There was an alarmist report in the Washington Post over the weekend about the Trump administration and the National Institutes of Health. Beneath the headline, “NIH cuts billions of dollars in biomedical funding, effectively immediately,” the paper cited various sources who said a new way of calculating medical grants, imposed by the Trump administration, would be a “devastating” move that would “imperil … universities and medical centers,” “cripple lifesaving research and innovation,” result in “higher degrees of disease and death in the country,” and “imperil clinical research,” for which Americans would “pay the price with their lives.”
Wow. Here is the issue: When a university or research institution receives a grant from NIH, it charges the government for “indirect costs,” that is, for administrative and overhead costs. The amount charged can vary, but it’s a lot of money. “The average indirect cost rate reported by NIH has averaged between 27 percent and 28 percent over time,” NIH wrote in a statement announcing the new policy. “And many organizations are much higher — charging indirect rates of over 50 percent and in some cases over 60 percent.”
In fiscal 2023, NIH gave out $35 billion in grants. Of that, NIH said, $26 billion went to direct costs for research, while $9 billion went to indirect costs to pay for administration and overhead.
NIH noted that when research institutions receive grants from private foundations, the private foundations don’t pay nearly as much for indirect costs as NIH does. “A recent study found that the most common rate of indirect rate reimbursement by foundations was 0 percent, meaning many foundations do not fund indirect costs whatsoever,” NIH wrote. “In addition, many of the nation’s largest funders of research — such as the Bill and Melinda Gates Foundation — have a maximum indirect rate of 15 percent. And in the case of the Gates Foundation, the maximum indirect costs rate is 10 percent for institutions of higher education.”
NIH also included the maximum indirect costs payment rate for other foundations. The Chan Zuckerberg Initiative is capped at 15%, as is the John Templeton Foundation and the Carnegie Corporation of New York. The Robert Wood Johnson Foundation is capped at 12%, and the Smith Richardson Foundation is capped at 10%.
So this is what the Trump administration did. It announced that NIH will now cap the rate of indirect costs at 15%. That way, the thinking goes, NIH will be more in line with private foundations and will be able to spend more on research and less on administration and overhead. Under the new policy, of the $35 billion spent on grants last year, about $5 billion would go to administration and overhead, instead of the $9 billion that was actually paid in fiscal 2023. The savings would be $4 billion.
It seemed reasonable, but the media reaction approached five alarms. In addition to the Washington Post, the New York Times headline was “Trump Administration Cuts Put Medical Progress at Risk, Researchers Say.” CNN’s headline was “Researchers decry ‘disastrously bad idea’ as NIH slashes payments for research infrastructure.” Not to be outdone, the Huffington Post went with “TRUMP SLEDGEHAMMERS NIH FUNDING; ‘CATASTROPHIC’ HIT TO SCIENCE.”
Democrats in Washington were happy to amplify the point. The new NIH policy “will mean shuttering labs across the country, layoffs in red and blue states, and derailing lifesaving research on everything from cancer to opioid addiction,” Sen. Patty Murray (D-WA) said. Rep. Jamie Raskin (D-MD) called the new policy “another deep wound inflicted against American medicine, science and health by Musk’s juvenile night crew of data thieves following the Project 2025 playbook.”
As Raskin indicated, for Democrats the chief villain in the narrative was, of course, Elon Musk of the Trump-created Department of Government Efficiency, and also the Heritage Foundation’s Project 2025. Musk had called the old, high indirect costs payments a “ripoff.” Last year, Project 2025 recommended that “Congress should cap the indirect cost rate paid to universities so that it does not exceed the lowest rate a university accepts from a private organization to fund research efforts. This market-based reform would help reduce federal taxpayer subsidization of leftist agendas.”
Meanwhile, knowledgeable Republicans were appalled — not at the new policy but at the media/Democratic reaction. “As a physician who has conducted NIH-funded research, I understand how important research funding is,” said Rep. Andy Harris (R-MD), a Johns Hopkins-trained anesthesiologist, in a statement. “But for years, the American taxpayer has paid inflated 50-60 percent ‘indirect costs’ for research in universities while nonprofits, private companies, and foundations only pay 15 percent or less. The NIH’s new indirect cost rate of 15 percent is in line with what research institutions receive from private foundations, and could actually allow more NIH funding to go directly to critical scientific research, instead of funding bloated university bureaucracies, including DEI offices.” The Washington Post article, Harris added, was “grossly misleading.”
All of that came within 24 hours of the announcement of the new policy. It’s not yet clear whether the NIH matter will reach USAID-levels of intensity among Democrats and the media. But it’s off to a strong start.
https://www.washingtonexaminer.com/opinion/columnists/3315099/after-nih-move-doge-hysteria-spreads/
