President Donald Trump’s administration announced late Friday it is drastically reducing payments the National Institutes of Health makes to universities, hospitals, and institutes that help cover administrative costs, a move critics said will result in a “catastrophic” hit to science research across the country.
Federal NIH grants pay for a portion of the overhead costs required for institutions to conduct research, including construction, utility costs, and lab operation, known generally as “indirect costs,” in addition to the costs of the research itself. Typically, about 30% of an average NIH grant to an institution is earmarked for indirect costs, but some universities get much higher rates.
NIH said that starting Monday, a 15% indirect cost rate will now apply to all new and existing grants, saving taxpayers more than $4 billion a year.
“Can you believe that universities with tens of billions in endowments were siphoning off 60% of research award money for ‘overhead’? What a ripoff!” billionaire Elon Musk, the head of the Department of Government Efficiency empowered by Trump to unilaterally slash federal spending, wrote Friday in a post online.
The changes to NIH grants follow reports that Trump and Musk are seeking to gut the National Science Foundation and lay off half its staff, and that the president will soon issue an executive order laying off thousands of Health and Human Services workers.
Scientists and medical experts said the move to effectively slash NIH grants will interrupt research across the country, forcing institutions to cut staff, close labs, and cancel projects, threatening the United States’ role as a global leader in scientific and medical innovation.
“This approach to suddenly cutting NIH grant indirect costs will cause chaos and harm biomedical research and researchers in hospitals, schools and institutes nationwide. A sane government would never do this,” said Jeffrey Flier, a professor of medicine at Harvard University.
“This is not ‘trimming the fat,’” added F. Perry Wilson, an associate professor of medicine at Yale University. “This is cutting right to the bone. It will lead to mass layoffs at Academic research centers. These are places where FUNDAMENTAL science is done — science that industry won’t always fund because the ROI isn’t immediately clear.”
The Trump administration’s announcement gutting NIH funding is likely to draw legal challenges. Congress specifically prohibited the agency from changing its funding without its approval, per Samuel Bagenstos, who served as general counsel to the Department of Health and Human Services under President Joe Biden.
“By proposing an illegal and arbitrary indirect cost rate, Trump and Elon are functionally forcing an indiscriminate funding cut for research institutions across the country that will be nothing short of catastrophic for so much of the lifesaving research patients and families are counting on,” Sen. Patty Murray (D-Wash.), the top Democrat on the Senate Appropriations Committee, also warned in a statement on Friday.
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“Sick kids may not get the treatment they need,” she added. “Clinical trials may be shut down abruptly with dangerous consequences. Just because Elon Musk doesn’t understand indirect costs doesn’t mean Americans should have to pay the price with their lives.”
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