That's gotta hurt New NIH policy will slash support money to research universities Sudden and drastic change will make it hard for researchers to keep the lights on. John Timmer Feb 7, 2025 7:17 pm | 0 UC Berkeley's Life Sciences Entrepreneurship Center. Credit: Steve McConnell/UC Berkeley UC Berkeley's Life Sciences Entrepreneurship Center. Credit: Steve McConnell/UC Berkeley Story textSizeSmallStandardLargeWidth *StandardWideLinksStandardOrange* Subscribers only Learn moreGrants paid by the federal government have two components. One covers the direct costs of performing the research, paying for salaries, equipment, and consumables like chemicals or enzymes. But the government also pays what are called indirect costs. These go to the universities and research institutes, covering the costs of providing and maintaining the lab space, heat and electricity, administrative and HR functions, and more.These indirect costs are negotiated with each research institution and average close to 30 percent of the amount awarded for the research. Some institutions see indirect rates as high as half the value of the grant.On Friday, the National Institutes of Health (NIH) announced that negotiated rates were ending. Every existing grant, and all those funded in the future, will see the indirect cost rate set to just 15 percent. With no warning and no time to adjust to the change in policy, this will prove catastrophic for the budget of nearly every biomedical research institution.Cut in half or moreThe new policy is described in a supplemental guidance document that modifies the 2024 grant policy statement. The document cites federal regulations that allow the NIH to use a different indirect cost rate from that negotiated with research institutions for "either a class of Federal awards or a single Federal award," but it has to justify the decision. So, much of the document describes the indirect costs paid by charitable foundations, which tend to be much lower than the rate paid by the NIH.The new rate of indirect cost reimbursement will be applied to any newly funded grants and retroactively to all existing grants starting with the issuance of this notice. The retroactive nature of this decision may end up being challenged due to the wording of the regulations cited earlier, which also state that "The Federal agency must include, in the notice of funding opportunity, the policies relating to indirect cost rate." However, even going forward, this will likely severely curtail biomedical research in the US.The indirect costs of doing research are real and substantial. Beyond the sorts of facilities and staffing needs faced by any other organization, biomedical research generates a regular flow of chemical and biohazard waste, which needs to be handled in accordance with state and local laws, and often requires trained staff. Animal research also requires specialized facilities, as does working with hazardous pathogens. There is a lot more involved than simply paying to keep the lights on.These local differences in regulations, utility and building costs, and salaries also explain why the rate varies from institution to institution. Turning to a flat rate will simply punish those institutions where costs are highest, such as those in dense urban areas. (Which may be a feature rather than a bug.)It's also important to note that any functions that can no longer be performed by the institution will need to be done by the scientists themselves, thus taking them away from doing research. That added responsibility makes the policy's statement that it is "vital to ensure that as many funds as possible go towards direct scientific research costs rather than administrative overhead" read somewhat ironically.Impending funding crisisIt is entirely appropriate for the NIH to drive a conversation about appropriate overhead rates and the higher share of those paid by the federal government compared to charitable funders. Acting without any conversation at all is likely to severely damage biomedical research in the US, given that universities and other institutions have already formulated budgets based on an expectation of overheads, and had no warning of a policy change.It's unclear what universities can do to deal with the impending financial problems beyond radically curtailing research activities or finding ways to extract the necessary funds from the direct costs of grants. The latter will force scientists to compensate by spending even more of their time writing grants rather than pursuing research.Overall, coming a day after the government's plans to radically shrink the National Science Foundation, it's difficult to read this as anything other than an attempt to crush scientific research in the US. The harm that will be done to research universities in the process may be viewed as a bonus by a populist political movement that has shown a consistent disdain for expertise.John TimmerSenior Science EditorJohn TimmerSenior Science Editor John is Ars Technica's science editor. He has a Bachelor of Arts in Biochemistry from Columbia University, and a Ph.D. in Molecular and Cell Biology from the University of California, Berkeley. When physically separated from his keyboard, he tends to seek out a bicycle, or a scenic location for communing with his hiking boots. 0 Comments