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Good morning ... We've got more for you today on how much the National Institutes of Health really spends on overhead costs. And we were all set to ignore the chatter about a budget problem that could force the House to re-vote on the health care bill — but you should probably be semi-prepared, just in case.

Here's how much NIH spends on indirect costs

(Figures for fiscal 2016 are NIH estimates)

Data: NIH; Chart: Andrew Witherspoon / Axios

The Trump administration and congressional Republicans are starting to give more scrutiny to how much the National Institutes of Health spends to cover administration and overhead costs, rather than research expenses. This chart, taken from NIH budget tables, shows how the two kinds of funding compared to each other since fiscal 2005. This is the information Rep. Andy Harris used when he questioned NIH director Francis Collins about it at a Wednesday hearing.

The takeaways:

  • Indirect costs have hovered at roughly 27% of total spending for more than a decade.
  • Direct costs have remained steady at around 72%.
  • For private funders, 10% is more typical for indirect costs, like this example from the Alzheimer's Association Research Fellowship. (Collins says universities can only afford to accept such low overhead funds from private funders because NIH gives them more.)

Because nothing is implausible anymore ...

You're probably going to start hearing more about a scenario in which the House might have to vote on the health care bill again. Why? It's all because the House didn't wait to get a final Congressional Budget Office estimate before they voted on the bill. Because it's being done under budget "reconciliation" rules, it has to save at least $2 billion. The older versions would have saved way more than that — but as Bloomberg's Billy House reported yesterday, it's no longer clear that the bill still does, after all of the last-minute changes.

Threat level: I would have said it's not very high. But then Vox's Dylan Scott posted a story last night that walked through some private groups' estimates of the changes in more detail. His story was more convincing: Yes, there could be a problem, especially if the state waivers from ACA rules encourage more people to buy health insurance. The bill could also spend too much on programs under the jurisdiction of the Senate HELP Committee.

The bottom line: We'll know for sure when CBO releases its final estimates next week. For now, just be aware that it's a possibility. And if it happens — hey, that's why careful lawmakers wait for CBO estimates before they vote.

Senate working group still hasn't decided things

The infamous Senate Republican working group met yet again Thursday, this time to talk about tax credits. It's only been two weeks since the House passed its bill, but as one senior GOP aide put it to Caitlin Owens, "The working group has made lots of progress in sharing their feelings."

They weren't kidding when they said they're starting from scratch and not just rewriting details. Many members have spoken for a long time about beefing up the House tax credits to help lower-income and older people. But when Caitlin asked Sen. Ted Cruz whether the group is even all in agreement about advanceable tax credits — which is what the House bill has — his response was: "That is one of the many aspects of the bill that are the subject of discussion."

Between the lines: The lack of any decisions about very basic structural pieces of the bill highlights the ideological diversity of Senate Republicans. Getting the necessary 50 votes is going to be difficult.

What we're watching: Whether next week's Congressional Budget Office score of the House bill will help the Senate pick up its pace. "We're interested in what CBO has to say about the House bill, but that doesn't keep us from writing our own bill," Sen. Lamar Alexander, chairman of the Health, Education, Labor and Pensions Committee, told reporters.

Republicans to Price on user fees: Sorry, we can't hear you

Giphy

The reauthorization of the Food and Drug Administration's user fees is moving along, but Democrats have been worried that the Trump administration might trip everything up. They've been complaining because Health and Human Services secretary Tom Price has been writing letters trying to get Congress to add one of the administration's ideas at the last minute: making the industry pay the full cost of medical product reviews.

It's easy to see why that wouldn't go over well, especially after the whole balance between federal funding and user fees has been carefully negotiated between Congress, the FDA, and the health care industry. So at the markup of the user fee bill yesterday in the House Energy and Commerce health subcommittee, Rep. Frank Pallone urged Republicans to just say "No."

The bottom line: Turns out he didn't have to worry about it. Committee chairman Greg Walden and health subcommittee chairman Michael Burgess both took the low-key approach: They just ignored the administration proposal. And Walden sent a signal that he's not interested in reopening the bill: "If we do not have the bill to the president's desk in July … desperately needed treatments will not reach patients."

The latest insurer payments bombshell

The Los Angeles Times set health care Twitter on fire yesterday with this anecdote, buried deep within a story about insurers' frustrations about the Trump administration. During a conversation with insurance industry executives, Centers for Medicare and Medicaid Services administrator Seema Verma allegedly offered to pay them for the Affordable Care Act's cost-sharing reduction subsidies — if they'd agree to support the ACA repeal bill.

The shock waves: Liberals called it everything from coercion to extortion. CMS issued a denial: "The statement about Administrator Verma suggesting that the administration would fund CSR's is absolutely false. What she said at the AHIP meeting in April was that no decisions had been made about CSR's," said CMS spokeswoman Jane Norris, who was at the meeting. But we get the sense this isn't the last time Verma, and others who were in the meeting, will be asked about it.

Don't miss the rest of the story: It has some harsh quotes from insurance company executives about the Trump administration's general management of the ACA, like this one: "There is a sense that there are no hands on the wheel and they are just letting the bus careen down the road."

And don't forget the subsidies lawsuit: The Democratic attorneys general of 15 states and the District of Columbia, led by California Attorney General Xavier Becerra, are trying to intervene in the House Republican lawsuit against the insurer payments. Their goal: make sure the insurers actually get paid.

What’s next for Athenahealth? A sale wouldn’t be surprising

Now that Paul Singer's hedge fund, Elliott Associates, is breathing down the neck of health care technology company Athenahealth, CEO Jonathan Bush is in a tough spot, Bob Herman reports. The outspoken leader likely will have to consider selling his company, or he could get pushed out if he decides to ignore pressure from its new activist investor.

History shows that when Elliott gets involved with what it perceives to be "undervalued" tech companies, private-equity firms or other bigger companies scoop up those targets. Some recent examples, all of which were spurred by Elliott, include:

  • Informatica sold for $5.3 billion in 2015.
  • Mentor Graphics was bought out for $4.5 billion in 2016.
  • LifeLock was acquired for $2.3 billion in 2016.
  • Elliott is also pushing Advisory Board Company, which has a big health care consulting division, to be acquired.
Looking ahead: Athenahealth's stock price has been volatile over the past three years and has missed financial expectations several times, and the company said it "looks forward to talking with [Elliott] to hear their views about the company." But don't be surprised if or when this turns into a multi-billion-dollar buyout, with or without Bush's blessing. Read Bob's Q&A with Bush from March for more about the company.

What we're watching today: President Trump and Vice President Mike Pence meet with Office of Management and Budget director Mick Mulvaney, 11 a.m. Eastern.

What we're watching next week: The House files its status update on the ACA subsidies lawsuit with the U.S. Court of Appeals for the District of Columbia, Monday, May 22. Trump releases his full budget for fiscal 2018, Tuesday, May 23. The Congressional Budget Office says it will release the cost estimate for the House-passed version of the American Health Care Act "early in the week of May 22."

Have a great weekend, and don't be shy if you have news or feedback: david@axios.com.

Featured

Congress has paid $17 million in sexual misconduct and discrimination settlements

Congress has paid out more than $17.2 million over the last 20 years to cover 268 settlements on Capitol Hill, according to the Office of Compliance, which was set up in 1995 under the Congressional Accountability Act. In 2002 and 2007 those tallies topped several million dollars.

Data: U.S. Congress Office of Compliance; Chart: Lazaro Gamio / Axios

Why it matters: Lawmakers and aides in Congress have been speaking out about the prevalence of sexual misconduct on Capitol Hill, including allegations that current lawmakers have perpetrated such acts, and this gives documentation, to some extent, of the incidents and settlements.

But it's not 100% inclusive; a spokesperson for Rep. Jackie Speier, who introduced legislation on sexual assault in Congress this week, told CNN 80% of the people who have told their office about sexual misconduct choose not to report to the OOC.

  • The settlements may not necessarily be related to sexual misconduct alone, since the OOC also handles racial, religious, or disability-related discrimination.

One controversial thing: The money comes from taxpayers, not from individual lawmakers' offices. Jenny Beth Martin, the leader of the Tea Party Patriots, claims that because these funds are not pulled from campaigns or offices shows they make up a "shush fund" that has "inadvertently institutionalized a cover-up culture, in which the supreme end-goal is to get the alleged victims to go away quietly." She is calling for more transparency since she says the funds do "little to stem the tide of sexual harassment" on the Hill.

The OOC is not reporting the details of the settlements, in part because some of the settlements include multiple different allegations. The office has released the numbers "based on the volume of recent inquiries regarding payment of awards and settlements."

  • The chairman to the House Administration Committee, Rep. Gregg Harper, and the ranking member may be familiar with the details of the settlements, since they have to approve payments after a settlement is reached. Speaker Paul Ryan and Minority Leader Nancy Pelosi are not aware of the details of the settlements, per CNN.
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Rape victim wants Al Franken's sponsorship dropped from her bill

Sen. Al Franken, D-Minn., on Capitol. Photo: J. Scott Applewhite / AP

Al Franken (D-Minn) helped Abby Honold, a University of Minnesota rape survivor, champion a Senate bill that would provide federal funding for law enforcement training on how to better interview victims of trauma.

Franken was set to introduce the bill later this month, but after learning that a journalist said he had forcibly kissed and groped her in 2006, Honold called Franken's office and asked for someone else to take on the bill, per the Washington Post. Honold told the Post that she could no longer be associated with someone accused of this kind of behavior.

Key quote: "It's really difficult when someone who has been a champion for you turns out to be the exact opposite for someone else," Honold said in a phone interview.

Franken's history of supporting women's rights: The senator has previously pushed for legislation that would support victims of sexual and domestic violence.

  • Franken initially got involved in Honold's bill after learning that her convicted rapist was a former intern for him. Prior to meeting Honold, Franken told the Star Tribune that, "Abby has shown tremendous courage in coming forward ... Her efforts have shed light on problems in how the system handles sexual assault cases."
  • In 2009, Franken proposed an amendment to a bill that barred "defense contractors who forced employees to mandatory binding arbitration in the case of rape, assault, wrongful imprisonment, harassment, and discrimination."
  • In 2012, defended the Violence Against Women Act on the Senate Floor.
  • Last month, he publicly condemned Harvey Weinstein and gave any Weinstein campaign dollars to the Minnesota Indian Women's resource center.
Featured

Stitch Fix CEO talks IPO, Amazon and why she doesn't care about unicorns

Stitch Fix founder and CEO Katrina Lake. Photo: Nasdaq

Stitch Fix, a personalized shopping subscription service, began trading on the NASDAQ this morning after raising $120 million in its IPO. Axios spoke with founder and CEO Katrina Lake. Here's the quick read:

  • She believes Stitch Fix serves a very different need than does Amazon.
  • Stitch Fix struggled in its early days to raise venture capital, which caused it to focus more on profitability.
  • Going public is about having increased flexibility to pursue bigger opportunities.

Setting the scene: Stitch Fix's IPO last night comes across as a dud, given that it sold fewer shares than expected at a price below its stated range. But this isn't the disaster it might be for other VC-backed startups, in that Stitch Fix raised relatively little venture capital ($44 million) at a modest valuation (last post-money was $300m). That means both investors and employees should be in the money at the $1.5 billion, post-IPO (fully diluted) value — something that wouldn't have necessarily been true if Stitch Fix had chased bloated unicorn dreams. Plus, shares are up in early trading.

Here is the Q&A:

Why did the IPO come up a bit short of your expectations?

"It's hard to say. The story of Stitch Fix is a nuanced one to tell and can take a little time for people to get their heads around. The data science and personalization is a different business model from other things out there. It's not e-commerce, it's not stores. But while we maybe didn't get the exact price we expected, we're very excited to get top-tier investors and are happy to go prove ourselves to those who might have underestimated us. I'm not going to be focused on the stock price from day-to-day, because we want to generate value over years. My deep conviction is that the company will end up being worth more in the future than it is today.

Stitch Fix only raised $44 million from VCs, which is relatively little by today's standards, and never at a valuation higher than $300 million. Why didn't you go for a "unicorn" round?

"It was hard to raise money for this company, so we always treated every dollar very preciously and focused early on profitability. I'm also not valuation focused, so we weren't going to raise money if we didn't need it. When it came to recruiting, there was a lot of upside in having a valuation to grow into."

Why go public now?

"We have plenty of capital on the balance sheet, so there was no forcing function. We're at a place where we've grown year-over-year consistently, felt there is a lot of predictability in the business and just felt like it was a good time. I'm glad we didn't go a year ago because there might have been out-sized expectations based on growth rates... It gives us flexibility, and helps us see how big a business personalization can be and how pervasive in the retail experience."

Your moat against Amazon is curation and personalization. Can that be maintained?

"We see ourselves as solving a very different problem in a very different way. Amazon is a lot about faster and cheaper when it comes to clothing, and in a lot of product categories that's a great value proposition. But the reality in fashion is that to find that one great pair of jeans that fits perfectly, you don't want endless choice or the cheapest option. You want the one thing on the planet that's best for you."

Featured

What Congress is doing about its harassment problem

House Speaker Paul Ryan and Rep. Jackie Speier are both working to address harassment in Congress. Photo: J. Scott Applewhite, Charles Dharapak / AP

In response to the flood of sexual harassment and assault allegations, members of both chambers have introduced three bills and requirements aimed at harassment culture in Congress.

  1. "Me Too": Rep. Jackie Speier (D-CA) and Sen. Kirsten Gillibrand (D-NY) Wednesday introduced the "Me Too" Act, calling for more transparency in the harassment complaint process on the Hill.
  2. House training: House Speaker Paul Ryan also announced on Wednesday that all House members and staff will have to complete anti-harassment and anti-discrimination training.
  3. Senate training: The Senate passed legislation last week requiring all senators and staff to go through anti-harassment and anti-discrimination training.
Featured

Former JC Penney CEO: Amazon should fear Walmart

Elise Amendola / AP

Former JCPenney CEO and Apple Store pioneer Ron Johnson said on CNBC's Fast Money that Amazon "should be really worried" about Walmart's resurgence of late, arguing that the Bentonville retailer's network of stores is cheaper and more efficient to operate than Amazon's collection of warehouses.

Why it matters: Walmart's earnings announcement was the highlight of a week filled with surprisingly strong performance by Amazon's brick-and-mortar competitors, like Best Buy, Gap, Abercrombie, and Foot Locker, which all reported stronger than expected same-store sales growth. These performances have powered the SPDR S&P Retail ETF 3.9% higher this week — its best five-day stretch of the year.

Sound smart: Despite a good week, Retail indices are still down year-to-date, while Amazon's value is up more than 50%. Outside of a few exceptions like Walmart and Best Buy, brick-and-mortar retailers are still struggling to attract traffic and grow sales, just less so that we thought last week.


Featured

Pluto's hazy atmosphere keeps its surface icy cold

Image released by NASA in Oct. 2015 shows a haze surrounding Pluto. Photo: NASA/JHUAPL/SwRI

Pluto's thick hazy atmosphere may be responsible for its temperature of -203ºC, according to a study published this week in Nature.

How it works: Hydrocarbon particles created in chemical reactions in Pluto's upper atmosphere group together as they fall toward the surface and are "transformed into thick layers of haze," Alexandra Witze writes in Nature. Haze doesn't block light from the the sun, but it is able to cool down and heat up the atmosphere.

Why it matters: Leslie Young, a planetary scientist at the Southwest Research Institute in Colorado, told Nature it's important to understand Pluto's atmosphere in order to work out what might be happening on other icy planets.

  • Another view: There are other ideas about why Pluto's atmosphere is so cold, including a combination of hydrogen cyanide, acetylene, and ethane gas. The haze model could be tested with observations from NASA's James Webb Space Telescope, which is now scheduled to launch in 2019.
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Kirsten Gillibrand: Bill Clinton should've resigned

Photo: J. Scott Applewhite / AP

Sen. Kirsten Gillibrand (D-NY) told the New York Times that Bill Clinton should have resigned from the presidency after the Monica Lewinsky scandal. "Things have changed today, and I think under those circumstances there should be a very different reaction," she said.

Why it matters: Sen. Al Franken and Alabama Senate candidate Roy Moore have faced immense backlash and pressure to step down after being accused of sexual harassment and assault — accusations no worse than those brought against Bill Clinton. In today's environment, with sexual harassment and assault allegations making headlines almost daily, Gillibrand thinks that Clinton would have felt more pressure to resign, her spokesperson told the Times.

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Mueller subpoenaed Russia docs from Trump campaign officials

Robert S. Mueller speaks to a convention of campus law enforcement officials in Hartford Conn. in 2008. Photo: Bob Child / AP

Special Counsel Bob Mueller subpoenaed Russian-related documents from more than a dozen top Trump campaign officials last month, per "a person familiar with the matter," the WSJ reports.

Why it matters: This is the first known request from Mueller for information from the campaign itself. The campaign has been voluntarily complying with the special counsel investigation and its requests for information, so this suggests Mueller's requests aren't being fully met. Failure to provide requested documents can count as obstructing a grand-jury investigation.

This comes on the heels of the Senate Judiciary claiming that Jared Kushner failed to disclose emails about WikiLeaks and Russia. It also follows the revelation that Mueller's team has secured a guilty plea from a campaign associate, George Papadopoulos, and that they have indicted Trump's former campaign chairman, Paul Manafort and his associate, Rick Gates.

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How bees decode each others' dances

The three neurons involved in deciphering the waggle dance. Image: Hidetoshi Ikeno / University of Hyogo

Scientists have mapped some of the neurons that let bees talk by dancing.

Why it matters: Bees, who accomplish impressive things despite their tiny stature, have become models for understanding cognition. Scientists study how they navigate and recognize faces — and now, how they share information. "We're starting to understand how a fairly simple neural system, like a bee's, can solve a complex task like communication," says Thomas Wachtler, a researcher at the Ludwig Maximilian University of Munich and an author on the study.

Bees tell each other how to find pollen-laden flowers using the 'waggle dance.' It's incredibly precise, and can pinpoint a flower miles away. A bee stomps and vibrates her wings and waggles her abdomen while walking in a straight line, then circles back to the start and does it again. The angle she moves says which way to go. The amount of time she wags tells the distance. Other bees follow the waggle map.

The catch: Hives are pitch-black. The observing bees don't see the dance — they hear and feel it.

Researchers already knew which neurons the bees used to feel vibrations, and they knew about the dance. But no one had looked at how the two interacted.

How they did it: Wachtler, along with Hiroaki Ai and his colleagues at Fukuoka University and the University of Hyogo, drummed the beat of an artificial waggle dance to a bee, and measured signals from the neurons. At the center of the brain's response were three neurons: the first starts or stops the second in response to sound – so that measures the time period of the waggle. The purpose of the third isn't clear yet, but since it receives signals from both of the bee's antennae, Wachtler thinks it helps the observers track where the dancing bee is in space, so they can determine the angle of the waggle.

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The Bonn coal phaseout pledges in context

One of the splashier announcements at the Bonn climate talks this week has been the rollout of the Powering Past Coal Alliance — a pledge by roughly 20 countries (so far) to phase out use of coal in power generation by 2030. The countries include Canada, the U.K., several other European nations, New Zealand and more.

Data: Energy Information Administration; Chart: Chris Canipe / Axios

Reality check: The chart above compares coal use in the countries that have adopted the pledge against global coal consumption in 2015 as reported by the U.S. Energy Information Administration. (It does not include pledges by some provincial governments or the U.S. states of Washington and Oregon.)

  • It shows that the pledge currently covers slightly over 2% of global coal use. The New York Times, using a separate dataset based on BP's big annual report on energy statistics, arrives at roughly the same tally.
  • The absence of dominant coal users China, the U.S., and India — and to a lesser extent Germany, Russia, Japan and some others — means that for now, the pledge only covers a small amount of the world's use of the fuel.

Why it matters: Coal currently accounts for around 40% of worldwide power generation. Cutting emissions from coal — the most carbon-intensive fossil energy source — is vital to eventually ensuring the steep global greenhouse gas cuts that scientists call necessary to avoid the most dangerous levels of global warming.

What's next: The organizers of the pledge say they plan to add many new partners ahead of the next big UN summit a year from now. Stay tuned.