On February 7, the U.S. National Institutes of Health (NIH) declared a drastic reduction in funding, slashing approximately $4 billion annually from biomedical research grants across the country. This decision primarily affects the allocation for “indirect” costs, such as laboratory maintenance, administrative expenses, and overall operations, reducing it to 15 percent—a sharp cut from the traditional rates.

According to the NIH, out of its $35 billion budget in 2023 that supports around 300,000 researchers nationwide, $9 billion was dedicated to covering these indirect costs. The agency justified the reduced rates by stating that they align more closely with the guidelines set by private foundations.

In retaliation, on February 10, twenty-two states initiated a federal lawsuit against the NIH. The lawsuit aims to shield their citizens and state interests from what they deem an “unlawful action by the National Institutes of Health,” which they argue will severely impact essential public health research within American universities and research facilities.

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Previously in 2017, Donald Trump had proposed reducing the NIH’s indirect cost rate to 10 percent, but this was met with opposition from Congress. Like then, the recent funding cuts have sparked a chorus of disapproval from the scientific community, who argue that these reductions threaten the health of Americans and the country’s research leadership. “This decision could potentially shorten and worsen the lives of our children, grandchildren, and possibly yours,” stated Theodore Iwashyna, a medical professor at Johns Hopkins University, during an interview with CNN.

Scientists have long voiced concerns that indirect costs are consuming a significant portion of laboratory grants. A 2014 analysis by Nature found that, generally, administrators’ claims of receiving less than their negotiated rates for indirect costs are valid.

Scientific American had a conversation with David Skorton, president of the Association of American Medical Colleges, which includes all U.S. medical degree-granting institutions, about how this funding shift will impact medical research.

[An edited transcript of the interview follows.]

How does this change impact individuals unaware of “indirect” NIH grants, yet who might need medical advancements?

Biomedical research is incredibly diverse. Some of it aims to unravel basic biological processes which, over years, can lead to significant applications like mRNA technology used in COVID vaccines under Operation Warp Speed. Then there’s applied research like cancer clinical trials which directly test new treatments on patients.

Early in my career, I worked on projects developing advanced diagnostic methods through computer-processed medical imaging. These projects, while not immediately treating diseases, are crucial for developing effective interventions.

All these types of research need sophisticated and costly laboratories that support multiple research teams. These labs require significant infrastructure—like specific utilities and technological support—which, though not directly attributable to a single project, are essential for all research happening there. These are typically covered by what we refer to as facility and administrative or indirect costs.

Historically, the federal government has periodically audited research institutions to determine the actual spending on such infrastructure, ensuring that these crucial supports are adequately funded through indirect costs.

Why are these costs indispensable for research?

These costs underpin the basic functionality of research labs in universities. They cover essential services like libraries and data centers, which are not just miscellaneous expenses but are vital for daily operations. The federal auditing processes recognize that while direct grants fund specific research projects, the broader infrastructure enables multiple projects to occur.

What are the consequences of slashing this funding?

Severely cutting facility and administrative costs could bring research to a standstill. Without adequate funding for the underlying infrastructure, the progression of vital knowledge could halt, affecting everyone depending on advancements in medical science for treatment, diagnosis, or even recovery from accidents.

The big picture of NIH funding: Why does it matter?

The indirect costs funded by NIH grants have not been frivolous; they were designed to create a powerful biomedical research network within the U.S., serving not just to enhance national prestige but to significantly improve public health.

Is comparing NIH indirect cost rates to those of private foundations reasonable?

Although it’s a common comparison, it’s somewhat misleading. Foundations generally offer more leeway in administrative spending, and their research priorities can differ markedly from those of the federal government. When you adjust for what foundations cover under direct costs that the government does not, the disparity in funding rates isn’t as pronounced as it might appear.