A federal judge has ordered a temporary nationwide halt on a new policy from the National Institutes of Health (NIH).
The policy, which was announced Friday and took effect Monday, limits NIH research funding for “indirect costs” to 15% of grants. Those administrative and facility costs go toward maintaining buildings and equipment and paying support staff. NIH said the cut applies to current and future grants.
Judge Angel Kelley of the U.S. District Court for the District of Massachusetts issued the nationwide pause in response to a lawsuit filed Monday afternoon by a group of medical organizations led by the Association of American Medical Colleges.
The judge had first temporarily halted the policy in 22 states that sued the Trump administration Monday. Oklahoma is not one of the plaintiffs in the suit.
NIH said it spent more than $35 billion in the 2023 fiscal year on competitive grants nationwide, and $9 billion of that funding was allocated to overhead costs. It said the average indirect cost rate has been around 27% to 28%. A post on X from the agency stated the change would save more than $4 billion a year.
“The United States should have the best medical research in the world,” the NIH notice reads. “It is accordingly vital to ensure that as many funds as possible go towards direct scientific research costs rather than administrative overhead.”
The suit from 22 states claims the policy would “devastate critical public health research at universities and research institutions in the United States.” It argues that it violates the Administrative Procedure Act, which governs how federal agencies implement new regulations, saying the policy is “arbitrary and capricious” and “contravenes Congress’s express directives in the appropriation acts governing the NIH.”
“Medical schools, universities, research institutions, and other grant recipients across the country have already budgeted for [and incurred obligations based on] the specific indirect cost rates that had been negotiated and formalized with the federal government through the designated statutory and regulatory legal process,” the suit reads. “This agency action will result in layoffs, suspension of clinical trials, disruption of ongoing research programs, and laboratory closures.”
Some Oklahoma institutions addressed the change, including the Laureate Institute for Brain Research – a clinical neuroscience research institute in Tulsa.
Scientific Director and President Dr. Martin Paulus said, if the policy stands, it would result in an estimated 30% immediate reduction of the institute’s budget, which mostly funds salaries for support personnel. He said its federally negotiated rate for indirect costs is about 62%.
For the institute, Paulus said indirect costs include maintaining an MRI machine and data security across its large computer server infrastructure. He said the Adolescent Brain Cognitive Development Study, one of its largest projects that is supported by NIH to study adolescent brain development, provides a good example of indirect expenditures.
“Our data is basically sent to a central site, and then the central site makes that data available to other researchers. But again, that is the infrastructure. It has to be set up, and it has to be made secure,” Paulus said. “That's the kind of work that is supported by the indirect costs, because it's not the direct research that is happening, but it's making sure that the research can be done.”
Paulus said there are many steps involved in planning and submitting a successful application for NIH funding. It typically takes between eight and 20 months after the application due date to receive a notice of award, according to NIH.
He said because it’s such a long-term process, it’s “impossible to turn on a dime.”
“We have maybe of the order of 20-30 research projects going on. They have a certain budget. We have carefully calculated what we need on a day-by-day basis, and, literally, overnight, all of a sudden, we have to recalculate,” Paulus said. “It's very, very, very disruptive.”
“We normally have a due process,” he added. “And this was anything but due process.”
A spokesperson from the Oklahoma Medical Research Foundation (OMRF) told StateImpact in an email the indirect cost portion from NIH grants covers expenses that are essential to its research, including the construction and maintenance of laboratories, utilities, high-speed data processing and storage and personnel to support administrative and regulatory compliance work.
OMRF scientists focus on areas like preventing and treating cancer, autoimmune, heart and aging-related diseases. The foundation, for example, just announced its most recently awarded NIH grant Monday, which supports a novel approach to studying Parkinson’s disease that could lead to earlier and more effective treatments.
“We’ve been a key contributor to Oklahoma’s economy for 75 years, with an annual economic impact today of nearly $200 million. If the announced rate cuts were in effect for the current fiscal year, we project its annual impact on our budget would be $11-12 million,” the spokesperson said. “Such a reduction is unsustainable for an independent research institute like OMRF.”
“While we can attempt to quantify the financial harm the new cap would cause, that undoubtedly would be dwarfed by the ultimate price patients would pay,” the spokesperson added, “How do you put a price tag on a new cancer treatment that is never discovered?”
University of Oklahoma President Joseph Harroz also responded in a university-wide email.
“Over the weekend, we continued to monitor news on this topic and are in active discussions with our federal delegation and partners,” Harroz wrote. “We expect a broad array of support among national associations to push against these changes, as well as key national leaders to continue to educate members of the federal administration regarding the detrimental impact of these changes.”
Harroz said OU has developed working groups through the Office of Legal Counsel to review and assess developments from the federal administration. He also said OU is assessing budget implications.
StateImpact reached out to Oklahoma State University for comment, which did not respond by the time of publication.
A hearing has been set for Feb. 21 for both cases.
“Regardless of what your political persuasion is, what we're trying to do is … research, and we're trying to do research the best we can,” Paulus said. “I would say we're very, very careful in how we spend the government's money. If the government decides to want to spend money differently – each administration could do that in their way. But I think it's important to then bring in the stakeholders and try to have an open discussion [about] what that actually means in terms of being able to do research.”
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