December 30, 2003
Dr. Norka Ruiz Bravo
Deputy Director for Extramural Research
National Institutes of Health
Building One
Bethesda, MD 20892

Re: Policy on Patent Costs in the Revised NIH Grants Policy Statement

Dear Dr. Ruiz Bravo:

The Association of Independent Research Institutes (AIRI) is concerned about a recent proposed change to the NIH Grants Policy Statement which is contrary to Circular A-122 government-wide policy. AIRI is a nationwide association of 89 nonprofit independent research institutes conducting peer-reviewed basic and applied research in the biomedical and behavioral sciences. AIRI institutions are distinct from other organizations involved in research -- such as universities, hospitals, and for-profits -- in their organization, mission, and size. Independent research institutes receive 11% of NIH extramural research funds.

On November 26, 2003, NIH issued its revised Grants Policy Statement. As part of the revision, NIH states that invention, patent, or licensing costs are unallowable. This change is described as merely a policy clarification. In contract to the NIH revision, OMB Circular A-122, which governs indirect cost recovery by nonprofit organizations, states clearly the circumstances under which patent costs are allowable. Without a change to Circular A-122, with adequate notice and public comment under the Administrative Procedures Act, NIH lacks authority to impose the change provided in the revised Grants Policy Statement. Furthermore, such a change is contrary to the public policy rationale for allowing such costs under certain circumstances, which a proper notice and comment process would have exposed.

AIRI strongly recommends that NIH withdraw this provision. Given the lack of authority for imposing the change and its direct refutation by government-wide policies, NIH places itself in direct jeopardy of legal challenge.

Sincerely,

Randall Main
President

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