This article was updated at 1 p.m. ET on Feb. 10 and 9 a.m. ET on Feb. 11.
A new initiative rolled out under President Donald Trump’s administration is cutting billions from grants for "indirect costs" tied to biomedical research, such as facilities, equipment and administrative expenses.
The changes are effective immediately, according to a National Institutes of Health (NIH) directive issued Feb. 7.
The cuts are designed to save about $4 billion per year, according to a Feb. 7 post from the NIH on X (formerly known as Twitter).
With a yearly budget of nearly $48 billion, the NIH is the world’s largest public funder of biomedical research. The agency's grants include money for indirect costs, supporting “facilities” such as buildings, equipment and maintenance expenses, among others, and “administration" for other support functions.
The new directive caps the indirect cost rate at 15% on all NIH grants, a move that will not be applied retroactively. This compares with a historical average of 28% to 29% for the agency, according to the directive.
“The United States should have the best medical research in the world,” the NIH document reads. “It is accordingly vital to ensure that as many funds as possible go towards direct scientific research costs rather than administrative overhead.”
For 2023’s fiscal year, the federal agency spent around $35 billion for nearly 50,000 grants across more than 300,000 researchers in the U.S. About $26 billion of that money covered direct research costs, while $9 billion was used for overhead costs, according to an uncited statistic in the new directive.
The NIH pointed to other indirect cost rates from private grant-giving establishments, such as 10% for the Grants Foundation and 15% from the Chan Zuckerberg Initiative.
The federal agency said it is “obligated to carefully steward grant awards to ensure taxpayer dollars are used in ways that benefit the American people and improve their quality of life,” according to the Feb. 7 document. “Indirect costs are, by their very nature, ‘not readily assignable to the cost objectives specifically benefitted’ and are therefore difficult for NIH to oversee.”
Since the changes were announced, there has been an outpouring of opposition from members of research and medical communities.
On Monday, attorney generals representing 22 states filed a lawsuit against the government to stop the action. According to the court documents, the plaintiffs are suing for declaratory and injunctive relief, arguing that the NIH change violates the Administrative Procedure Act and therefore is “unlawful.”
The NIH action will “devastate critical public health research at universities and research institutions," and will lead to layoffs, suspension of clinical trials and disruption of ongoing research programs, the lawsuit claims.
On Monday, a federal judge temporarily blocked the NIH plan in the 22 states included in the lawsuit, according to documents filed in a Massachusetts court. Judge Angel Kelley issued a temporary restraining order preventing the 15% cap from occurring in those states. A hearing is slated for Feb. 21 regarding the matter.
The states who have filed suit and are therefore included in the temporary order are: Arizona, California, Connecticut, Colorado, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Rhode Island, Vermont, Washington and Wisconsin.
Indirect costs help cover crucial research activities such as “patient safety, research security and hazardous waste disposal,” Mark Becker, president of the Association of Public & Land-grant Universities, said in a Feb. 7 statement.
“NIH slashing the reimbursement of research costs will slow and limit medical breakthroughs that cure cancer and address chronic diseases such as diabetes and heart disease,” Becker added. “Let there be no mistake: this is a direct and massive cut to lifesaving medical research. We urge the administration to reconsider this self-defeating action.”
“At public universities across the country, NIH-funded researchers are working tirelessly toward breakthroughs in treating debilitating diseases and discovering cures to deadly illnesses,” Becker continued. “Cuts to reimbursement of these costs are cuts to medical research and represent the federal government stepping back from commitments it has made to world-leading researchers. This action will slow advances for millions of patients who desperately need critical breakthroughs and imperil the U.S.’s position as the world leader in biomedical innovation.”
A 2024 analysis found that every $1 of NIH-funded research generated $2.46 in economic activity for 2023, according to an annual report from biomedical research advocacy organization United for Medical Research (UMR). The grant funds helped support hundreds of thousands of jobs in the country, according to the report.