NIH director steers agency through tough times

Last year, Rep. Henry Waxman set his investigators on the trail of a potential scandal at one of the National Institutes of Health. The California Democrat, known for his aggressive probes of suspected malfeasance in Republican administrations, had caught wind of a complicated mess at the National Institute of Environmental Health Sciences.

According to newspaper stories and internal critics, the institute's director, David Schwartz, had diverted agency funds to his own intra-agency laboratory; steered researchers away from basic science; and sought to silence an agency journal that informs journalists, trial lawyers, and the public of emerging health risks.

Investigators from Waxman's Oversight and Government Reform Committee looked into the potential scandal, sent warning letters to NIH officials, and held a hearing in September. Then, just before the satellite TV trucks began descending on the NIEHS headquarters near Durham, N.C., Waxman let the matter drop.

What happened?

Essentially, NIH took control of the situation at the behest of Elias Zerhouni, its director, Waxman says. As the complaints mounted, Zerhouni's top deputies temporarily barred Schwartz from his 26-person NIEHS laboratory in February, and then sent the lab's 12 "guest researchers" back to Duke University, where they had worked with Schwartz. In August, Zerhouni ordered Schwartz to temporarily step aside, launched a top-level review, and promised to deliver a report to Congress. At the September hearing, Schwartz's acting replacement, Samuel Wilson, described the numerous ways that NIH agreed with Waxman's description of the situation.

"The important thing to me," Waxman told National Journal recently, "is that [Zerhouni] took the first steps to resolve the issue." Zerhouni, the director of NIH since 2002, has "been very responsive -- he moved very forcefully."

Zerhouni's feat of mess-management wasn't just a matter of distancing himself from a tainted deputy -- Zerhouni had hired Schwartz, and his senior deputies had approved the employment agreement that Schwartz cited when he brought the 12 researchers over from Duke and provided paid expert testimony in asbestos lawsuits. And it wasn't the only difficulty that Zerhouni has confronted. His budget has been painfully flat, after doubling during the tenures of his predecessor, Harold Varmus, and the acting director who followed. He has had to impose tough conflict-of-interest rules on prominent scientists who are used to having their own way. And the director's job at NIH has had relatively little authority over the sprawling $29 billion assemblage of 27 separate fiefdoms.

Yet, in his six years on the job, Zerhouni has managed to win and keep the support of establishment Washington, of industry officials, and of the outside groups that compete for NIH funds -- institute officials estimate that there are 478 of them. He has prospered because of his personal charm, his deft political maneuvering, and, most of all, his ability to rejuvenate the agency. That's no minor task; previous reform efforts stalled amid opposition from myriad heartstring-pulling pressure groups, status-conscious scientists, pork-protecting legislators, and dependent biotech executives. Zerhouni "has made an incredible difference, much more so than the former director," said Sharon Hesterlee, vice president of translational research at the Muscular Dystrophy Association.

Asked to comment on Zerhouni's performance, Sen. Edward Kennedy, D-Mass., who chairs the Senate Health, Education, Labor, and Pensions Committee, provided this bouquet: "Dr. Zerhouni leads the National Institutes of Health with extraordinary skill, vision, and integrity. I commend him for the contributions he has made to the health of the American people."

"He's been a very good leader for the NIH," Waxman said. "He's a hard worker, he respects science, he's committed to the NIH's mission, and he moved the [science] agenda forward."

That's rare praise from Democrats for a top administrator appointed by President Bush, who is regularly accused by Waxman of conducting a "war on science."

Algiers to Bethesda

Zerhouni, 56, trained to be a scientist and a manager, and to keep one eye on discovery and the other on getting things done right. One of his earliest jobs was at an engineering company in his homeland, Algeria, where he discovered that concrete castings were cracking because the builders weren't using enough fine-grain sand. Testing concrete was too prosaic for him, so he earned a medical degree at the University of Algiers. Partly prompted by a relative, he specialized in radiology, which seeks a clearer image of the body's internal workings. That defined focus distinguishes radiologists from many other biological scientists, who spend their days incrementally exploring narrow niches, such as the digestive tract of C. elegans -- a worm one-quarter of an inch long.

In 1975, at the age of 24, Zerhouni arrived in the United States with a medical degree and a scholarship. Three years later, he was chief resident in radiology at the Johns Hopkins University School of Medicine, and he became an assistant professor the next year. He left Hopkins in the early '80s, spent four years at Eastern Virginia Medical School, and then returned to Hopkins in 1985. He won a full professorship by 1992, the chairmanship of the radiology department in 1996, and then became vice dean for research, rising to the post of executive vice dean of the medical school. His career combined research -- he won lucrative patents for improving imaging technology -- with industry outreach and management at one of the nation's cutting-edge research centers.

In April 2002, Bush asked him to run NIH. Senate confirmation was smooth, and in May Zerhouni was grappling with his predecessor's legacy and with the president's curbs on embryonic-stem-cell research. Varmus, who ran NIH from 1993 to 1999, had persuaded Congress to double the agency's budget, but he didn't attempt to exercise much control over how the money was spent.

Moreover, Congress was increasingly unhappy with the modest results of its doubled spending on NIH. Legislators want concrete results -- therapies and jobs, not press releases about C. elegans's digestive tract or reminders from researchers that it takes 20 years to convert a laboratory discovery to a tested therapy. Also, the flatlining of the NIH budget after 2003 complicated Zerhouni's outreach to Congress. The earlier increases were "like the housing bubble," Hesterlee said. "It was fun when it was on; it is painful in the aftermath."

Zerhouni began his tenure by touring the 27 units of NIH's sprawling campus. These agencies, which include the NIEHS; the National Heart, Lung, and Blood Institute; and the giant $4.8 billion National Cancer Institute, had long resisted any direction from the NIH director, the White House, or Congress.

As the new director, Zerhouni had modest power, a tiny central office, and limited ability to transfer funds between the 27 centers. Congress has traditionally allocated funds directly to the centers and to favored projects, leaving the director with control over about 1 percent of the budget. That's only a few tens of millions of dollars, but it was used by Varmus's predecessor, Bernadine Healy, as the catalyst for a few new programs. Still, the director's authority was so limited that Healy, Varmus, and Zerhouni had to use the periodic agency-wide Leadership Forums to cajole top-level support for their plans.

Zerhouni titled his plan "Roadmap for Action" and established three major priorities: New Pathways to Discovery, Research Teams of the Future, and Re-engineering Clinical Research. A road map was needed, he said, because "there is no issue at the NIH that doesn't have 10 sides and 20 angles; and without a vision, you end up turning in circles."

Zerhouni also created an Office of Portfolio Analysis and Strategic Initiatives to map NIH spending and identify areas that need more funding, or less. Partly because NIH institutes and centers have their own account books and idiosyncratic medical definitions, it's difficult for the director's office to calculate how much is being spent on a particular research topic. "Believe it or not, when I visited the institutes and asked that question of the directors, it was very difficult to even find out what definitions they were using for cardiovascular disease," said Raymond Gibbons, a Mayo Clinic cardiologist and the 2007 president of the American Heart Association.

This reorganization went far beyond new offices and titles. Zerhouni ended the NIH practice of allowing each of the 27 centers to have a say in all major matters. "Direct democracy" was out, he said, because "this isn't the U.N." He also eliminated some 60 committees because "you have to destroy points of veto." He then established a top-level steering committee of only 11 members, and appointed six working groups with rotating memberships.

This compromise between centralization and the committee, he said, helps make NIH better suited to the nature of science -- the unpredictable discovery of the unknown. Industrial productivity can be planned down to the last nut and bolt, but scientific managers don't know what they're going to get from an investment, and many of the eventual breakthroughs are surprises, even to the scientists who make them. "You don't want to dictate science [or] be an ATM for science," Zerhouni said.

His reform efforts shocked the many outside groups that clamor for NIH funds -- local groups, patients organizations, and scientists unions. The patients groups are especially powerful because they can roll out public-relations campaigns with sympathetic patients and camera-ready celebrities, and can track members of Congress who have relatives afflicted by one disease or another. The scientists are influential because they have a lot of status in Democratic-affiliated university towns and because they help lead the patients groups. They fight any reduction in grant budgets: University administrators demote unfunded scientists to the lower-status task of teaching. Worse, at some institutions, "if you lose your grant, you're on the street," said Alan Krensky, director of the portfolio office.

The groups' clout was made clear when Zerhouni sought to close down the General Clinical Research Centers, which were established 25 years ago to bring scientific discoveries into university hospitals. This program needed to be replaced, Zerhouni said, because it was designed for acutely ill patients, such as heart attack victims who need surgery. These days, he said, NIH wants to focus on treatment of chronic conditions, such as heart disease. Lobbying for the $270 million-a-year program was "enormous," Zerhouni said, and to make the sale, "I had to go downtown [to Congress] and show why it's important."

Zerhouni won. Twenty-five of the 78 centers have been shut, and the program will end in 2012. But the universities didn't lose. Many are getting money to run new centers for translational science activities, which integrate the varied skills of many distinct professionals, including academic scientists, doctors, and nurses. "The universities saw the [new] paradigm; and the people who had never talked to each other, talked to each other -- because there is money on the table," Krensky said.

Similarly, Zerhouni won a fight to move money from older, established researchers to younger colleagues. Once the budget went flat in 2003, few of the postgrads could win peer-approved NIH grants amid competition from the corps of older, well-connected researchers. Moreover, "young" is a relative term in biomedical research; new scientists don't finish required postgraduate internships until they're in their 30s. By then, they need money for homes, marriages, and kids, and many take well-paid industry jobs rather than risking a long-shot gamble on winning an NIH grant request and an academic franchise. In September, Zerhouni announced a slew of new programs, including the $105 million New Innovator Awards for younger researchers.

But Zerhouni doesn't win all of his battles. For example, in 2007, lobbyists persuaded Congress to reject his efforts to cut the National Children's Study. The study is intended to track the health of 100,000 people from birth to age 21, at a cost of $3 billion over more than two decades. It is not affordable, Zerhouni argues, and the recent 2009 budget request tries to cancel the program.

Scandal Management

Even as he established his road map, Zerhouni worked to fix problems that arose under his predecessor. Varmus, during his 1993-99 tenure, had quietly boosted recruitment of top-notch academics by allowing NIH researchers to sign lucrative, off-hours consulting deals with biotech and pharmaceutical companies. The December 2003 exposure of those deals by the Los Angeles Times created a national scandal, complete with congressional hearings. "That cost Zerhouni about 18 months of his tenure," said Patrick White, vice president for federal relations at the Association of American Universities. "It practically derailed his directorship."

The double-dipping scandal wound down in late 2005 after Zerhouni imposed new regulations, which many of NIH's top scientists and recruitment experts opposed. "[My decision] was tough and unpopular, but it was right because it preserved the public trust," Zerhouni said.

The NIEHS problem is a lingering aftereffect of the scandal, in part because its director, Schwartz, was recruited from Duke University with a package that allowed him to run the agency, continue some outside work, and operate his own laboratory using a team of his Duke employee-scientists. Before arriving at NIH, Schwartz had an income just shy of $700,000, partly from fees earned for testifying in asbestos lawsuits, according to his conflict-of-interest forms.

Once Schwartz was in office, his numerous internal critics say, he tried to divert funding away from the NIEHS's basic-science researchers, whose product is most useful in disease prevention, and toward applied research, which is most applicable to therapists and drug companies. Schwartz also tried to cut 80 percent of the $3 million funding for the NIEHS journal, Environmental Health Perspectives, which outside reporters, lawyers, congressional staffers, and advocates rely upon. Schwartz's critics included the Society of Environmental Journalists, as well as professionals inside and outside the NIEHS. Waxman's staff took up the chase. Sen. Charles Grassley, R-Iowa, the ranking member of the Senate Finance Committee, also sent a flurry of letters detailing and criticizing Zerhouni's role in the kerfuffle. In short order, Schwartz backtracked, his lab's staff and budget were cut, the magazine's budget and staff were rebuilt, and he was forced to step aside in August. Schwartz did not return calls seeking comment. During the September hearing, Schwartz's acting replacement, Wilson, promised to restore funding for the magazine and focus research on prevention, and Zerhouni emerged from the near-scandal with barely a scratch on his halo. In February, Schwartz quietly resigned from NIH to take a research job in Colorado.

Although several other top NIH officials have their own labs that are funded by other NIH centers, Zerhouni forswears a lab for himself. "They're not a good idea" for the director, he said. "You can't do justice to either job."

These days, Zerhouni is looking past the NIEHS problem and toward a new conflict-of-interest initiative. He wants NIH scientists to rotate throughout industry to foster greater government-industry cooperation and to accelerate research, he said. Public trust would be ensured by top-level creation of new ethics rules, by regulations that curb secret deal-making, and by the promotion of greater public awareness of the benefits that flow from government-industry cooperation, he said.

Dealing With Congress

Throughout the double-dipping scandal, Zerhouni worked to cement his reforms with a new NIH reauthorization law. The previous reauthorization, completed in 1993, occasioned a controversial debate, complete with a bitter dispute over the use of fetal remains in medical experiments. Happily for Zerhouni, the three-year debate over the 2007 reauthorization barely made it into the national media.

The White House had wanted a major overhaul of NIH, but Zerhouni lobbied Congress for more-limited change. But even his scaled-down proposals prompted concern and backroom opposition from disease-related groups and unions of scientists, such as the Federation of American Societies for Experimental Biology and the Association of American Universities. Advocates feared that their priorities and affiliated institutes would lose out in a revamped NIH, yet they also wanted to improve NIH. Politicians, too, feared opposition from the lobbying groups, yet they also wanted to upgrade NIH management. Nearly all of "my own folks said that it would never pass," Zerhouni said.

But pass it did in January 2007 -- and now Zerhouni's management reforms are mostly enshrined in law. For example, the law created a Scientific Management Review Board to recommend top-level changes every seven years, and it gives the director up to 5 percent of NIH's budget to disburse. Zerhouni plans to direct that money toward such new projects as the Human Microbiome Project, which will explore the assortment of germs, viruses, and alien DNA that inhabit healthy human cells and organs. Researchers suspect that these biological squatters deeply affect our health and, perhaps, even our behavior.

Still, these changes leave the NIH director with far less control over his agency than that held by, say, the Defense secretary.

Zerhouni's tenure has been periodically upstaged by the stem-cell controversy. Researchers have long used embryonic stem cells from mice to study diseases, but the announcement in 2001 that stem cells could be extracted from human embryos spurred researchers' advocacy for greater use of embryos and embryonic cells. The prospect of treating human embryos as sources of raw material appalled social conservatives, and some activists worried that embryonic-stem-cell research would accelerate the development of human-cloning research.

Scientists and biotech executives lobbied hard for the use of embryos because they believe that the cells will help them make discoveries and test drugs in less time and at less cost. They opposed Bush's compromise, announced in August 2001, in which he offered federal funding for research on existing colonies of embryonic stem cells while denying funds for using new cell lines. Industry's lobbying campaign drew support from many NIH and university scientists who were loath to see their ambitions regulated by politicians, and from liberal advocates who wanted to repel arguments from conservative groups.

Zerhouni maneuvered between these factions. In congressional testimony, he periodically urged wider research on embryonic stem cells, and his staff -- including several officials originally hired by President Clinton -- sharply increased funding for embryonic-stem-cell research. "The administration substituted the views of the extreme Religious Right for [those of] scientists, and Zerhouni pushed back," Waxman said.

Zerhouni's criticisms, however, were restrained enough to prevent a breach with the White House. "He could have raised hell about it" but chose not to do so, said a congressional aide. Zerhouni's restraint was partly due to his suspicion of the embryonic-research advocates. "The hype in this field is totally unbelievable," he told NJ. He also worked the other side of the issue, ensuring continued funding for possible alternatives to embryonic stem cells.

The payoff came in November 2007, when NIH funded a breakthrough that allowed most sides to claim victory. Zerhouni didn't assign the grants or sign the checks, but on his watch, an NIH-funded researcher converted ordinary skin cells into cells that are seemingly identical to embryonic stem cells. Social conservatives applauded the breakthrough, although scientists grumble that embryonic-stem-cell research still deserves more funding and fewer restrictions. Zerhouni continues to straddle the factions, saying that embryonic-stem-cell research had yielded the secrets that allowed the breakthrough, and that more secrets would emerge from parallel research on adult and embryonic stem cells.

That's a long list of successes, yet Zerhouni failed on one bottom-line issue -- the NIH budget.

In early 2007, Bush asked Congress to increase NIH's funding by only 1 percent. Myriad advocacy groups banded together to demand a larger boost, and they persuaded Congress to approve a 3.7 percent increase. Bush, however, vetoed that appropriations bill, and NIH ended up with $29.5 billion, or a 1.1 percent increase. The prospects do not look any better for 2009: In February, Bush called for NIH's funding to remain the same. A budget of $29.5 billion may be a lot of money, but it still amounts to a cut because the costs of running a high-tech, leading-edge laboratory rise with inflation. Zerhouni failed to push the funding up for numerous reasons, all of which boil down to the fact that the White House and the Democrats have other priorities. "It is not his fault," Waxman said. "It's the president and Congress. I blame the Bush administration."

But in a town that measures success by budget growth, a slowly shrinking budget is a big, black blot.

There's background chatter about where Zerhouni will go once he leaves his post. Insiders and outsiders speculate, off the record, that he will try to snag the top slot at Johns Hopkins, or go into industry, or move to the Bill and Melinda Gates Foundation, or, if he is a masochist, to take a job at the United Nations.

Whatever happens, his successor will help determine whether his management reforms continue, or else see NIH suffer the consequences of a thousand uncoordinated research grants. Yet it is difficult to see how NIH can slide very far backward, because pressure imposed by technology, management, and business pushes it forward. "We're just bringing the NIH into the 21st century," Zerhouni said. "It's not rocket science."