The U.S. National Institutes of Health announced on February 7 it was immediately cutting some $4 billion a year in funding to biomedical researchers nationwide. The move would reduce the share of NIH grants paid to “indirect” costs—lab upkeep, administration and operation—to 15 percent, cutting their historical rate almost in half, overnight.
In the announcement, NIH said that of roughly $35 billion spent funding 300,000 researchers nationwide in 2023, $9 billion went to indirect costs. The move to a lower indirect cost rate, it argued, put them more in line with those put in place by private foundations.
On February 10 in response, 22 states filed a federal lawsuit, “to protect their states and residents from unlawful action by the National Institutes of Health (‘NIH’) that will devastate critical public health research at universities and research institutions in the United States.”
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Donald Trump proposed dropping NIH’s indirect cost rate to 10 percent in 2017, but faced congressional resistance. As was the case then, the newly proposed cuts have triggered widespread criticism from scientists, who say it endangers patients and the U.S. strategic advantage in research. “Frankly, this means that the lives of my children and grandchildren—and maybe yours—will be shorter and sicker,” medical professor Theodore Iwashyna of Johns Hopkins University told CNN.
Indirect costs eating into lab grants have long triggered complaints from scientists, but a 2014 Nature analysis concluded that “overall, the data support administrators’ assertions that their actual recovery of indirect costs often falls well below their negotiated rates.”
Scientific American spoke to David Skorton, president of the Association of American Medical Colleges, which represents all the medical degree–granting schools in the U.S., about this shift, and its effects on medicine.
[An edited transcript of the interview follows.]
How does this affect people who may have never heard of “indirect” NIH grants before, but who get sick or know people who could benefit from better medicine?
So the idea of biomedical research is multifaceted. Some of it is meant to help understand the way life works. Over a decade of research led to the idea that messenger RNA, a basic building block of biology, for example, could actually be used as a platform for vaccines. That knowledge was very basic, very fundamental, and eventually fed into Operation Warp Speed and the development of vaccines against COVID. So that’s one thing.
Then there are research projects that you might call applied research, like cancer clinical trials. Someone unfortunately has cancer, and basic research has shown that perhaps a new approach, like immunotherapy, harnessing the immune system to fight off cancer cells, might help. We need to find out, so it goes to human, clinical trials. Those clinical trials are also research projects. And then there are research projects that have to do with diagnosing illnesses. Not treating it. I did some research early in my career on computer processing medical images from the cardiovascular system. The idea there was to develop better diagnostic techniques that could lead to a quicker way to diagnose an illness. So that you know the right treatment.
All of those obviously have different requirements. Fundamental research will often require a complicated and expensive laboratory, one that has the right kind of water, utilities and capabilities. And in that laboratory, there can be five research groups, and they’re all studying different questions. So those individual research groups, doing their individual projects, will apply for [NIH] funding. For the overall laboratory itself, for the cost of running it, for the utilities, all those things, can sometimes not be attributed exactly to any one project, because it really applies to all the projects. And so, the physical lab operation, utility cost, the libraries that back it up, are considered a so-called facility and administrative cost and sometimes referred to as indirect costs
Decades ago the federal government came up with the idea that they would periodically, carefully, audit medical schools or universities that were doing the research to find out how much money they were actually spending on things like high-tech lab [equipment], high-speed data processing, security, data storage. And these are the things that are reimbursed through facilities and administrative costs or indirect costs.
Just to be clear these, these costs are needed to do research.
These are all costs that are vital to running labs at universities. They’re just not things like an individual pipette. They are functions, say libraries or data centers, things you need to run the lab. The reason the federal government has a careful auditing system is that it’s recognized that the direct grant itself is really funding the specific problem that’s being studied. But you need this infrastructure to study many, many problems. So no, it’s not frills.
So what happens when you cut this kind of funding?
In fact, if the facility administrative costs are cut very, very severely as was announced by the NIH, laboratories would literally go dark. The research would stop. The march of knowledge that someone, a relative, friend, neighbor, co-worker, needs to survive an illness, or to have a diagnosis or move on with their lives after an accident, whatever it might happen to be, they would suffer because the research wouldn’t be able to go on. Indirect costs are not frills, and NIH grants do not pay the full cost of doing research for just that reason.
And that’s the intention, right? The idea for decades behind NIH paying this grant money was to build a gigantic, biomedical research colossus in the United States, which it has become. These indirect costs are the way we did just that.
That’s exactly correct. But the enterprise was not being built just for the sake of bragging rights. It was built to serve the American people.
What do you make of the comparison to indirect cost rates for foundation grants in the NIH announcement? Is that a fair comparison?
We have something online about this, but a couple high points: Foundations often allow more flexibility than the federal government does to allow for administrative expenses. So that’s an apples and oranges comparison. And foundations often have a research focus that may differ from the federal government. When you think about the differences—in other words, what would the foundation pay as a direct cost that the federal government will not—once you figure that in, it shows a head-to-head comparison, the rates are not very much different.