On Monday, a federal judge temporarily halted the National Institutes of Health (NIH) from implementing major funding cuts to medical research grants after 22 states filed a lawsuit opposing the policy.
The controversial change, announced last Friday by the Trump administration, sought to reduce federal reimbursement for research-related indirect costs from an average of 27–28% to 15%.
The ruling, issued by District Judge Angel Kelley, pauses the policy until further court hearings, with the next session scheduled for February 21. The temporary block only applies to institutions in the 22 states that joined the lawsuit, including California, New York, North Carolina, and Massachusetts—key recipients of NIH grant funding.
What Are Indirect Costs, and Why Are They Important?
Indirect costs, also known as “facilities and administration” expenses, cover essential overhead expenses that support medical research but are not directly tied to specific experiments. These costs include:
- Utility bills for research labs
- Lab equipment maintenance
- Building security and upkeep
- Administrative support
Without adequate funding for these expenses, hospitals and research institutions warn that groundbreaking studies, such as cancer research and treatments for chronic diseases like diabetes, could be jeopardized.
The Trump Administration’s Plan to Cut NIH Funding
The policy, outlined in an NIH memo, was introduced as a cost-saving measure that could potentially reduce federal spending by over $4 billion annually. The cuts reflect a long-standing proposal by conservative policymakers to limit the amount of federal research funding allocated to overhead costs.
During his first term, former President Trump’s administration floated a similar proposal to cap indirect costs at 10%, but it faced strong opposition from both parties in Congress. Critics argued that such cuts would devastate U.S. research capabilities, leading to job losses and reduced innovation.
The recent policy shift comes as the Senate prepares to vote on the confirmation of Robert F. Kennedy Jr. to oversee the NIH. Kennedy is expected to review the proposed cuts if confirmed.
Why Are Research Institutions and States Opposing the Cuts?
Financial Impact on Research Institutions
The Association of American Medical Colleges warned that cutting indirect cost reimbursements would force research labs across the country to scale back or shut down entirely. “Make no mistake. This announcement will mean less research. Lights in labs nationwide will literally go out. Researchers and staff will lose their jobs,” the group said.
Recipients of NIH funding argue that indirect costs are essential for maintaining research infrastructure. Without them, labs would struggle to pay for basic necessities like electricity, equipment, and security.
Legal and Policy Concerns
Massachusetts Attorney General Andrea Joy Campbell, representing the coalition of 22 states, described the move as an unlawful and politically motivated action that could harm the nation’s competitiveness. “We will not allow the Trump Administration to unlawfully undermine our economy or play politics with our public health,” Campbell said in a statement.
The Children’s Hospital Association also criticized the cuts, warning that reducing indirect funding rates could hinder future medical breakthroughs. The association called on Congress to intervene and protect established processes for determining funding.
Political Reactions and Potential Outcomes
Support from Conservative Lawmakers
Supporters of the policy, including former Trump advisor Joe Grogan, argue that NIH’s current system of funding indirect costs is inefficient and in need of reform. Grogan criticized the process, saying, “It’s time for a transparent bipartisan discussion of whether taxpayers are getting cutting-edge research out of NIH.”
The NIH justified the cuts by comparing them to rates paid by private nonprofit foundations that subsidize medical research. The memo emphasized that redirecting more funds toward direct research costs would help the U.S. maintain its position as a global leader in medical research.
Bipartisan Opposition to the Cuts
Lawmakers from both parties have historically opposed efforts to cut NIH’s indirect cost funding. In 2017, a Republican-controlled Congress included protections for these funds in a budget bill after similar cuts were proposed.
Republican Senator Susan Collins, who opposes the current cuts, said she contacted Robert F. Kennedy Jr. to urge him to reverse the policy if confirmed. “He has promised that as soon as he is confirmed, he will re-examine this initiative,” Collins said in a statement.
Challenges in Implementing the Policy
Current and former health officials have criticized the policy, arguing that it ignores the existing, detailed process for determining indirect cost rates. Institutions submit extensive proposals justifying their costs, which are then audited by federal authorities before final rates are approved.
“We fight like hell trying to keep the rates down,” said a former federal health official. Capping the rates arbitrarily, they said, disregards years of work by federal agencies to ensure taxpayers get value for their money.
The largest share of indirect costs typically goes toward maintaining research facilities and equipment, with strict rules preventing funds from being misused for non-research purposes. Critics argue that reducing funding for these expenses would undermine the ability of institutions to conduct world-class research.
The temporary block on the NIH’s funding cuts signals ongoing legal and political battles over how medical research is funded in the U.S. While the Trump administration frames the policy as a cost-saving measure to redirect funds toward direct research, critics warn that it could backfire by crippling labs and reducing innovation.
As the court hearing on February 21 approaches, research institutions and lawmakers will continue to push for a long-term solution that balances cost control with the need to sustain cutting-edge medical research.
