Trump's NIH Cuts Send Shockwaves Through the Science World

One of the first moves made by the Trump administration was to change the nature of grants made by the National Institutes of Health. Under the new policy, there's a 15% cap on "indirect costs" associated with a given grant. This is money that essentially pays for institutional overhead, not directly related to the new costs of the specific project itself. So how do NIH grants actually work? What are the direct and indirect costs? What is the effect that's already playing out? On this episode, we speak to Carole LaBonne, a biologist and researcher at Northwestern University, on what she's already seeing from the changes. Read more:Trump’s Science Agency Pick Says He Won’t Cut More PersonnelThe US Is Withdrawing From Global Health at a Dangerous TimeOdd Lots is coming to Washington, DC! Get your tickets for our Jones Act debate here. See omnystudio.com/listener for privacy information.

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• 0:00Speaker 00

  Finance is increasingly being built on digital rails. But as the adoption of virtual assets, tokenization and stable coins grows, can regulation not only keep pace but help accelerate it? Find out more later in the podcast.

• 0:16Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Business Week's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting and hiring practices.

• 0:59Speaker 01

  But according to recruiters, advisors and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company and Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates quote, "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at chatgpt.com.

• 1:39Joe Weisenthal?

  Hey, Odd Lots listeners, we're coming to DC.

• 1:42Tracy Alloway?

  We're finally doing it, Joe. It's going to be our first live show in Washington DC, our nation's capital. It's also finally going to be the time where we actually talk about the Jones Act.

• 1:52Joe Weisenthal?

  We've been talking about doing the Jones Act episode of Odd Lots for a long time and it's become this recurring joke that we've never done. But we're going to do it in grand style because we're going to be doing it live in DC and it's actually going to be a debate.

• 2:07Tracy Alloway?

  Yeah, so we have Sarah Fuentes. From the Transportation Institute, she's going to be taking the pro side. And we also have Colin Graybow of the Cato Institute. He'll be taking the against side. It's going to be really interesting to see how all of that shakes out.

• 2:23Joe Weisenthal?

  In addition to that, we're going to be speaking with Blair Levin, who was around during the telecom bubble. And we have Andrew Ferguson, the new head of the FTC, the one who's replaced Lena Kahn. We're going to be talking about mergers and acquisitions and all that stuff. So it should be a really fun night.

• 2:38Tracy Alloway?

  If you want to come and join us for that evening, it's going to be on March 12th at the Miracle Theater. Go to Bloomberg.com/oddlots and you can find the link to purchase tickets. We hope to see you there.

• 2:53Speaker 01

  Bloomberg Audio Studios, podcasts, radio, news.

• 3:09Joe Weisenthal?

  Hello and welcome to another episode of the Odd Lots Podcast. I'm Jill Weisenthal.

• 3:14Tracy Alloway?

  And I'm Tracy Alliway.

• 3:15Joe Weisenthal?

  Tracy, we're recording this February 25th, and we're just a little bit over a month into the new Trump administration. And setting aside how one views the long-term goals of the administration from the outside, it's chaotic. And there have been a lot of cuts and it doesn't look like scalpel types of cuts. Many things have been shut down or frozen completely in some respect. And you see a lot of people talk about the implications of these moves, but I find it hard to wrap my head around.

• 3:47Tracy Alloway?

  There's a lot happening, that's for sure. And I think one of the struggles of everyone who's trying to follow this at the moment is that you have new executive orders coming out almost daily. Then you have the legal challenges to those. And then you have the administration itself sometimes arguing within itself about whether or not certain orders should be followed, certain emails should be replied to. It does feel very chaotic.

• 4:12Joe Weisenthal?

  One area that I think has caught a lot of people's attention in particular has been immediate moves at the

• 4:20Joe Weisenthal?

  NIH, the National Institute of Health. And there are multiple moving parts here. But from what I've been understanding that when there are grants awarded, some of the money goes to direct costs and some of it's indirect. And there has been a change in what's allowed on the indirect. And then I've also seen, and it's almost hard to believe, but I've now seen it in enough places, that there have been like whole programs that got hit with an immediate freeze, which I have to imagine in science creates all sorts of problems. I imagine there are lots of endeavors that can't just be stopped, started on a switch. And so, understanding what's actually happening right now in science funding and the implications of some of these moves is obviously something we need to discuss, especially given the broader thing of like,

• 5:04Joe Weisenthal?

  we want to be, I think, a country at the leading edge of science and technology.

• 5:08Tracy Alloway?

  Yeah, this is exactly the tension, I think. So even Elon Musk and Donald Trump will talk about how important it is for the US to be technologically advanced and to beat competitors like China. But at the same time, they're doing this. And I guess their argument is that by capping some of the cost of research, you might make it more efficient, you might make it more monetizable, you might see more breakthroughs. But again, there is this tension to the sledgehammer approach that we've seen, where if you just put in a cap on something like indirect funding, it can affect a bunch of research programs. So we should talk about it. I also, I must admit, I don't know anything about NIH funding. It seems very sprawling and very complicated.

• 5:53Tracy Alloway?

  So I want to get into that as well.

• 5:55Joe Weisenthal?

  All right, well, I'm very excited to say we have the perfect guest, someone who actually is a scientist in the lab, working on these things, and has been talking about the impact of the moves over the last several weeks. Thrilled to bring on to the show Carol Lebon, Professor of Molecular Biosciences at Northwestern University. Professor Lebon, thank you so much for coming on the Outlots Podcast. Happy to be here. What's happened in the last month?

• 6:20Speaker 04

  Why don't you ask a broad question?

• 6:23Tracy Alloway?

  Yeah, we need 40 minutes for just answering that question.

• 6:26Speaker 04

  Well, this is fine. Three major things have happened in the last month. One is what you alluded to already, this attempt to cap the indirect cost for grants at 15%. And I'm happy to go into that in detail. But you can think about it, if you pick any area of research that you might care about, let's say pediatric cancer, that basically amounts to a 15 to 20% decrease in funding for studying those cancers. And this is an area where NIH has made huge progress. So 40 years ago, if your child was diagnosed with cancer, there was less of a 60% of those children that would still be alive in five years. Today, there's a 90% survival rate. So I mean, these are impacts that are going to be huge.

• 7:10Joe Weisenthal?

  I'm going to actually stop you right there because I think this is important. There is science research that happens outside of the NIH. When you look at that 40-year history, how do you draw the line for someone who, you know, people are aware of big pharma companies exist, that this is like the NIH should get credit for that progress?

• 7:30Speaker 04

  So the NIH is really sort of two different systems. They have an intramural system, so there are scientists running laboratories at the NIH. And by the way, they have not been exempt from these cuts to probationary people. I know of young scientists who had started their independent laboratories at the NIH in the last couple of years, who left a week ago Saturday, received an email at night saying that they were terminated and that their access to campus was gone. So there's intramural research. But the vast majority of NIH grant funds go into their extramural program. These are funds that go to grants at universities in all 50 states. And they are incredibly important for all levels of science.

• 8:14Speaker 04

  Basic research, translational research, clinical trials are going on not at the NIH, but in Iowa and in Ohio and in Florida. And so, you know, it's estimated that these grant monies that come to the universities, they support directly about 400,000 or more employees across those 50 states. But also, they drive more than $93 billion of economic activity each year. And again, that's across all 50 states. That's not staying in Washington DC. There's an estimate that for every dollar of NIH grant money that is granted, it generates almost $2.50 worth of economic activity.

• 8:58Tracy Alloway?

  Just to press on Joe's point, how do you actually measure the success of NIH funding? Is it you produce some new wonder drug that is monetizable and everyone starts using it? Is it just the sort of nebulous concept, I guess, of like advancing scientific research? How do you judge the success and efficacy?

• 9:19Speaker 04

  So I think that you can look at that on two levels. So there are the studies that are translational studies that immediately impact human health, and those are very, very important. But just as important is the kind of research that the general public sometimes has trouble wrapping their heads around because you don't necessarily see an immediate advance from that research in human health. But most of the advances that we see today that are being translated and are really making a direct effect on human health, they stem from studies that were done 10 or even 20 years ago that were foundational, that at the time, again, didn't, you know, this is called discovery-based science, or basic science, or fundamental research.

• 10:01Speaker 04

  But it's these foundations that are built on in the more clinical studies. And also in industry, in the pharmaceutical industry and biotech, they are building on these basic discoveries that were funded by the NIH. I can give you one really cool example. So you've got to have heard of Ozempic, right? The semaglutin. That's everywhere these days. Did you know that that came from research, very basic research that was done ages ago on a venomous lizard called a gila monster?

• 10:31Tracy Alloway?

  A gila monster?

• 10:33Speaker 04

  This gila monster is native to the southwest of the US. And people noticed that scientists noticed that it had the ability to fast for an incredibly long period of time. So wanting to understand the biological mechanisms of how it did that led them to isolate from the saliva of a gila monster. This what would eventually become Ozempic.

• 10:57Joe Weisenthal?

  Talk to us about the math of direct versus indirect costs. Because I think this is just something that was in the headline of the announcement. And I don't think I really have a concrete understanding of what the difference is, why there is this distinct allocation. What do you walk us through a year ago or just in the up until recently? What this allocation was all about?

• 11:19Speaker 04

  So every grant that goes to, let's say Northwestern where I am, has two components to it. Direct costs that come directly to my research laboratory and indirect costs that are used to support my research. So a lab like mine is analogous to running a small business. So let's say that business is a restaurant.

• 11:38Joe Weisenthal?

  Yeah.

• 11:38Speaker 04

  The direct cost of the restaurant would be the food, the cooks and the servers. But there are other costs to running a restaurant business. You have inventory and purchasing and upkeep of the kitchen equipment and the building, et cetera. And so the restaurant can't run without those other things. It can't exist with just the food, the cooks and the servers. And so for a research lab like mine, the direct costs are the chemicals and the reagents and the salaries of the scientists who are carrying out the studies. But there's also indirect costs. And those again include maintenance and replacement of equipment, ordering, bookkeeping, handling hazardous waste, compliance with government regulations, all of which are absolutely essential to doing the research.

• 12:20Speaker 04

  And the reason it gets separated out like this is actually to save money. Because while the direct costs are specific to my particular research. Most of those indirect costs are for most, if not all, research labs at a given university. And so you get economies of scale by lumping those together. Does that make sense?

• 12:42Tracy Alloway?

  Yeah. So going back to your restaurant analogy, I guess it's kind of like you're funding a food court, right? So each individual restaurant within a food court might have their own direct costs, but then the cost of actually maintaining the space, renting out the space is sort of shared by everyone doing different things.

• 13:00Speaker 04

  Sure. I think that's a great advance on the analogy, and it would be particularly so if they had a pooled, let's say, central billing so that they didn't each have to handle the finances individually.

• 13:11Tracy Alloway?

  So one thing that I was wondering is how the NIH cap on indirect funding currently, or I guess up until a month or two ago, actually compares with other medical research organizations? Because I'm thinking specifically about organizations like the Gates Foundation, and I think in the announcement, the NIH talked about aligning with other types of research organizations like the John Templeton Foundation. So how do private research organizations manage to keep their own indirect costs down? And why do their indirect costs seem lower than the NIH's?

• 13:49Speaker 04

  Oh, I mean, they are lower, and there are, in fact, some types of small foundations that have no indirect costs. I remember back when I was a graduate student at Harvard, Harvard wanted to stop letting their researchers take those grants because they were not paying for the other real costs of doing research. But in general, over time, what's come out of it is in the research ecosystem, universities admit that these smaller foundations, and even something like the Gates Foundation, you know, they're directing money at very specific things, and they can do more with their work if they lean on the NIH and universities for covering more of those indirect costs. So they don't cover the indirect costs. It's just that it's understood that they can't.

• 14:34Joe Weisenthal?

  So your assertion here is that what appears to be a financing mechanism with lower indirect costs is capable of existing because, I don't know if free riding is the right word, but because there is also the indirect costs that come from the NIH to aligned or the same labs.

• 14:54Speaker 04

  Absolutely. They're like a law sweeper.

• 15:12Speaker 00

  What's next for virtual assets? I'm Jacob Rees, host of Economy Scale, a series exploring growth in key global sectors. And in this episode, we're diving into the digital forces shaping finance. Sean McHugh from Dubai-based Virtual Assets Regulatory Authority has this to say.

• 15:27Speaker 05

  We're seeing a lot of institutional players come in, digital asset dedicated hedge funds, high-frequency traders and that sort of thing, and folks who service institutional clients.

• 15:36Speaker 00

  As more capital enters the market, adaptive regulation is likely to become increasingly key. Reese Merrick of Ripple says.

• 15:44Speaker 06

  A lot of regulators globally would like to keep the industry at arm's length. That's the opposite here. I think also what you'll find is that regulation and frameworks can come out, but some of them are maybe a slight iteration on some 80-year-old policy and not actually in line with what the technology can do and offer. And again, that's very different in Dubai.

• 16:03Speaker 00

  Listen to the full episode wherever you get your podcasts. This series is brought to you by Bloomberg Media Studios and the Dubai Department of Economy and Tourism.

• 16:13Speaker 01

  This is the Bloomberg Tech Minute, brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Businessweek's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands-on experience. Matters more to recruiters than advanced degrees, with the company looking for people with raw innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting and hiring practices.

• 16:57Speaker 01

  But according to recruiters, advisors, and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company. And Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates quote, "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute, brought to you by ChatGPT. Get started at ChatGPT.com.

• 17:36Joe Weisenthal?

  So, one of the arguments is that a lot of NIH funding goes to a handful of extremely well-endowed universities. It's skewed. That also, and it's something you hear a lot, including from people academia, that there is a tremendous amount of bureaucratic bloat that exists. And I think, setting aside the science, it does not surprise me that the current administration wants to take aim at bureaucratic bloat within America's universities, et cetera. Why shouldn't we be skeptical of the degree of costs that these labs have borne?

• 18:13Speaker 04

  I mean, I think you shouldn't be skeptical because these are negotiated between Health and Human Services and the universities through a very thorough process, where they sit down and really have to lay out what the costs are and show proof that that's what the costs are. So this isn't somebody picking the number out of the air. This has been the result of negotiations to really figure out what the costs are. And you know, most universities would tell you that even the negotiated indirect cost rates don't cover all of the costs of research.

• 18:44Tracy Alloway?

  This is a very wide ranging question, but going back to Joe's point about the administrative burden, could you maybe walk us through the process of getting an NIH grant? Like, how does it actually work? How long does it take? How many steps do you have to go through?

• 19:00Speaker 04

  Yeah, so NIH runs three funding cycles a year. Each of them take more than half a year to complete, almost three quarters of a year. So basically, there will be one date where grants are submitted, another date where grants are reviewed by a panel of experts from around the country, usually a panel of 25 to 30 scientists with subject matter expertise in the area of the grants. And those are called study sections. And then finally, they'll be reviewed by an advisory council that will basically OK grants for funding. So here's an example. I have a really talented postdoctoral fellow working in my, my research group who applied for a career transition award back in the summer.

• 19:43Speaker 04

  His grant was reviewed in October by a study section. It got a phenomenal score that should have been funded. His council was supposed to meet at the beginning of this month in February, but because no study sections or councils have been allowed to meet, his grant can't be approved for funding. So there are three of those cycles a year. And right now, I mean, I'm not sure that if your listeners are aware of this, but besides the kinds of things that we're talking about with indirect costs and direct costs, HHS has blocked NIH from posting in the federal register. And why that matters is in order to hold one of these study sections, these grant review sections, or hold one of these advisory councils, they have to be posted in the federal register

• 20:28Speaker 04

  at least 15 days ahead by law. So when a judge put a restraining order on the freeze to grants, HHS got around this bureaucratically by just simply not letting NIH submit those notices. So the whole system has been ground to a halt. Grants that were reviewed, like my postdocs last fall, can't get approved at council. Grants that should have been reviewed this month can't be reviewed, and who knows? Whether their councils will meet coming in May when they should. So right now labs are really in sort of an existential crisis. I mean, so again, going back to this small business model. Labs are businesses that run on very tight margins.

• 21:10Speaker 04

  And so if I'm going to be running my laboratory on one of these NIH grants, which let's say is four years long. In year three, I would be applying for a renewal of that grant to continue that research. And remember, research that the NIH has already invested in. If that grant can't get reviewed or funded, then I'm turning around to the people in my lab and saying, I don't want to have to do this, but I'm going to have to let you go. So not only is that a real cost in terms of jobs for people who are, again, experts in what they're doing, but you're damaging research that you've already invested in. It, the whole thing is kind of senseless. That's certainly not government efficiency.

• 21:50Joe Weisenthal?

  Can you talk more about what's being frozen right now? So you've just described the stopping of the review process. So theoretically, if this freeze is in place by the time you need your next transfer of funding, and it can't happen, then you could have layoffs. What's happening operationally in labs that you know of right now as a result of the overall freeze? Are there specific trials or tests? Or I guess experiments is what a layperson might call them that had been going on in January that aren't happening right now?

• 22:21Speaker 04

  So I think there are some clinical trials out of NIH that have been affected directly. For most of us, it's damaging things, but we could still pull back from it being absolutely disastrous if things get turned around very, very soon. But otherwise, the layoffs are going to include people who take care of research animals. It's going to include the people that make sure that hazardous waste is disposed of safely. And right now, it really depends on each university. A lot of universities have begun to either rescind offers for graduate students for the coming fall, or basically decide not to have the next class of graduate students or cut it down by 20.

• 23:04Speaker 04

  To fifty percent. And I think this is something it's important to bring up. So NIH research really does three things, right? It funds the science that we've been talking about. So making drugs like Ozempic or pediatric cancer research. It funds money in the economy, as I mentioned, so hundreds of thousands of jobs, ninety-three billion dollars a year in economic activity. But the other thing it does is to train the next generation of research scientists. And I can tell you that the trainees right now, graduate students and postdoctoral fellows, are completely scared and demoralized and wondering whether there is a future for them in science. And if we lose the next generation of scientific researchers,

• 23:48Speaker 04

  it's not just going to affect academic research. We train the workforce for the pharmaceutical industry and the biotech industry. This is going to decimate US scientific biomedical research broadly.

• 24:02Tracy Alloway?

  So just on that note, one thing you hear from the Trump administration continuously is this idea that we need to compete with China. And it's certainly true when it comes to electronics technology like semiconductors. And they say also in the realm of scientific funding. Can you maybe talk a little bit about how the Chinese research model stacks up against the US research model? And I guess how much competition there is currently between the two countries for that younger generation of talent?

• 24:32Speaker 04

  Yeah, no, absolutely. As I'm sure you're probably aware, federal investment in science, like at NIH and the National Science Foundation after World War II, was what drove the US's enormous growth in the 50s and 60s and really boosted America to the forefront of the world in technology development and science. And we barely keep pace. I mean, to say that we spend too much money on science is so far from being true that it's crazy. On the other hand, China recognizes what these investments do. And they have been upping and upping the kinds of investments that they make in biotechnology and other technology. Because that is what's going to drive the economic growth of the future.

• 25:17Speaker 04

  The investments that the US has made in science to date have driven the formation of entire industries. Not just innovations in medicine, but also in engineering and technology. We are going to lose that leadership.

• 25:33Joe Weisenthal?

  You've given these examples of talented post-docs being unsure if they're going to get their funding, or the prospect that the next generation of talent who will go into private sector labs is going to be devastated because their education trajectory is off. One of the arguments for NIH reform is that a lot of NIH grants actually go to established professionals, that there is this hierarchy, that it's very hard or very rare to get grants for people under 40. Setting aside the Trump Elon reforms, do you believe that there are flaws within the existing NIH regime causing money to not go into the most promising areas?

• 26:14Speaker 04

  So, I would take issue with what's going on being termed that, but the problem is that there's not enough money in the system. And so, those grant cycles that I just mentioned, right? So, one of the study sections is going to be evaluating many, many dozens of grants in each cycle. And then there are many study sections that are evaluating different areas of science. At current funding levels, less than 10% of those grants are going to be able to be funded. Where is the line that I could draw where I could clearly say that these ones are absolutely should be funded, and these ones maybe need more work or more

• 26:57Speaker 04

  thought? That line is more around the 25% to 30%. So, we are really underfunding research. And you're right, when you are underfunding research, there is going to be, if you will, a competitive advantage to established researchers versus junior researchers. But the NIH recognizes that. And so, they have put in place a number of different mechanisms to try to alleviate that. So, there are score boosts for early career investigators that help more of them get funded. There are special granting programs that are aimed at those early career investigators. So, I mean, one of the things about NIH is that it's really conscientious about trying

• 27:39Speaker 04

  to course correct. They are constantly looking at what they're doing and what the outcomes are. And then- Consulting with the broader scientific community about where they could find deficiencies or how they could solve particular problems. It's not like all of this is going on in a vacuum and nobody's paying attention.

• 27:59Joe Weisenthal?

  That makes a lot of sense to me. I'm just looking at stats. The median age for researcher designated an NIH award for the first time had increased since 1995 and is now, according to something that was reported in 2021, over 40 years old. Like government process, corporate processes, whatever, there's always, as you say, there's course correcting, there's awareness of the issues. But awareness is not the same thing. It's addressing them. And I'm just trying to press on whether there are reasons to be skeptical about the efficacy of the existing system or the ability of the existing system to course correct. Or is this not a number that we should care about at all? Does that not mean anything that the average age of a first time awardee has gone up?

• 28:44Joe Weisenthal?

  Maybe that's not necessarily a bad thing.

• 28:46Speaker 04

  Yeah, so, you know, one thing you can say about almost anything this large is it's the best flawed system that we have.

• 28:52Joe Weisenthal?

  Okay.

• 28:52Speaker 04

  The US Scientific Research Enterprise is the envy of the entire world, hands down. The reason for the increase in age has nothing really to do with the NIH itself. And so that's more on science and scientists to some extent.

• 29:08Joe Weisenthal?

  Okay.

• 29:08Speaker 04

  The time to degree for graduate students has been creeping up, how long it takes them to earn their PhD, and also the time that faculty spend as postdoctoral fellows. And, you know, when I was first starting out as a graduate student in the 90s, there were people who were hired into faculty positions that never did postdoctoral fellows. Then that became almost non-existent. And now there are some programs like the Whitehead Fellows, where you have mentored postdoc positions, where there are independent faculty member-like people, but with a little bit more safety net than a typical assistant professor would have. And so, you know, I'm going to swing back to those people that get fired from their laboratories at the NIH two weeks ago.

• 29:51Speaker 04

  So each one of those people will have spent more than 10 years training for their jobs. Only more than 12 years training, but between graduate school and their postdoctoral fellowship. Each one of those people was almost certainly supported by NIH funding through those dozen years, whether it be independent fellowships to them personally or funding from their PIs research grants. So these are people who the US has already made an enormous investment in. And they were successful at getting research laboratory positions at one of the top places in the world, the NIH.

• 30:33Speaker 04

  So these are the best of the best, and we just fired them by email on a Saturday night. That's a waste of all that money that was spent training those people and the research they were doing.

• 31:00Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Business Week's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting and hiring practices.

• 31:44Speaker 01

  But according to recruiters, advisors, and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company, and Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates, quote, "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at ChatGPT.com.

• 32:23Tracy Alloway?

  You mentioned slim profit margins earlier, and I think this is one of the things that a lot of people struggle with when they talk about public funding for research at elite universities in particular, because you see numbers like, you know, the Harvard endowment has more than $50 billion, and there are other universities out there with even more. And I guess the question is, why can't universities that are charging incredibly high tuition, that run these massive investment accounts, and that also get donations, why can't they fund everything themselves?

• 32:57Speaker 04

  Okay, so first, I just want to make a correction that it's not profit margins. There's no profit here. It's operating margins, right? It's the ability to keep your laboratory afloat. So that said, endowments are not this sort of bucket of free funds. Endowments are a collective of money that has been donated by specific donors and earmarked for particular things. And so there are legal requirements that you spend that money on what the donor asked for it to be spent on. There are a few places, Johns Hopkins is a great example. Bloomberg himself has made investments there that can be spent directly on science. That's making a huge difference there. But in general, at most

• 33:41Speaker 04

  universities, people who are funding endowments are funding the sports stadium, unfortunately. They're funding financial aid, which is great. My own university has made enormous strides in having an increase in Pell Grant eligible students, which is super important. But for the most part, they're not general funds that can be used to support anything you want to.

• 34:04Joe Weisenthal?

  Let's get back to operational realities. So some of your research recently, I'm reading an article at northwestern.edu about lamprey eels. And obviously, as you mentioned, with the example of Ozempic and the gila monster, you know, what seems like sort of pure lab experimentation in biology has the potential to turn into incredible profit source. But even setting aside that question, okay, let's say you have some new ideas. There's something new you want to explore about the biology of eel and eel cells, et cetera. How do you come up with the price? You're applying for a grant, you want to build on some research that you do.

• 34:46Joe Weisenthal?

  Talk to us just about that process of you think you need or you feel you need X money, et cetera. What do you do? How do you, blank sheet of paper, you want to do a new experiment and you want NIH money? What does that process look like of coming up with that number?

• 35:02Speaker 04

  Okay, so there's coming up with the ideas and coming up with the grant numbers and budget itself. The ideas usually stem from research that you've been doing and are informed by research that other people are doing. It's usually you will get into conversations with other researchers to refine those ideas to really make them to the point where they're shovel ready for actually doing experiments. So you can apply for grant funding for them. So the NIH has two kinds of granting mechanisms going back since the early 2000s. One is, which has been the main way that people get funding is called modular grants. And those grants are really a set amount of money.

• 35:44Speaker 04

  So there's, there's no sort of negotiating for what their actual costs are. It's just that this is the amount of money. And that amount of money has not changed in the last 25 years. And so while costs for personnel and costs for reagents and everything else has gone up a lot. That amount of grant money has not gone up.

• 36:06Joe Weisenthal?

  What is, are we talking one million? Like what is a, what is a modular?

• 36:10Speaker 04

  We're talking about $250,000 a year.

• 36:12Joe Weisenthal?

  Okay, okay.

• 36:12Speaker 04

  Okay, so this is not, this is not a lot of money, right? So if you want more money than that, and more and more people are having to do this because $250,000 is not enough to support a research laboratory anymore. Then you have to submit a non-modular budget where you basically have to estimate in excruciating detail how many personnel it needs and how much that will cost. What are the actual animal costs? What are the, let's say, sea Sequencing costs for next generation sequencing, genome sequencing. What are the reagent costs, et cetera? Do you need any specialized pieces of equipment? Attach a quote for me for that to show me exactly how much that piece of equipment will cost. So this is non-trivial.

• 36:57Speaker 04

  You might argue if you're looking for inefficiencies in the system, that making people go into that much detail and then needing people at the NIH to go into a forensic dive onto each of those things is maybe not the most efficient way of doing it, but it's the only way of doing it right now. So it's not that you're sort of pulling some number out of thin air and saying, hey dude, this is how much money I do need to do my research. It's going to get scrutinized at the university level. We actually have to submit even more detailed budgets than will actually go into the NIH because they want to make sure that we are in compliance so that we don't ever get in trouble with the NIH. So I get asked for things internally that are even beyond what NIH is going to ask for.

• 37:38Speaker 04

  And then NIH will get those budgets and that will get scrutinized before anything gets paid out. And it gets scrutinized in two ways. It gets scrutinized during the grant review process where the reviewers are asked to weigh in on the budget and whether it's appropriate for the research that is proposed. It will be scrutinized by the council, who will do the same thing. And who are increasingly, particularly at the National Institutes of General Medical Sciences, are capping the total amount of money that any one investigator can have. And it will get again scrutinized at the program officer level before those grants are paid out.

• 38:12Tracy Alloway?

  I find this so interesting. How do you actually come up with the estimate for some of the costs? And how does the NIH actually go about evaluating whether or not it's reasonable? Because I think about with scientific research, often you're doing something very novel. So going back to the Gila monster example. I mean, how do you know the cost, the reasonable cost of housing, like two dozen Gila monsters for a few years while you experiment on them?

• 38:40Speaker 04

  You have to do due diligence and figure it out. And it does, it's time consuming. So a lot of what faculty like me spend their time doing is deep diving into these costs and deep diving into the accompanying paperwork and administrative burden, for lack of a better word, that comes with a lot of these mechanisms. But it is the only way to get the funding to do the research. So some things are easy. We know in any given market what a competitive salary is for a scientist at this level or that level, et cetera. We know, at least at the beginning of the grant, what the costs for the reagents that we know that we're going to need are. But you're right, as you proceed in the grant,

• 39:22Speaker 04

  you may require a kind of technology or kinds of reagents that you didn't initially budget for. And that's when you're scrambling to find additional funds to be able to do that. And that's where some of these foundation grants sometimes come in.

• 39:36Joe Weisenthal?

  I just have one last question. You know, obviously, science is a very broad category, but the thing that excites people from a sort of commercial or return on public spending investment perspective is the connection between science funding often, and it turns into a drug or a new therapy of some sort. You mentioned Ozempic and anti-cancer drugs and so forth. We've never, like, really done an episode on the economics of labs in general, et cetera. And I want to do way more on this because I think it's really important. Can you sort of paint us a general outline of, in America right now, at the source of original discovery,

• 40:18Joe Weisenthal?

  what is the distribution between sort of what happens between the public sector versus a research institution and then private sector labs?

• 40:26Speaker 04

  Yeah, I mean, since the 1950s, this has been an invaluable three-way partnership, right? The government wants to do research, but it knows that it doesn't have the capacity, let's say, to do it all on the NIH's campus. And so it partners with scientific laboratories at universities by providing grant money so that basic research can be done. The pharmaceutical industry or the biotechnology industry, they don't make investments in that kind of foundational research because there's no exact timeline for when you might get a payoff from that, right? So what they do is look to the universities to provide them with that foundational knowledge that then they can make a startup company or take your promising results on what could be a new drug

• 41:11Speaker 04

  and fund the clinical trials that are going to see whether it's effective. And this partnership has been incredibly successful and it is the reason why the US is a leader in this area worldwide.

• 41:23Tracy Alloway?

  Just on this point, is there an argument to be made that maybe universities could monetize some of their research better? Maybe have higher equity stakes or any equity stakes in promising new drugs in exchange for the work they basically do for Big Pharma?

• 41:41Speaker 04

  Oh, you know, I think you could take that argument even more broadly. So why is it that a drug that was developed at Northwestern, and there's a real example for this, but I'll leave the drug and the person out of it, that was then turned into trillions of dollars by a pharmaceutical company? Now, the university did get a cut of that because they had the patent on it. But you know who isn't getting the benefits of it? You. So you are getting charged huge amounts more money for that same drug that was developed using US research funds than someone in Europe is. That, I think, is where the inefficiencies in the system are.

• 42:16Joe Weisenthal?

  There's so much more I want to do on this. Sometimes you read like a story about like some MIT professor and somehow some biotech was born out of his labs and he retires and is a billionaire. And I want to understand more about the economics of that and how that is allocated. But this was a fantastic introduction to the topic of what's going on. So Carol Lebon, thank you so much for coming on Outlets.

• 42:38Speaker 04

  Happy to have talked with you. Thank you very much.

• 42:40Tracy Alloway?

  Thanks, Carol. That was great.

• 42:42Speaker 04

  And I'd be happy to explain Lamfry to you at some point.

• 42:45Tracy Alloway?

  They frighten me. I think

• 42:46Joe Weisenthal?

  Yeah, I didn't like

• 42:47Tracy Alloway?

  Like, I find them very interesting, but I also find them extremely off-putting at the same time.

• 42:52Speaker 04

  I'm convinced that they are the inspiration for the demogorgon.

• 42:55Tracy Alloway?

  Oh, yeah. Yeah, you're right. They look like them. Absolutely.

• 42:59Speaker 04

  But they are like a living fossil. They are the closest thing we have to a living example of what the most primitive vertebrate was. And so if you want to understand where you as a human vertebrate comes from, we can look to evolutionary studies using the lamprey.

• 43:16Joe Weisenthal?

  Can we keep this last little bit in? That was actually really good. Thanks, Carol.

• 43:20Speaker 04

  Yep. Thanks. Bye bye.

• 43:33Joe Weisenthal?

  Tracy, I thought that was a really good introduction to the topic. I will say this, like, I'm sure that someone could walk in here and convince me, or at least make a compelling argument that we need radical overhaul to the NIH way we do drug discovery, or the way we do

• 43:53Tracy Alloway?

  Fiscal shock therapy.

• 43:54Joe Weisenthal?

  Yeah, or just that we really need to totally rethink the way we do science investment in this country. I also think that if the main lever you pull is just less money, and it means that there are going to be people who have worked for 10 years, and then their career is derailed, or various labs get shut down or in a state of limbo, that I'm very skeptical that that alone would turn into better results.

• 44:22Tracy Alloway?

  Yeah. Well, a couple of things here. So number one, I liked your plea for billionaire researchers to get in touch with Odd Lots. So I'll just repeat that. If you are a researcher who has made tons of money off of some invention, then please get in touch with us. But secondly, I thought the point Carol made at the very end of the podcast about how, you know, a lot of these discoveries, a lot of scientific advancement does eventually get monetized, usually by private companies, even though it's funded through public grants. And I think That's, I mean, to her point, like, that is a huge area of inefficiency.

• 44:59Joe Weisenthal?

  It's very easy to look around and find things you don't like about any system. And there's too much paperwork, or there are things that slow it down. And or there is money that is going towards such a nebulous area of science. And you find some random example that has no prospect of commercial application. I'm sure all of that exists to an extent. It also seems objectively true that at least at this moment in 2025, the US has the world's most advanced pharmaceutical and biotech industry. Could it be way better in some sort of like alternate scenario where everything moves faster and more efficiently? It seems plausible.

• 45:44Joe Weisenthal?

  But I think to Carol's point that I really liked is that for the last several decades, the US has really had the leading edge industry of the world and studying the hard sciences. And those sciences have turned into all these sort of commercialized technological breakthroughs. I think people should appreciate what we have currently in this country and understand the interplay between public money, research foundations, and commercial ventures that have put us at the technological frontier.

• 46:14Tracy Alloway?

  No, absolutely. And the one other thing I would add on is I really like the Gila monster Ozempic example, because this is something else that you see happen quite a lot when people talk about research studies. So I think Elon Musk has talked about like, oh, all these crazy scientific projects, like having shrimp run on treadmills and things like that. But some of them actually lead to monetizable drugs. And I think the shrimp example, they were actually stress testing marine animals or crustaceans' ability to withstand environmental stresses. So even if the projects sound very niche, like with lampreys or Gila monsters, they can have interesting and potentially profitable consequences.

• 46:59Joe Weisenthal?

  I'm never compelled, you know, people love to point out areas of like, look at this. They spent $1 million to hold a relay race among shrimp, you know, or something like that. And I'm never compelled by it. I believe that there exists government waste. There probably is even a lot of it. I find those to be like the least compelling examples that people love to say. Uh, maybe it's, uh, but I, but I do think we need to spend more on shrimp doing relay races.

• 47:28Tracy Alloway?

  You know, it's funny, whenever I hear Gila monster. So my dad, one of his best friends is called Gila. And her husband is Dusty. And I always think that's like the most Texan duo ever, Gila and Dusty.

• 47:43Joe Weisenthal?

  Oh, that is, you know, whatever I always think about Gila. Although I see it's actually, I was gonna say, Gila is one of the few words that was imported into the US language from Southeast Asia. But actually, in this case, it is not, it has a totally different etymology. It has something to do with the Southwest. So I thought I knew something, but I don't.

• 48:02Tracy Alloway?

  Okay.

• 48:03Joe Weisenthal?

  There are many such cases.

• 48:04Tracy Alloway?

  Shall we leave it there?

• 48:05Joe Weisenthal?

  Let's leave it there.

• 48:06Tracy Alloway?

  This has been another episode of the Odd Lots Podcast. I'm Tracy Alocke. You can follow me at Tracy Alocke.

• 48:12Joe Weisenthal?

  And I'm Jill Weisenthal. You can follow me at the stalwart. Follow our guest, Carol Le Bon. She's at Le Bon Lab. Follow our producers, Carmen Rodriguez at Carmen Armin, Dashell Bennett at Dashbot, and Kale Brooks at Kale Brooks. For more Odd Lots content, go to Bloomberg.com/oddlots. We have a blog and a daily newsletter that you can subscribe to. And if you want to chat about all of these topics 24/7, including hard sciences and pharma, go to our Discord, discord.gg/oddlots.

• 48:40Tracy Alloway?

  And if you enjoy Odd Lots, if you like it when we talk about scientific research funding and the etymology of the word Gila, then please leave us a positive review on your favorite podcast platform. And remember, if you are a Bloomberg subscriber, you can listen to all of our episodes absolutely ad free. All you need to do is find the Bloomberg channel on Apple Podcasts and follow the instructions there. Thanks for listening.

• 49:37Speaker 07

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