The National Institutes of Health (NIH) announced on Friday that it will reduce the amount of indirect funding provided to research institutions. The new policy limits indirect costs to just 15% of research grants.
The NIH’s Office of Policy for Extramural Research Administration (OPERA) explained that, in the fiscal year 2023, it spent $9 billion out of the $35 billion total on indirect costs. These costs include necessary expenses such as equipment, operations, maintenance, accounting, and personnel.
When a scientist receives an NIH grant, the institution that supports the research typically receives an additional percentage of the grant to cover these indirect costs. This rate is negotiated between the grantor and the institution. For example, if a scientist is awarded a $500,000 grant, their institution could receive an extra amount for indirect costs.
Michael Eisen, a biologist at the University of California, Berkeley, emphasized the importance of indirect funding for research infrastructure, noting that these funds support essential services like electricity and janitorial services for research spaces.
The NIH memo stated that the average indirect cost rate for organizations receiving NIH grants is around 27-28%, although some rates may be even higher.
The 15% indirect cost rate was determined by comparing the rates used by private research foundations, such as the Robert Wood Johnson Foundation and the John Templeton Foundation, which set their limits between 10% and 15%.
OPERA’s memo stressed that the U.S. should maintain its leadership in medical research. The agency said that the new rule would ensure that more funds go directly to scientific research rather than administrative overhead. By capping indirect costs at 15%, the NIH estimates it could save $4 billion.
However, many researchers criticized the decision, arguing that cutting indirect funding would harm essential research activities. Jeffrey Flier, the former dean of Harvard Medical School, called the move irresponsible.
Eisen also expressed concerns, saying that while the indirect funding system may seem complex, the NIH’s decision could have serious negative effects. He warned that the policy could shift the burden of supporting research onto universities, which may not have the financial resources to compensate for the loss of federal support.
“This policy will likely result in fewer biomedical studies,” Eisen said. He argued that if the NIH moves forward with this plan, it could hinder the progress of research in the U.S.
On the other hand, Katie Miller, a Trump appointee to the Department of Government Efficiency, praised the change. She argued that the new policy would cut excessive indirect costs at institutions like Harvard, which she accused of overcharging for research expenses.
As of now, the Senate has not confirmed a new director for the NIH. Dr. Jay Bhattacharya, a Stanford University professor, was nominated by President Trump but has not yet undergone confirmation hearings.
Eisen acknowledged that this issue would likely be raised during the confirmation process for the new NIH director.
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