National Institutes of Health Cuts Research Funding

On Friday, the National Institutes of Health (NIH)’s director lowered the maximum “indirect cost rate” that researchers can charge the federal government.

NIH awards many grants providing substantial federal funding for research purposes. NIH spent more than US$35 billion in fiscal year 2023 on almost 50,000 competitive grants to over 300,000 researchers at more than 2,500 universities, medical schools, and other research institutions nationwide, the agency said. Of this funding, approximately $26 billion went to direct costs for research, while $9 billion was allocated to overhead through NIH’s indirect cost rate.

When the NIH awards a grant to a scientist, an additional percentage of that award is provided to the scientist’s institution to pay for infrastructure that supports the research, such as lab equipment, utilities, hazardous waste disposal, HVAC, microscopes, and more.

NIH reported its indirect cost rate averaged between 27% and 28%. On the other hand, most private foundations that fund research provide substantially lower indirect costs than the federal government, the agency said. For example, NIH cited a study that found the most common rate of indirect rate reimbursement by foundations was 0%, meaning many foundations do not fund indirect costs whatsoever.  In addition, many of the nation’s largest funders of research—such as the Bill and Melinda Gates Foundation—have a maximum indirect rate of 15%.  And in the case of the Gates Foundation, the maximum indirect costs rate is 10% for institutions of higher education, NIH reported.

In turn, NIH imposed a standard indirect cost rate on all grants of 15%. This policy shall be applied to all current grants for go forward expenses from Feb. 10, NIH said.

Scientists, doctors, and researchers said NIH cutting the funding so abruptly is devasting for research, which has been vital to making new healthcare discoveries, CNN reports. Slashing the budget also will threaten jobs and regional economies that depend on funding, The Washington Post reported. In addition, NIH is the leading funder of biomedical research in the world and supports 412,000 jobs, according to United for Medical Research.

The abruptly lowered indirect cost rate is illegal under the Labor-HHS-Education Appropriations Bill, U.S. Senator Patty Murry of Washington said. University lawyers also are likely preparing a legal challenge, Morning Brew reported.