A coalition of attorneys general from 22 states announced Monday they are suing the Trump administration to stop steep cuts to how medical research grants are funded by the National Institutes of Health.
“We will not allow the Trump Administration to unlawfully undermine our economy, hamstring our competitiveness, or play politics with our public health,” said Massachusetts Attorney General Andrea Joy Campbell in a statement announcing the lawsuit.
Hospitals and universities criticized the move, announced Friday by the Trump administration, which the National Institutes of Health said would save the federal government more than $4 billion a year. As outlined in an NIH memo, it would cap the amount of funding for what are called “indirect costs,” for general expenses like facilities and administration, at 15%, down from an average of around 27 to 28%.
Cancer research, heart disease and more
The vast majority of medical research in the U.S. is supported by NIH funding, which “includes over 2,800 hospitals, medical schools, universities, and other research institutions” nationwide. Research for curing cancer and addressing chronic health conditions like diabetes and heart disease would be among the projects impacted, the Association of Public and Land-Grant Universities warned.
The cost-cutting move implements an idea floated by conservatives for years. During President Trump’s first term, the White House proposed sharply limiting the indirect costs paid by the NIH to 10%.
“We tried this in term 1 and NIH LOBBIED AGAINST Trump’s policies and got Congress to block it. The consequence for those employees was exactly nothing,” Joe Grogan, former director of the White House’s domestic policy council, posted on X.
The NIH justified the cutback as being similar to rates paid for these costs by other nonprofit foundations that subsidize medical research.
“The United States should have the best medical research in the world. It is accordingly vital to ensure that as many funds as possible go towards direct scientific research costs rather than administrative overhead,” said the NIH’s memo.
The new guidance was attributed to the NIH director’s office. The agency is currently headed by acting director Dr. Matthew Memoli, pending the Senate confirmation of President Trump’s pick to head the NIH, Dr. Jay Bhattacharya. An NIH spokesperson declined to comment on the change, referring all inquiries about the change to the Department of Health and Human Services. The department did not immediately respond to a request for comment.
Recipients of federal research dollars rejected characterizing the reimbursements as unnecessary, saying they are often needed to pay for costs like utility costs and lab maintenance and security.
Those “facilities and administration” costs are difficult to attribute to on paper as direct costs of the research, they said, but are needed for the studies to continue.
“Make no mistake. This announcement will mean less research. Lights in labs nationwide will literally go out. Researchers and staff will lose their jobs,” said the Association of American Medical Colleges in a statement.
Some groups are also calling on Congress to step in. The cuts will affect institutions across the board, critics say, including in states that supported Republicans in the president’s coalition.
The Children’s Hospital Association asked on Monday for lawmakers “to prevent unilateral changes in the established processes” for determining the indirect rates, citing “current law and longstanding Congressional intent.”
“Reducing the indirect cost rate will threaten the ability of children’s hospitals to provide future groundbreaking cures for children,” the association said.
“We fight like hell trying to keep the rates down”
Current and former health officials say they were blindsided by the guidance change, which upends a long-running system by which federal authorities already carefully scrutinize and negotiate down how much funding goes to indirect costs.
“We fight like hell trying to keep the rates down,” said one former federal health official, who had worked with the team responsible for auditing indirect costs on NIH’s behalf for years.
That process starts with an extensive proposal submitted by researchers that goes through the federal Cost Allocation Services team within HHS, officials said, seeking to justify how they are planning to use the funds from a grant.
The biggest portion of indirect costs usually goes towards paying for the facilities and equipment needed for biomedical research, not administrative costs. Federal research dollars cannot go towards paying for parts of the building and equipment that are not used for research.
Federal health authorities often wage contentious negotiations with research institutions over those requests, resulting from inspections of the facilities and interrogations of the researchers working out of the buildings looking to “poke holes” in their submissions.
“We do not give away the farm. Whoever said that has never gone out on a site visit with us,” said the former official.
The former official said that artificially capping the rates below what they have negotiated with institutions ignores the work already done by health authorities to come up with current funding rates.
“Whoever wrote this memo knows nothing about how rates are calculated, what is included in them, what NIH is actually paying for. You cannot have medical research without buildings,” they said.
