Breaking down the NIH’s controversial cost-cutting plan

The National Institutes of Health (NIH) yesterday began implementing its plan to place a 15% cap on “indirect costs” associated with tens of billions of dollars in research grants, a move that’s drawn sharp criticism from the academic research community.

What are indirect costs? When a scientist receives a federal NIH grant for a project, the institution hosting that scientist’s work receives an additional percentage for indirect costs associated with their research – a catch-all term covering things like buildings, utilities, specialized equipment, support staff, and other overhead expenses.

• Of the ~$35 billion in grants issued by the NIH in the 2023 fiscal year, some $9 billion (26%) went to indirect costs, with each institution negotiating its own rate directly with the federal government.
• By lowering that figure to 15% across the board, the NIH says it will save $4+ billion/year – funds that Trump admin officials characterize as a taxpayer giveaway to elite universities who could easily cover those costs themselves.

Scientists largely oppose the NIH’s move. Academic leaders say the cap on indirect costs would harm scientific institutions’ ability to carry out cutting edge research, with potential side effects including longer waits for disease diagnoses and cures, fewer research jobs, and slower scientific progress compared to the rest of the world.

Pause button: Hours after it took effect, the NIH’s plan was temporarily blocked by a federal judge in response to a legal challenge from 22 Democratic state AGs, who claim the move violates laws governing how federal agencies implement new regulations.

🏛️ In other Trump admin news: President Trump yesterday announced 25% tariffs on all imports of steel and aluminum to the US, and said additional “reciprocal tariffs” are coming later this week.