In a sweeping and controversial policy shift, the National Institutes of Health (NIH) has announced it will slash indirect cost reimbursements for research grants to a flat 15% cap, a drastic reduction from previously negotiated rates that often exceeded 50% for many institutions. Effective February 10, 2025, this change represents a direct assault on the financial stability of the nation’s research institutions and threatens to cripple the infrastructure that sustains U.S. scientific innovation.
Presented as a cost-cutting measure to “streamline” research funding, the policy is, in reality, a shortsighted attack on the backbone of biomedical discovery. Indirect costs — covering essential expenses like laboratory operations, compliance with safety regulations, research support staff, and advanced equipment maintenance — are not bureaucratic waste. They are the foundation upon which the United States leads the world in scientific and medical innovation and for broader global innovation itself. Without these funds, universities, hospitals, and research institutions will struggle to keep labs open, retain top talent, and continue the groundbreaking work that drives medical advancements, biotech innovation, and public health progress.
The decision is not an isolated budget adjustment — it is part of a broader federal push to gut scientific funding under the guise of fiscal responsibility. The move aligns with an ongoing pattern of administrative disruptions, including funding freezes, agency restructuring, and politically motivated oversight that directly undermines the nation’s ability to respond to public health crises, advance life-saving treatments, and support the next generation of scientific talent. Experts across academia, industry, and public health warn that the consequences will be immediate and severe: groundbreaking research delayed or abandoned, clinical trials disrupted, and a weakened biopharmaceutical pipeline that could set back medical progress by decades.
This policy represents an existential threat to the research community, the biotech sector, and, ultimately, public health. The question is no longer whether this decision will have catastrophic consequences—it is how far-reaching and irreversible those consequences will be.
Not an Isolated Policy Change
This drastic policy shift is a direct mandate from the White House, reflecting President Trump’s renewed push for aggressive budget cuts under the influence of the Department of Government Efficiency (DOGE), a quasi-governmental agency spearheaded by Elon Musk. Since its establishment, DOGE has systematically targeted federally funded programs for cost reductions, with scientific research emerging as a prime target.
The administration has framed this move as a strategy to curb “wasteful spending” in federal research funding, arguing that too much money is spent on administrative and operational costs rather than direct scientific research. However, this argument deliberately ignores how research institutions function — scientific discoveries do not happen in a vacuum, and indirect costs are essential to maintaining the infrastructure that enables innovation.
This move also coincides with other sweeping changes that have disrupted funding for science and medicine:
Funding freezes: In January 2025, the Office of Management and Budget (OMB) temporarily froze all federal financial assistance activities, delaying the disbursement of grants and leaving institutions in limbo. Even though the freeze was lifted, the uncertainty it created disrupted research planning and forced many institutions to put projects on hold.
Agency disruptions: The administration has also imposed hiring freezes, restrictions on travel and communications, and new bureaucratic hurdles that have slowed the NIH’s ability to approve and administer research grants. This has resulted in delays in critical research projects, particularly those focused on urgent public health issues.
Impact on Biomedical Research
The NIH’s new funding model threatens to dismantle the basic infrastructure that supports scientific research in the United States. Indirect costs — also known as facilities and administrative (F&A) costs — cover laboratory maintenance, safety compliance, regulatory oversight, and administrative support, all of which are necessary for research to take place.
For institutions like Harvard and Johns Hopkins, which previously had indirect cost rates exceeding 60%, the cuts will blow multimillion-dollar holes in their budgets, forcing them to either divert funding from other critical programs or scale back their research ambitions. Smaller institutions and historically black colleges and universities (HBCUs), which rely more heavily on federal funding, are even more vulnerable.
The Association of American Medical Colleges (AAMC) has warned that these cuts will diminish the nation’s research capacity, slow scientific progress, and deprive patients of critical medical advancements.
Challenges for the Biopharma Industry
The biopharmaceutical industry relies on academic research institutions for early-stage discoveries that form the foundation of new drugs and therapies. If research institutions can no longer afford to sustain their labs and personnel, pharmaceutical innovation will grind to a halt.
Many of today’s breakthrough treatments — including mRNA vaccines, gene therapies, and targeted cancer treatments — originated from university research funded by NIH grants. Reducing indirect cost support will choke the pipeline of innovation, stalling drug development and making it harder for biotech startups to emerge.
This move stands in direct contradiction to the U.S. government’s previous commitments to strengthening domestic biopharmaceutical manufacturing and securing the supply chain for critical medicines. Instead of fostering a climate of innovation, these budget cuts push research abroad, benefiting foreign competitors at the expense of the U.S. life sciences industry.
Threats to Health Equity
The NIH’s funding model disproportionately affects institutions that serve marginalized and underserved communities. Many of the nation’s leading health equity initiatives — including research into racial disparities in maternal health, environmental health risks in low-income communities, and targeted interventions for rare diseases — depend on NIH grants.
Institutions with fewer private funding sources will struggle to absorb these losses, leading to the discontinuation of critical research on diseases that disproportionately affect vulnerable populations. In the long term, this move will exacerbate existing healthcare disparities by reducing investment in community-based health research and public health interventions. The
American Physiological Society (APS) has warned that these cuts will "effectively strip billions of dollars from the biomedical research enterprise, reducing health advancements and weakening our ability to respond to future pandemics and crises."
Risks to Lifesaving Measures
The consequences of this decision extend beyond individual institutions or research projects. They endanger the entire public health system by reducing the nation’s ability to respond quickly to emerging health crises.
Laboratories working on infectious diseases — such as influenza, Ebola, or COVID-19 — depend on stable funding for their research infrastructure. NIH-funded programs that monitor antibiotic resistance, develop new cancer therapies, or track the long-term effects of environmental pollutants are now in jeopardy.
The AAMC has issued a stark warning: “The lights in labs nationwide will literally go out, leading to job losses, stalled discoveries, and slower responses to the next public health emergency.”
A Critical Moment for U.S. Science and Public Health
The NIH’s indirect cost cuts are not just a budgetary decision — they represent a dangerous step toward the systematic dismantling of U.S. scientific leadership. If left unchallenged, these changes will cripple biomedical innovation, harm industry growth, and endanger public health. Policymakers must act now to reverse this reckless policy before it causes irreparable damage to the future of science, medicine, and global health security.