The U.S. National Institutes of Health (NIH) is the largest funder of biomedical research in the world, and its grants create the foundation of basic science knowledge on which major health advances are built. On Feb. 7, the NIH announced that it would cut "indirect expenses" in the funding it provides to research grants by nearly half.
“We were all just dumbstruck,” says Dr. Richard Huganir, professor and chairman of the department of neuroscience at Johns Hopkins University School of Medicine, who relies on NIH grants for his research into therapies for autism and intellectual disabilities. “I’m calling it the apocalypse of American science. This will basically change science as we know it in the U.S.”
"We're going to see health research kneecapped," says Dr. Otis Brawley, professor of oncology and epidemiology at the Johns Hopkins School of Medicine and the Bloomberg School of Public Health. Brawley has overseen grants at the National Cancer Institute (which is part of the NIH) as well as received them for his cancer research.
The funding cut took effect on Feb. 9 and targets indirect costs, which include facilities and administration costs.
In an immediate response, 22 states sued the NIH and the U.S. Department of Health and Human Services (which oversees NIH), calling the action “unlawful” and saying it would “devastate critical public health research at universities and research institutions in the United States.”
Hours later, the Massachusetts Attorney General issued a temporary restraining order preventing the NIH from immediately cutting billions in the grants it issues to scientists and their institutions.
Here's what to know about the ongoing funding turmoil at the NIH.
What's an 'indirect cost'?
NIH awards around $30 to $35 billion in grants each year to a wide range of disease-related research projects. It helped fund the mRNA technology that eventually led to the recent COVID-19 vaccines, for example.
In a Feb. 7 post on X, the agency said about $9 billion of its annual research grant budget goes toward indirect costs, which are charged by academic institutions receiving the grants. Institutes that receive NIH grants negotiate indirect cost rates, taking into account how much they need to pay for things like heat, air conditioning, and electricity inside research facilities. Administrative costs include those required to comply with legal and regulatory requirements to conduct the research. Once a rate agreement is reached, it applies to all federal grants from NIH to that institution.
Indirect costs can range from nearly 30% to 70% of a research grant, depending on the institution. Certain non-academic institutes that have fewer resources than academic universities tend to have higher indirect rates, from 90% to 100%, says Brawley. In its X post, the NIH says Harvard has charged 69%, Yale 67.5%, and Johns Hopkins 63.7% in indirect costs. (Johns Hopkins' rate recently changed to 55%, Brawley and Huganir say.) Under its new policy, the NIH would cap indirect costs for all institutions at 15%.
Huganir says indirect costs are essential for modern-day research. In addition to keeping the lights on in labs, they cover maintaining and staffing critical scientific equipment and resources such as animal facilities, DNA sequencing, and imaging.
“Right now we are in the middle of developing therapies that could really cure certain forms of intellectual disability for millions of kids across the world,” he says. “We are terrified that the research is going to stop.”
Why is the NIH cutting indirect cost payments?
The NIH did not immediately respond to a request about what prompted the change, directing journalists to the agency’s Grants Policy Statement. However, Elon Musk—tasked by the Trump Administration to address efficiency in government spending—called out the high percentage of indirect costs that the NIH had been supporting. “Can you believe that universities with tens of billions in endowments were siphoning off 60% of research award money for “overhead?” he wrote on X on Feb. 7.
The 15% cap puts NIH grants in line with those from private philanthropic agencies that support research. The NIH says that these entities—such as the Gates Foundation, the Rockefeller Foundation, and the Chan Zuckerberg Initiative—allow a maximum of 10% to 15% of a research grant for indirect costs. But philanthropic foundations and academic institutes aren’t comparable to the federal government when it comes to funding science, Brawley and Huganir say, since foundations tend to support more focused and specific endeavors, such as individual faculty members or targeted projects.
Who will pick up the slack?
So far, it's unclear. In his post on X, Musk hinted that endowments should be part of the solution. But health experts say endowments aren’t a consistent or practical source of funding for overhead costs, since many outline narrow purposes or projects for the funds that are legally allocated and can’t be redirected to cover things like research expenses.
“Nobody else can really afford to pay for it,” says Brawley. “What’s worked nicely over the last 50 to 60 years is that the NIH does a lot of basic science research, asking questions that people can’t make money from. And the corporations, including biotech, can swoop in, and take that basic science information and do engineering and turn it into things you can sell and treat diseases with.”
How will the new NIH policy affect research?
Without the funding to support indirect costs, much of the scientific work that has been a mainstay of the U.S. biomedical field may not happen, or would take much longer. “The bottom line is that we are going to have a lot less resources, which obviously means we are going to have to lay people off, and research will be slowed down,” says Huganir.
Brawley is also concerned about the quashing effect such actions will have on young scientists to remain in the field and create new labs. “Nobody wins the Nobel Prize for what they did when they were 50,” he says. “I’m worried about the loss of creativity from young people; that’s where all the really good ideas come from.”
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He also notes that while a lot of attention has been focused on large academic universities with big endowments and deeper financial resources, the policy will likely have an even stronger impact on smaller community hospitals that supply many of the patients who participate in clinical trials. “People who are getting treated in clinical trials now for cancer will find many of those trials will close down,” he says.
That will affect the pipeline of new treatments for diseases like cancer. Brawley says that drugs approved in the last six months have been tested in trials over the last decade, so curtailing funding in research today will slow down the pace of progress and eventually result in fewer drugs. “I anticipate that the number of drugs approved is going to go down dramatically in the next five to 10 years,” he says.
What will happen to current NIH research grants?
“We have been working all weekend trying to calm faculty and students and everybody who is concerned about future careers in science,” says Huganir. “We have lots of committees addressing different aspects of this, and we’re trying to come up with ideas about how we can compensate for any losses we are experiencing."
"That may mean laying people off and maybe putting hiring freezes on new faculty," he says. "We will have to make up for the difference through cost cutting in some way.’
With the temporary restraining order, NIH grantees have some time to come up with a plan for how they will try to maintain the pace of scientific research with much less NIH support.
“Perhaps we need to reimagine or re-envision our entire system for how we fund science and how people make money off of science,” says Brawley. “But the way to do that is not to threaten on Friday night to cut everybody’s indirect [costs] down to 15%.”
Ultimately, scientists say the American public will pay a price for the drastic funding cuts. “The American people should know that this is going to impact them—the health of their families and their children,” says Huganir. “And the economies of communities around these institutions that get a lot of NIH funding are going to be impacted as well.”
