# NIH Reduces Indirect Cost Reimbursements: An Impending Crisis for Biomedical Research
The National Institutes of Health (NIH) has recently revealed a significant policy alteration that will profoundly affect biomedical research financing in the United States. The agency has opted to limit indirect cost reimbursements to 15% for all current and future grants, a decision that could severely undermine research institutions dependent on these funds for their operation.
## Comprehending Indirect Costs in Research
Federal research grants generally encompass two components:
1. **Direct Costs** – These expenses are directly associated with conducting research, including salaries, equipment, and supplies like chemicals or enzymes.
2. **Indirect Costs** – These reimburse institutions for the vital infrastructure and administrative assistance necessary for research activities. This covers laboratory space, utilities, compliance with safety standards, and administrative tasks like human resources and grant management.
Negotiations between research institutions and the government determine indirect cost rates, typically averaging around 30%. Certain institutions receive as much as 50% of the grant total to address these essential expenses.
## The NIH’s Abrupt Policy Transition
On February 2025, the NIH [declared](https://grants.nih.gov/grants/guide/notice-files/NOT-OD-25-068.html) that a flat 15% limit on indirect cost reimbursements would be instituted. This alteration is applicable retroactively to all current grants and will apply to future grants as well. This decision was made without prior discussions with research institutions, leaving them no opportunity to modify their budgets.
The NIH defended its decision by referencing federal regulations that permit agencies to establish different indirect cost rates for particular grants or award types. The agency also highlighted the lower indirect cost rates provided by private foundations as justification for its change.
## Serious Repercussions for Research Institutions
The repercussions of this policy change are severe:
– **Budget Deficits** – Universities and research institutions have designed their budgets based on previously settled indirect cost rates. A sudden cut will force them to scramble to meet essential expenses.
– **Operational Challenges** – Indirect costs support vital infrastructure, such as laboratory upkeep, waste management, and compliance with safety regulations. Without sufficient funding, institutions may need to reduce these services, risking research integrity and safety.
– **Heightened Administrative Responsibilities for Scientists** – If institutions can no longer afford administrative support, researchers will have to assume more duties, distracting them from scientific endeavors.
– **Disproportionate Effect on High-Cost Institutions** – Universities located in urban settings, where operational expenses are elevated, will encounter the most significant challenges. These institutions may need to curtail research initiatives or seek alternative funding sources.
## A Blow to US Scientific Preeminence
The NIH’s decision arrives at a moment when US scientific research is already under considerable financial pressure. Just a day prior to this announcement, the White House proposed a budget that would [significantly reduce funding](https://arstechnica.com/science/2025/02/white-house-budget-proposal-could-shatter-the-national-science-foundation/) for the National Science Foundation (NSF). Together, these actions suggest a broader initiative to diminish federal support for scientific research.
The retroactive aspect of the NIH’s decision may also be subject to legal scrutiny. Federal regulations mandate that funding opportunity notices encompass policies regarding indirect cost rates, raising doubts about the legality of the NIH’s abrupt policy shift.
## What Lies Ahead for Research Institutions?
With minimal time to adjust, universities and research institutions are faced with limited choices:
– **Reducing Research Initiatives** – Many institutions may have to decrease the number of research projects they back.
– **Reallocating Direct Costs** – Some institutions might try to move funds from direct research expenses to cover infrastructure needs, yet this will ultimately reduce available funding for actual scientific exploration.
– **Pursuing Alternative Funding** – Institutions may seek support from private foundations or partnerships with industry, but these sources typically offer less funding than federal grants.
## Conclusion
The NIH’s choice to cap indirect cost reimbursements at 15% constitutes a significant peril to the future of biomedical research in the United States. By rolling out this policy without prior notice or discussion, the agency has put research institutions in a vulnerable financial situation. Unless this decision is retracted or alleviated, the US risks jeopardizing its status as a global frontrunner in scientific advancement.
Researchers, universities, and policymakers must now collaborate to contest this policy and advocate for sustainable funding structures that bolster both scientific innovation and the supporting infrastructure that enables it.
