers and laboratories will close, and scientists, research assistants, and support-staff members will lose their livelihoods.

To avoid such a recession in biomedical research, universities, research institutions, and the NIH must work together to ensure that any growth in the number of principal-investigator positions reflects the predicted growth in available financial resources.

One solution is to change the NIH's grant-making policy to require that a principal investigator's salary—or at least a substantial part of it—be paid for by the investigator's home institution. The National Science Foundation has already adopted such a policy, providing no more than two months' salary for a P.I. per year.

Clearly, if adopted by the NIH, such a policy would reduce the number of positions offered by universities and research institutions, slow down the growth in the number of available P.I. positions, and further increase the pressure on the academic job market.

But the upside is that universities and research institutions, if forced to bear the financial burden of hiring and paying investigators themselves, would plan their hiring strategies far more carefully. Because an investigator without funds for materials and research assistants is of little use, home institutions would also be forced to consider the present and future availability of research grants. That extra consideration, in turn, would ensure a better balance between the aspirations of universities and research institutions, and the ability of the NIH to subsidize those ambitions.

Lior Shamir is an assistant professor of computer science at Lawrence Technological University.


1. cabisbee - October 22, 2010 at 09:45 am

Another faculty member who doesn't have a clue about indirect costs and how they don't come close to covering costs...or what the real reasons are for the pressure to enhance a faculty.

2. jschantz - October 22, 2010 at 11:55 am

It is entirely possible this could happen, but it would be cultural and economic suicide for the US to let it happen. With all that is going on globally in both academia and finance, if American Universities lose their leadership position in research, we are essentially over as a world financial and intellectual force. I have witnessed first hand the level of investment around the world, and it is absolutely imperitive that we match or exceed the level of investment from our competitors. There is no alternative.

3. abcde1234 - October 22, 2010 at 12:51 pm

"Obviously, any future increase in available NIH funds is limited, so the inevitable result of this unbalanced growth is that, in the long term, the NIH will no longer be able to keep up with the demand for soft-money principal-investigator positions. Studies will run short on funding, research centers and laboratories will close, and scientists, research assistants, and support-staff members will lose their livelihoods."

No need for future tense, here. It's happenning now.

You diagnosed the problem very well, though.

Your proposed solutions are perfectly logical, and if adopted would go a long way toward preventing further crisis. They are also about as likely to happen soon and voluntarily as every US citizen putting solar panels on their houses and driving fuel-efficient cars. We don't do anything to prevent crises. We only do things when life-threatening crises leave us no other choices.

See, during the time of the doubling of the NIH budget, greedy universities built new buildings and had wet dreams of hiring a gazillion soft-money scientists to fill them, and bring in indirect costs. So now ther eis the mad scramble to fill those buildings, and it just so happens that, thanks to the same kind of "must grow bigger" mentality, the makret is flooded with biomedical science PhD, many of whom are willing to take any crappy position they can get. So, they get hired, maybe get a grant to cover their salary, then they loose their grant, not necessarily because they are no good, but because everyone is chasing the same nickle. So then, the administration has to heat and cool and light and secure these empty buildings, maybe provide bridge funding or temporary salary support before finally booting out the unfunded investigator, and then shelling out money for a new search.

And before you know it, federal dollars are actually _costing_ universities more than they provide, but the universities have infrastructure and budget projections in place that would make it impossible to wean themselves off of it.

But, rest assured, this problem will be "solved" once everything collapses.

4. larkdr - October 23, 2010 at 09:56 pm

Even the small labs in my institute pay over $100K per year for indirect costs. They get some lab space and other services, but nothing that should cost over $100K. Some of the indirect costs are used as seed money for new faculty, but a lot of it just goes to the university budget. So when administration sucks every spare $, you're going to have more and more externally funded researchers whose indirect costs "don't come close to covering costs". That's true. If you want to build a new building or expand administration with some new hiring, it will never come close.

5. novain - November 05, 2010 at 12:41 pm

Medical centers are in a business with a mission on research, education and patient care. As in all business, no margin no mission. Soft money faculty members are one facet of the business plan to run the academic medical centers (non-profit organizations/business corporations). Return on investment (ROI) analysis is done on each faculty member; if found non-profitable, he/she will eventually be booted out. If found profitable, he/she stays put even when the intelluctual contribution may be only marginal (or incomprehensible). Just out of curiousity, check out the number of MBAs running the business side of your academic organization.

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