Top universities and medical centers stand to lose $100 million a year or more if a sweeping change to how the National Institutes of Health reimburses research costs takes effect on Monday. The big losers would include prestigious institutions in conservative states.
The NIH, the nation’s top funder of biomedical research, announced on Friday that it would substantially limit payments for indirect costs, administrative and facility expenses connected to research, starting almost immediately. To assess the potential impact of these changes, STAT examined publicly available financial records, agreements negotiated between research centers and the federal government, and internal emails. These documents show that, in some cases, the policy change could plunge operating budgets into deficits, leaving academic leaders scrambling to figure out how to manage the loss.
Research administrators, scientists, and academic clinicians interviewed by STAT expressed shock after the NIH announced the policy change, with many fearing that the loss of revenue could quickly lead to layoffs, halted or cancelled studies and clinical trials, and even the collapse of biomedical discovery in the United States down the line.
“If this goes into action on Monday, it actually, literally has the ability of stopping and grinding research to a halt — soon,” said Robert Winn, the director of the Massey Comprehensive Cancer Center at Virginia Commonwealth University. “How does an institution now climb out of a multimillion-dollar hole? Tens of millions. How does that just happen, overnight?”
The policy change centers around the indirect cost payments that federal grantees receive from the government. These costs are also called facilities and administration costs, or F&A costs, because they cover the general upkeep of running a research institution including electricity and other utilities, janitorial services, rent, and certain administrative costs. Institutions directly negotiate an indirect cost rate with granting agencies, an intensive process requiring the institution to provide audited financial documentation of their overhead costs.
These rates have ranged widely from the previous minimum of 15% all the way to around 70%. A rate of 70% essentially means that for every dollar of direct funding a scientist receives from a grant, the research institution receives 70 cents in indirect funds. The new policy caps the indirect rate from NIH grants at 15% — a change that experts said will not only harm elite institutions, which often get the highest rates of overhead support, but will have a lasting impact on practically every academic and medical institution in the country with a research budget.
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