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1IIA1Z V'A1LIJ'' ML.l)IiGAL SCll 1UU'L DEPARTMENT OP' MlDICIN! ~1ilJ , 11 ETll-1 1SR'AI?L I I(aSIaITAL. Muir;n,;', Aildresx: DIVISION OPRHfPIRATORY DISEASES BETH ISRAEL,HOSPITAL OARY'L. HUSER, M.D., CNItP' 330 BROIDI4LIN6 AVENUL. YOSTON+ MASSACHUSETTS 01218, (617)'. 736'-2391 October 27, 1978 Mr. Henry C. Meadow Harvard Medical'' School 25 Shattuck Street Boston, Massachusetts 02215 Dear Dean Meadow, I am-attaching a series of schedules that reflect our budgetary projections for the Smoking and Health Research Program, as well as summaries of our other research support. We have prepared these schedUles and projections as a basis for our developing together a more definitive proposal to present to our tobacco industry gxantors for their progxam at Harvard University. In that context, they are submitted to you not as final projections but rather as a first step on which to go forward. Indev'elopi~ng our projections, we havetried' to follow the guidelines, . that were suggested to us by the tobacco industry representatives that met with us last wi!nter. From our various discussions with you, I apprec,i'atee that what we have projected may not be in the format or the position that you would like to present to the industry. I thought it would be hel'pful, however, to follow their suggestions in developing,this initial presentation to'you. Thus, the guidelines and assumptions on which we have based these projections include the following: 1)', Funds fr=the tobacco industry grantors would be extended for five years (1978-1983) at the current rate of support, with a yearly increase for infllation. Using the current three years of support provided through the Extension Agreement, the amount projected for a newifive-year award would be $4,090,079 for total costs, including the current overhead allowed'to the University. 2) It was suggested that inclusion of any funds for renovation of facilities be amorti~zed at 8% over ten years, as an'initial basis for developing negotiations. We have used the figure of $784,000 for our share of the laboratory facilities at the Mount Auburn Hospital' and the animal inhalation quarters at Charlesgate West,, as provided us by Ms. Sophie Koch-Weser.. 3'), The calcula'tion of'the tobacco industry share of the monies needed for facilities development, as well as for the net/net profit to Trans National for the Charlesgate facility (which we have expressedd as the Charlesgate mortgage)~„ iis based'on industry-related'animal utilizationi, floor space utilizationi, and technical/administrative staff'employment in these facil'ities. The industry share currently would be represented by,, to our best estimate, approximately 65% of our total effort, if the Charllesgate facility were fully operational.

Mr. Henry C. Mc.ndow October 27, 1978 RPage 2 4) Fiir.vl ly, we have assumed that we wi 11 be ahlc to maintain the current level of Nllii or non-industry support('35p,of total effort). Actually, if all of'the grants now awarded to us or approved could bee implemented, the non-industry share would be muchicloser to 50' a' of the total costs of'our program. If we go forward, we wiSl apply for as much non-industry support as possible. We have not done so n w, of' course,, because of the uncertainties of'our future and our priority requirement to focus on a resolution of'the industry-sponsored program. The budget projections that we have d'eveliope&ai1so include additional considerations. We have trimmed our professional personnel and technical staff somewhat to preserve the very best parts of our program, in the hope of providing for the University (within the guidelines given to us by the industry) the maximum amount of funding available for additional consider- ations. In reducing professional personnel, we have followed the sugges- tions provided us by the ad hoc Advisory Committee to our research program at Harvard., ffinal~lly,in developing,these projections,, we have taken the industry's suggestion that we prepare budgets for aifive-year period, - assuming,that the grant would~not be renewed and'that there would be a phase-out period during the last six months of support. This is not to say that the industry desires to restrict their support to us to the next five years only, but rather that that would be the extent of their current commitment. Indeed, by amortizing the renovation costs over ten years, it was their expression that the research grant could'potentiallly continue over that same period of'time'. By restricting,their expected current commitment to us to an initial five years rather than ten„ however, they are in effect asking for a'''shared responsibility"' or "risk" by the Univer- sity to develop both facilities and mechanisms that would assure program stability. In projecting our budget estimates in this manner„ additional monies would have to be identified in any further industry renewal, to recover the deficit projected for the final six-month phase out period of 1982-83, if the industry support were to go beyond five years. All budget projections contain a modest contingency factor, to give us a matgin of'safEty beyond'our identified operating and personneli costs. A yearly inflation allowance has also been included. The schedulles that we have prepared are as follows: Schedule A: Schedule A is a summary of the budgetary projections for the Smoking and Health Research Program, for industry funds only, for the next five years. The costs of'renovation are amortized at 8% over 10 years, and both the costs of renovation and the Charlesgate mortgage are presented'.as 65% of'the total costs for these entries, reflecting the tobacco industry share of these expenditures. This schedule also includes an entry for approximately $270,00'0' for equipment,, reflecting our best estimate of what will be needed to make our laboratory independent in a new location where research resources are not now readily available. The largest share of this equipment expenditure is for an electron microscope and related supporting functions. We have included in thi~s projection a yearly balance and'a cumulative balance, with overexpenditures relative to the industry proj'ecti:ons for direct costs bracketed' by parentheses. The projection for the current budget extenrledlat the current rate of increase

h'1l'. IUenry 1:~~. (ylc~;~klrn~ ' Oc:tober 27'„ 1978 I' age 3 w;rs clon0w i't lu.nut spc?Ci f i c-:t II I'y ildc•t.t t, i' C'yi nJt a IOit i vors ilty ovc nccad a 1 Low:tnee„ which is presently available at an additional l'(p", beyond' direct costs fo~t~~ research' for the industry. Therc is a nct positive cumulative balance of $551',789, iru our projections, liowc:.vcr, wlrich represents the difference between those direct costs we fieel will be needed to preserve our program at an acceptable level for i'inclustry suPhort atiul the: amocunt that they have projected! as potentially available to us as an extension of the current budget. Schedule B: Our revi~sed salary schedule for professional personnel for the curreirt academic year a-re presented in Schedule B, assuming, that the recently awarded nicotine titration contract from the National Cancer Institute can be implemcntca'by January 1, 1979. On the average, approximately 60% of'our current professional salary commitments are paid for by tobacco industry funds, either as direct research costs or as an allocation tolthe. Cardiopulmonary Clinical Teachin; and Training,flind'. Two add'itional, grants are potentially„avail'ablie to us from non-industry sources (identified in Schedule I)', but have not been included in these projections bccause they cannot,, as yet, be impliemented'. In addition, there now remains approximately $3!5, 0001iniuncommited funds inivariousaceounts of' ours from past years,„ which does not show up in any of the budget projections. This wila' in part be negatedi by the unscheduled $15,000 we have paid to Trans National, and! some of the outstanding renovation expenses for Charlcsgate West. Scheciule C: Our professional salary projections for the next fi've. years are presented in Schedule C, allocating approximately 65a of'our professional costs to tobacco industry funding, and' a5 o to \tIII or non- industry support. At this timc,, however, none of our grants extend beyond 1980. We have been assured that our NCI contract for the study of' experi- mentaT atherogenesis in pigeons can be extended bcyond!19S0, and we have been asked1by them to prepare protocols and budget projections for a two- year, extension. Similar discussions have accLJrrecl with NIDA for our marijuana-related research, ancl'with NCI for our nicotine titration studv if'it can be implemented. Thus, should our pro„ram go forward, I am!contident we can maintain (or more likely improve) this level of' non-industry support for our professional personnel. Should we not be able to do so, we wouldl have to revise the scope of our program to fit the level of'tobacco industry support. This seems unlikely to me, however, in spite of potential reductionss in NIIIi fund'inSasthe need totil;htenthenational, economy continues. There are very few laboratories that can study agents that are appearing in our environment at an ever incrcasingrate, and both the necd, and support to test the biol,ol;,ic cl-fects oll ' thcye agents on the host ;tre rapidly expandli.ng,. Scl6eelulc C af;su incLtides i.ciTuti'r.taCion ol` sulrlnut•t tiot' somC inaividuals before tlic: end of' a I~ot.ciiLlal t1'ive-y!cirr :tw:trcl. 'I'licse rccJuctlons in pctr;;unnci follow the recommendations of our ad hoc Advisory Committee. Scharliulc I): This sc-hed'itlc reflects the salaty I)rojcctions for our ~ C+J technical and administrative staf, ', as these persunncl are tiuw charbcd' to ~ our tobacco industry funds. la'~c have used the current fringe benefit rate, C11 with an increase at 0.31% encEV year. The percentase of'cach person's time ~' now, spent on industry relntc:cl' activitics, as well as thci'r salary allocat3on,,;b is 1 istedl next to cach pos.i t ion. The fraction o f ttu f i nal year that 4 individ'uals would' be availablc iff a phase out wcrc implemcnted' in 1982-1983 is included for tHat year, with thc salaxies adjusted,accordingly.

Mr% Iieaia'y C~~., Mt'e~~,ido~~w ' O4tcoher 27, 1978 PPage 4 Schc(lul'c Is: The operating expenses for each of our admiiniistrative sections are presented in Schedule E. For the research units,, these operating,expenses include supplies, travel, medi!cal illustrations and alll o'ther expenses not involving conunitments to personnel. For the Charlesgate animali inhalation facility, the operating expenditures also include utilli.ties,, services, maintenance and supplies, including the cost of anima!ls. These projections were developed as an extension of our 19'77-78 and 1978'-79 expenditures in these areas. Additional, outstanding current commitments include anieqiuipment all'ocatiion ($25„000) for a smoking, machine, unpaid rent for Charlesgate West ($24,000), andias yet unpaid renovation and reliated'costs. Schedule F, Schedule G'iand Schedule H: These schedules are comparablee to Schedule B, Schedule D and Schedule E, and reflect the currently awardedl non-tobaccolindustry funding "availlable in these areas. We have included only the academbc years 1978-79 and 1979L80, in that our;awards presently available run in part or in total only through that time. If our current grants were to be extend'ediand renewed, we wouldianticipate a proportionately higher level of non-industry support in some of'these areas for the years 1980-1983., ScheduleI: We havesummarizedi iniSche~duleI our research,fundingby grants currently available, as well as by those grants pend'ing. With the exception of the NCI-sponsored Inhaliation Bioassay of Cigarette Smoke in Pigeons, all of our awards are administered through Harvard Medical School.. The NCI has indicated to us, in the context of'better coordinating our program administration, their'willingness (actually their desire) to transfer. the pigeon bioassay contract from the Beth I'sraeli Hospital to Harvard Medicali School. This would certainly facilitate adjustment of indirect costs and overhead expenditures amongst the various aspects of our program, including appropriate allocations for the off-campus facility at Charlesgate. West. We have i'ncludedithe NCI-sponsoxed Nicotine Titration contract, both in terms of the current award that is available to us for 1'97g-79'andithe additonal funding that they already have indi!catedl will be avail'ablie to us for 1979-80. I would anticipate that this program will continue, and will grow considerably in scope if we are successful in the first year or so of our effort. We have two additional grants that we have listed as pending. The first of'these is a contract, to be awarded through the American Petroleum Institute, to evaluate the carcinogenic potential of certain petroleumm products. Our proposal was the most cost-effective;-of those submitted'„ but we can not implement it until our animal facilii~ti~es are renovated. The second pending proposal is a grant, already approved, to study lung macro- phages, lung injury and tobaccoismoke through support from the Nationali Institute of Environmental Sciences. This program will require the capacity for our handling a large number of rodents, which we could not do at this time, unless the Charlgesgate West facility were to be renovated',, along the plans proposed by Ms. hoch-lVeser. 0, ~. We will be available to discuss these projections and devellop with you ~' any changes you want to suggest. I hope these schedules will be helpful to O our initial efforts., Sincerely, 00 GLPl:mtc Gary L. Huber, M'. Di. Chief' Enclosures Respiratory Diseases lJfiilt ~~.

SCHEDULE A Sll'+QMARY SMOKING F, HEALTH RESEARCH PROGRAM PROJECTED FIVE-YEAR BUDGET (Tobacco Funds Only) 197 + 8-79 1979-80 1980-81 1981-82 1982-83 Five-year Total - Costs of renovation ($-51,000 anorti7ed - at 3%, 10 %-ears*=) $75, 945 $75, 945 $75, 945 $75,945 $75,945 $379,725 Chsrles7ate >iortga;e= 23,400 23,400 23,400 23,400 23,400 117,000 Direct Costs Personnel 363,391 400,779 404,915 419,976 362,132 1,951,193 Operating costs 150,344 160,877 170,799 181,368 139,299 802 687 Subtotal 513,735 561,656 575,714 601-,34-4 501,431 , 2,753,880 Equipment 269,685 8,000 6,000 4,000 --- 287,685 Total 882,765 669,001 681,059 704,689 600,776 338,290 Current bud~et extended at current rate of increase 708,565 761,342 815,326 872,317 932,529 4,090,079 Balance (174,200) 92,341 134,267 167,628 331,753 551,789+ Cumulative Balance ($174,200) ($81,859) $52,408+ $220,036+ $551,789+ *Based on end-of-year annual payments. =Based on 6~o payable by Tobacco Award O Amount overextended beyond budget projection GtFLQS44P..Q

el~N ~ ^ SCHEDULE_ 6_ PROFESSIONAL SALARY SCHEDULE ------------- REVISED SALARY SCHEDULE (7/1/78 - 6/30/79) Professional Staff Only Salary 7/1/78- 6/30/79 Pigeon , Contract Tobacco Clinical Award Training Marijuana Grant Nicotine Titration* Davies, P ' $29, 700 $7, 425 (25 a) $19, 305 (65%) --- '$2,970(100) --- Drath, D. 29,700 7,425(25%) 20,790(70%) --- 1,485(50) --- HaYashi,@t. 28,600 5, 720 (20%) 20, 020 (70%) --- 2,860(10%) --- Huber, G. 41,500 14,525(35%) 13,750(33%) 6,225(15%) 7,000(17%) Rubin, A. 20,000 --- 7,000(35%) 9, 500 (48%) --- 3, 500 (17 0) Sakuri, T. 14,200 --- 3, 550 (25%) 10,650(75%) --- --- Sornberger, G. 29,700 8,910(30%) 12,711(43%) ---. 2,079(7%) 6,000(20%) - ----------- ------------------------------------------ ------------ ---- - - - Ellenbogen M 000 4 --- , . , -- --- --- 4,000(10%) --------------------------------------------------------------------------------------------- First, M. 2,000 --- 2,000 Grubner, P. 26,200 6,700(26%) 19,500(74%) Hinds, W. 14,400 3, 540 (25%) 10, 860 (75%) Subtotal $240,000 $54,245 $115,736 $33,900 $15,619 $20,500 Fringe (19.2%) 46,080 10,415 22,221 6,509 . 2,999 3,936 TOTAL $286,080 $64,660 $137,957 $40,409 $18,618 $24,436 0SZ4OS44C0 *Awarded by NCI at present, not implemented

~ SCHEDULE C PROFESSIONAL SALARY SCHEDULE PROJECTED FIVE-YEAR BUDGET 1978-79 Tobacco NIH 1979-80 Tobacco 1980-81 NIH Tobacco NIH 1981-82 Tobacco NIH - 1982-83 Tobacco NIH 2avies, P. $19,305 $10,395 $20,930 $11 ,270 $22,555 $12,145 $24,180 $13,020 $25,805 $13,895 Drata, D.. 20,790 8,910 20,930 11 ,270 22,555 12,145 24,180 13,020 25,805 13,895 1ay2_hi, M. 20,020 8,580 10,010 4 ,290 --- --- --- ;luber, G. 13,750 27,750 22,000 22 ,000 23,250 23,250 24,500 24,500 25,750 25,750 ?ubin, A. 16,500 3,500 3,500 - -- --- ---. --- --- --- --- Sakurai, T. 14,200 --- (15,400)# - -- (16,500)# --- (17,900)# --- (19,000)# --- 5ornbzr;er, G. 12,711 1,6,989 20,930 11 ,270 22,555 12,145 24,180 13,020 25,805 13,895 ---------------------------------------------------------------------------------------------------- --------------------- =11en'.,:~;en, 1. --- 4,000 2,600 1,400 2,600 1,400 2,600 1,400 2,600 1,400 ---------------------------------------------------------------------------------------------------- --------------------- --- :irs:, `•:. 2,000 --- 2,000 --- 2,000 --- 2,000 --- 2,000 --- -rubner, 0. 19,500 6,700 8,900 6,000 aincs, 10,860 3,540 10,110 5,440 10,920 5,880 ---------------------------------------------------------------------------------------------------- --------------------- :.ubtetal $149,636 $90,364 $137,310 $72,940 $122,935 $66,965 $119,540 $64,960 $126,765 $68,835 Frince(19.2`-e)* 28,730 17,350 26,775 14,223 24,340 13,259 23,819 13,057 22,730 14,042 TOTAL $178,366 $107,714 $164,085 $87,165 $147,275 $80,224 $143,359 $78,017 $149,495 $82,877 TS4QS4co 10.5, ~ increase per year- -- - =O Indicates optional salary not now commited NIH -\ational Institutes of Health or other non-tobacco indus'try support

I r" SCHEDULE D Administration. adninistrator (75%) Admin. Assistant (7S$) Secretary II (100%) Secretary II (50%) 3iostatistics Data Processor (50%) Analytical Chemistry Research Assistant (60%) Research Technician (50%) 3iochemistrY Research Assistant (100%) Research Technician (100%) '4orphology ---Re-search Assistant (100%) Research Technician (100%) Research Technician (100%) Inha_lation Facility Supervisor (65%) Assistant Supervisor (65%) -- - ?la. hine Operator (200%) Animal Handlers (400%) tlousekeeping (50%) 5ubtotal y Fringe 16.-'°e c 0.3", inc./yr. TOTAL O __ $ tobacco industry effort Zs4o94eo ^ TECtINICAL/ADNINISTRATIVE SALARY SCHEDULE PROJECTED FIVE-YEAR BUDGET (Tobacco Funds Only) 1978-79 1979-80 1980-81 1981-82 1982-83 $ --- $18,750 $20,250 $21,870 $23,620 11,580 12,391 13,258 14,186 15,179 10,300 11,021 11,792 12,617 13,500 4,250 4,548 4,866 5,207 11,142 7,000 7,490 8,014 8,575 9,175 9,000 9,630 10,304 11,025 5,898(1/2) 6,000 6,420 6,869 7,350 7,765 12,500 13,375 - 14,311 15,313 8,193(1/2) 10,500 11,235 12,021 12,862 6,881(1/2) 12,500 13,375 14,311 15,313 16,385 5,250(1/2) 11,235 12,021 12,862 6,881(1/2) --- 8,426(3/4) 12,021 12,862 6,881(1/2) 10,725 11,476 12,279 13,138 10,543(3/4) 8,125 8,694 9,303 9,954 5,326(1/2) 18,000 19,260 20,608 22,051 11,797(1/2) 30,000 32,100 34,347 36,751 19,662(1/2) 3,500 3,745 4,007 4,287 2,294(1/2) $159,230 $203,171 $220,582 $236,223 $181,122 $1,000,328 25,795 33,523 37,058 40,394 51,515 168,285 $185,025 $236,694 $257,640 $276,617 $212,637 $1,168,613 I

SCHEDULE € OPERATING EXPENSES PROJECTED FIVE-YEAR BUDGET (Tobacco Funds Only) 1978-79 1979-80 1980-81 1981-82 1982-83 Five-year Total ?ro;raI1 ac_-ini_tration (1) $47,.436 $50,990 $53,869 $56,921 $60,695 $269,911 3iqstatistics(3) 9,812 10,322 10,726 11,160 ~ 11,696 53,716 .ync:ytic Chemistry (2) 8,569 9,254 9,902 10,496 5,248 43,469 ?io-hemistrY (2) 14,226 15,364 16,439 17,563 8,795 72,387 ''orohoioga (2) 12,185 13,160 14,081 15,067 7,534 62,027 Clinical/Physiology (2) 14,300 14,644 14,969 15,317 12,659 71,889 .~:harlesc-ate Inhalation Fa;.ility (3) 43,816 47,143 50,813 54,844 32,672 229,288 TOTAL $150,344 $160,877 $170,799 $181,368 $139,299 $802,687 ;1) Supplies, travel, medical illustrations, services, other Supplies, travel, medical illustrations, other Utilities, services, maintenance, animals, supplies, other •y3ditional Current Commitments Equipment Allocation $25,000 ,:harlesc-ate Rental Allocation 24,400 Alterations, Renovations and Special Contingencies 25,000 $74,400 ES~,OSt~~O

(0"~' SCHEDUL~ F PROFESSIONAL SALARY SCHEDULE PROPOSED SALARY SCHEDULE (7/1/79-6/30/80) (Non-Tobacco Funds) :'rofessional Staff Only S Salary 7/1/79- 6/30/80 Pigeon Contract Marijuana Grant Nicotine Titration* Davies, P. $32, 200 $4, 000 $3, 220 $-,- Drath, D. 32,200 4,000 3,220 Havashi,M. 14 , 300+ 2,860 2,860 --- Huber, G. 44,000 7,700 6,600 3,750 Sornber,-er, G. 32,200 4,830 2,255 3,250 ---------------------------------------------------------------------------------------------------- -------------- Ellenbogen, M. --- --- --- 1,400 ---------------------------------------------------------------------------------------------------- -------------- - --- Grubner, 0. 14,900+ 3,870 --- Hinds, 1i. 15,550 1,940 --- , --- ---------------------------------------------------------------------------------------------------- --------------- Subtotai $185,s'50 $29,200 $16,545 $8,400 Fringe (19.5Q) 36,143 5,695 3,226 1,638 Total $221,493 $34,895 $19,771 $10,038 * Awarded by NCI at present, not implemented + Six months of support only (7/1/79-6/30/80)