Judge pauses NIH plan to cap ‘indirect’ costs in response to lawsuit from states

A Massachusetts federal judge put a pause Monday on the Trump administration’s push to change how the National Institutes of Health funds research.

The ruling came after nearly two dozen states filed a lawsuit seeking a temporary restraining order against the NIH’s recently announced initiative to cap the “indirect” costs — administration and facility costs tied to research — associated with new and existing research grants at 15%. It represents a significant change for grant recipients.

“Defendants and their officers, employees, servants, agents, appointees, and successors are hereby enjoined from taking any steps to implement, apply, or enforce the Rate Change Notice within Plaintiff States until further order is issued by this Court,” Judge Angel Kelley said in her order.

She set a hearing for Feb. 21.

The Trump administration’s plan has sparked an outcry among elected officials - namely Democrats - universities and the medical and research community.

NIH said the goal is to ensure as “many funds as possible go towards direct scientific research costs rather than administrative overhead.”

In their lawsuit filed Monday, the attorneys general from 22 states said the “unlawful” rate change “will devastate critical public health research at universities and research institutions in the United States.”

“Without relief from NIH’s action, these institutions’ cutting-edge work to cure and treat human disease will grind to a halt,” they said in the lawsuit. They said the move would strip citizens who are the “beneficiaries of research creating treatments, such as modern gene editing, vaccines such as flu vaccines, and cures for diseases like cancer, infectious diseases, and addiction.”

Meanwhile, Sen. Susan M. Collins, Maine Republican, criticized the “poorly conceived directive.”

Ms. Collins said capping indirect costs would have a “devastating” effect on the research community in her home state.

“There is no investment that pays greater dividends to American families than our investment in biomedical research,” she said Monday. “In Maine, scientists are conducting much-needed research on Lyme disease and other tick-borne illnesses, Alzheimer’s, diabetes, Duchenne’s muscular dystrophy, and on how to improve efficiency in drug discovery, helping to lower the cost of prescription drugs, and conducting many other life-enhancing or lifesaving research.”

According to NIH data, the top 2024 recipients of awards and grants included Johns Hopkins University in Baltimore; the University of California, San Francisco; the University of Michigan at Ann Arbor, and Washington University in St. Louis.

President Trump, in 2017, tried to reduce NIH’s indirect cost rate to 10%, but Congress opposed the change.

In her letter, Ms. Collins also noted that legislation passed last year includes “language that prohibits the use of funds to modify NIH indirect costs.”

Ms. Collins said Mr. Trump’s pick to lead the Department of Health and Human Services, Robert F. Kennedy Jr., assured her he would give the initiative a good look if he wins Senate confirmation.

Mr. Trump and the Elon Musk-led Department of Government Efficiency office have been pushing to wring out trillions of dollars of wasteful spending from the federal government.

Last week, NIH said that $9 billion of the $35 billion the NIH doled out in grants last year paid for administration overhead and that there were instances where the overhead costs gobbled up 60% of the grant money. 

NIH said the new initiative will save $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’?” Mr. Musk said on X. “What a ripoff!”

In the lawsuit filed Monday, the attorneys general said that research institutions negotiate the indirect cost rates with the federal government “based on each institution’s unique needs and cost structure and derive from documented and actual costs experienced for that institution.”

They said high-level medical research requires funds “not just for the costs that can be directly attributed to the specific work of a particular project, but also the indirect costs that support multiple projects.”

“For example, in order to conduct research, a university needs buildings, and needs to maintain those buildings and supply them with heat and electricity,” they said. “A university also needs the infrastructure necessary to comply with legal, regulatory, and reporting requirements.”

“And university staff need administrative support, including clerical staff, IT support, cybersecurity and data repositories, as well as staff to administer the university as a whole,” they said. “Again, these administrative costs support the university as a whole, and help make research possible without being attributable to any specific grant or project.”

Correction: This story is misspelled Johns Hopkins University.