Donald Fredrickson: Spending Hughs' Legacy

In 1975, the Howard Hughes Medical Institute (HHMI) was remarkable more for its namesake, the legendary, ultra-reclusive billionaire, than for its $3 million research program. But Hughes' death in 1976, and the 1985 sale of the Hughes Aircraft Co. for $5 billion, have made the Institute remark-able to the tune of $200 million in biomedical grants last year alone. That figure is expected to climb to $300 million by 1990, making the Institute the largest private medical research organization in th

January 26, 1987

In 1975, the Howard Hughes Medical Institute (HHMI) was remarkable more for its namesake, the legendary, ultra-reclusive billionaire, than for its $3 million research program. But Hughes' death in 1976, and the 1985 sale of the Hughes Aircraft Co. for $5 billion, have made the Institute remark-able to the tune of $200 million in biomedical grants last year alone. That figure is expected to climb to $300 million by 1990, making the Institute the largest private medical research organization in the world. Overseeing the Institute is its President and Chief Executive Officer, Donald S. Fredrickson. Born in Canon City, Co., in 1924, Fredrickson received his bachelor's (1946) and medical (1949) degrees from the University of Michigan. He did his intern-ship and residency in Boston hospitals and joined the staff of the National Heart and Lung Institute in 1955. He was director of the National Institutes of Health from 1975-1981. He was interviewed December 15, 1986 by Tabitha M..Powledge, editor of The Scientist. The following is a shortened, edited version of their talk.

Q: HHMI is legally classified as a medical research organization (MRO). What consequences flow from that?
FREDRICKSON: Medical research organizations are described in half a sentence in the 1950 tax code, which says they shall be engaged principally in the direct conduct of research in conjunction with hospitals. What that and subsequent Treasury regulations have come to mean is that we must employ scientists, and provide them space and all the things they need to do their research, in conjunction with a hospital. Things have changed since 1950 and sparring with the Internal Revenue Service has been a major occupation of ours in the last couple of years.

We're not a private foundation and are not subject to private foundation rules. We don't want to be a private foundation, but we need clarification of the definition of an MRO. What does it allow us to do and not to do? We also want to know if there are any outstanding penalties or tax issues unresolved.

How HHMI Spends Its Money

Q: What proportion does HHMI contribute to the U.S. medical research budget?
FREDRICKSON: In fiscal 1986, we spent about $225 million. It's difficult to compare that to other expenditures. The National Institutes of Health puts out, by its own estimate, about $4.7 billion in support of medical research. HHMI only operates in five major areas of basic science—genetics, immunology, cell biology, structural biology and neuroscience. NIH is spending about $1 billion on those topics. So we spend at most one-third, perhaps more realistically one-fifth, of what NIH spends on those five research areas. We don't pay indirect costs, which account for about one-third of NIH's outlay. We pay what it costs us to operate an institution, but we don't add an overhead figure.

The Institute has been growing very fast. But it soon is going to come into equilibrium, because we now know what our endowment is. We intend to spend at least 3½ percent of that, and probably more, over the next few years. So our spending will increase a little bit relative to NIH, but not a great deal more. We still have to grow though; we're not fully mature in our new incarnation.

Q: Are you talking about growing in the five areas or expanding into other areas?
FREDRICKSON: We're not going to expand too much from those five areas. We will, however, expand our operation and extend it to more institutions than we're in now. In-stead ofcreating more ofthose large units we have in 20 or so academic medical centers, we are proposing to expand primarily through formation of what we're calling "select units" that will be smaller. We won't construct so many buildings, but we will be selecting sites where we can have two or three investigators. The scientists will be related to the network, we'll pay salaries, and everything else will be the same, but that selection and expansion means we could double the number of institutions we're in by the next five to eight years.

It was a direct ambition of ours not to get too concentrated. We're interested really in supporting excellent people, but we like to look beyond them to the institution they're in. We ask how we can maximize their productivity. We're not so crazy about discovering things, in the sense that HHMI claims to have backed a new cure for cancer. We'd rather discover the discoverers and make sure that they have the most productive scientific milieu.

Our charter includes a parenthetical emphasis on medicine and the medical sciences, but I wouldn't say we'll confine ourselves completely to that. Part of our possible settlement with the IRS may enable us to open up a broader program.

Q: In what areas?
FREDRICKSON: We've been thinking about that for some time, and haven't yet decided. But they might be in the arenas where we now operate, in graduate school and medical school. We might also expand beyond that into other educational arenas—undergraduate, perhaps earlier.

We also are considering what we might call "science-and-society" programs—for example, the ethical issues we are helping to create in modern biology. HHMI is a very active center for genetic research; clearly, there are lots of problems arising from emerging technologies in genetics that we ought not to lose sight of.

Q: You've begun a program at NIH to give medical students research experience. Have you done other graduate student funding?
FREDRICKSON: No, except that we do have a lot of postdocs in our laboratories as employees. If we should open any new programs, some may deal with expanding that kind of training. After all, it's inextricably wrapped up with research; we all recognize that.

Research Topics

Q: Could you outline some specific research topics that Hughes is pursuing?
FREDRICKSON: It's quite eclectic because we choose primarily scientists, rather than research topics, and we don't presume to interfere with their academic freedom. We like them to be doing things that relate to the whole, but there's a big spread. Take immunology, for example. We're funding work by people who are very interested in the genes that determine T-cell receptors. One of our ace molecular biologists, who's really working on genetic regulation, decided that he would like to clone the gene for the T4 receptor related to AIDS, and he did. Now he's pursuing AIDS in the brain, which is fine with us. We don't have a program on AIDS, but obviously we are very pleased to let these excellent people roam in their own way into areas of such importance.
Q: It's a way of combining two of your research areas?
FREDRICKSON: That's right. That's one thing about our basic science program: the boundaries are so elusive. That's the whole purpose of research anyway, isn't it, to destroy boundaries?

We do a lot of work in genetics. Y. W. Kan, the first person to look at genetic polymorphisms, to find the missing gene in thalassemia, is one of the Hughes people. When Herbert Boyer was working with Stanley Cohen on recombinant DNA, he was a Hughes scientist. Many important things have come out of places where Hughes had an operation.

We have a big interest in the preparation of the human gene map. At Utah, they look at genetic polymorphisms in Mormon famiies to develop a potential disease carrier recognition. We maintain Francis Ruddle's gene map at Yale. We're very interested and willing to provide a facility that will be of common value to all of science across the world. We're not interested in mapping the genome completely; others are. But we're watching that activity to see how Hughes might participate.

Q: How much do you try to guide researchers in their interests? For example, given the scope and urgency of AIDS, aren't there pressures on you to expand in that area?
FREDRICKSON: If you are described as having a $5 billion endowment, it sounds so vast that everybody with a disease problem comes and tells you that what they need is just a drop in the bucket. But it isn't if you take the long view, and we are. We're trying to keep this as a perpetual trust. We want to spend all the extra income we make, but we have to make sure that we reinvest enough to keep the corpus right where it is now.

When you do that, you make long-range commitments; you have agreed to support scientists in laboratories for a certain number of years. It's not giving out grants and lavishly providing short-term support for an effort, however important. We think that's what we ought to continue to do. We don't want to get into categorical research very seriously. The amount people want to put into AIDS, as suggested in the last Academy study, is much more than we can possibly spend. If we did we'd have to abandon all of our laboratories and all of our commitments and partnerships.

While we concentrate on basic research, we also feel that twinge occasionally about clinical investigation. Everybody is despairing that clinical investigation is dying; well it isn't at all. It's just having a painful metamorphosis. It won't be very long before all the cloners and all the molecular biologists will get back to problems that relate to human disease. When they do, we want to be right there with them. You're going to have to link clinical investigators with those basic labs because they can't get that far from base camp anymore.

Who Gets Hughes Money?

Q: Scientists can't apply for Hughes money. How do you find them and choose them?
FREDRICKSON: We have two major advisory groups, the scientific review board and a medical advisory board, who are the center of the mechanism for generating discussion about scientists. Added greatly to that input is an endless discussion with people from medical schools. There's one or two here every week, every day sometimes.
Q: Could you describe the review process a little bit?
FREDRICKSON: We do that in-house with our advisory groups. Our selection of new scientists goes like this: on the one side we generate an interest and knowledge of a lot of scientists, particularly those between the ages of 40 and 50. By that time people have been around the track enough so that there's distance between the leaders and the followers. It's tougher when you get to the younger ones, of course. We have some lists that we constantly review and discuss; eventually we make some decisions about leaders in those five fields who might be approached. That's the in-house operation. Where we have institutions and partnerships, we then have local committees that deal with us, and we discuss staffing together.
Q: How do you go about evaluating the work you've already funded?
FREDRICKSON: We do it two ways. One is that we have a program review every year at our conference center in Coconut Grove in January. We do it by program, though we mix some of the programs because we need more cross-fertilization. (We do some of that through workshops and subsidiary networking too.) The scientific reviewers and the external advisers who are appointed for terms listen to everybody. Afterward there is a long round of discussion about who's doing what, and how so-and-so is coming along. We used to make all of our decisions on that basis, but it was terrifying; it took all the fun out of reviewing.

The review allows you to have an updating every year, to see the development of scientists, see where they may be having trouble, and try and give them some advice. But then once every five years at the least, maybe even four, we make a site visit to the lab. In addition to our review groups, we bring in ad hoc experts in the particular fields being reviewed. Those take several days; they are long sessions.

The Review Process

Q: The process sounds a fairly formal one.
FREDRICKSON: It's definitely formal. The site-visit reports are written and opinions are distilled, and then we come back to the medical advisory board, we go back over what happened, what we saw, what we think. They make recommendations. And then we even have another review of that.

We have recently terminated a number of scientists. The review process had not been developed adequately; it had rested dormant while expansion took all our attention. We try to be very compassionate about terminating; we continue support for two or three years while the best scientists are sliding away to connect with NIH and other systems of support.

Q: The more you describe your system, the more it sounds similar to processes such as that at NIH. What's the difference?
FREDRICKSON: Well, that's precisely right. There are some essential processes that you can't replace. Naturally we use the best parts of what 40 years of experience at NIH have taught us about peer review. But we don't ask for applications from investigators; we don't want them to tell us what they're going to do. Every year we like a little report, but it's very much simpler. We don't hire people on the basis of what they plan to do or what they've done. Also, we're able to give much longer-term support to many scientists. There's one nice thing about this place: if our investors are doing their job, we know what the budget's likely to be.

But NIH is not capable of taking care of institutions. It does it by great beneficence in indirect costs. But it does not have any capacity for fine-tuning what it does to institutions. That is, I think, where we complement the system perhaps better than any other thing we do. For example, we can help with resynthesizing institutions that have become very specialized and broken down over the years. The medical school may have left the campus but the biology department is still there. How do you get them back together again? In those ways, we can particularly be of use to the system.

Q: Are you at present doing any funding of research outside the United States?
FREDRICKSON: No, only in our gene resource program where we have helped put on some conferences. But I expect to, although I also expect to concentrate on the United States.
Q: You've a very close relationship with NIH. You're funding medical student research there, and have underwritten meetings. Have questions been raised about whether it's appropriate for the government to have such a close relationship with a private agency?
FREDRICKSON: NIH has not raised that question, nor have any members of Congress or anybody else. Sometimes our trustees worry because they don't want to be NIH, they don't want to be seen as an imitation of it, and they're quite correct in that. But actually, our relationship (it seems to me, and f know both institutions extremely well) can be of great help to NIH. It could never have done the medical student project and it needed it. It needs those students there, it needs a tie to the young. And of course we couldn't have found another place with a thousand laboratories of such excellence.

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