What are indirect research costs and why do they matter? (Or: why Trump’s NIH just nuked American medical research in a Friday afternoon news dump.)
On Friday, the NIH announced on Twitter/X and on its website that it would cap all “indirect” research costs in grants awarded to institutions of higher education at 15%. Most researchers recoiled in horror. This is far lower than most major institutions receive.
I never expected that most of you would need to know what “indirect research costs” are, or why they matter. But here we are. Now you have to know.
To explain the situation, I asked my friend and mentor, Yale School of Medicine Professor Dr. Harlan Krumholz to explain what indirect costs are, and why they are more than bloat. Please watch the highly impactful 5-minute video above that Harlan generously recorded late last night for us, the Inside Medicine audience. (Closed captions (㏄) and a transcript option (📄) can be found beneath the video playback control bar). Note: The views reflected in Dr. Krumholz’s video are his own, and may not reflect those of Yale University.
Harlan eloquently and passionately explains in both clear and urgent terms what is at stake. “We cannot afford to sacrifice the core infrastructure that enables all the discoveries," he says. There will be “serious consequences for innovation….it could take generations to recover.” To listen to Harlan is to be reminded about the inspiring work US-based scientists do, and why we should oppose any attempt to dismantle all of it. We should be vigorously supporting medical research!
I also asked my former Harvard colleague Professor Edward Boyer (now at The Ohio State University) for a quick reaction. He put it bluntly: “China just became the leader in biomedical research.” It bears noting that if this move succeeds in gutting American academic medical research, it will make Big Pharma research the only game in town. Is that what we want?
The rest of this post is a series of resources and brief commentaries to help you further understand what the Trump administration just tried to do to our nation’s first-class academic medical research assets, which, until now, have been the envy of the world.
The NIH tweet that started this debacle.
The NIH’s Twitter/X post framed the 15% cap as decreasing “administrative overheard.” (Again, getting rid of bloat sounds great, but that’s not what most indirect costs are.) Here’s a screenshot:
Some Frequently Asked Questions about indirect costs.
Among several key points addressed in this Association of American Universities document are these two:
What are “facilities and administrative” (F&A) costs? “F&A costs – also referred to as “indirect costs” – are essential costs of conducting research. The federal government’s longstanding recognition and payment of its share of these costs has helped U.S. colleges and universities build and support the required research infrastructure that has made the American research enterprise the best in the world. When the government provides a grant to a university for a research project, a portion (typically 67-75 percent) of the budget is available directly to the research team. This “direct costs” portion supports researcher salaries, graduate students, equipment, and supplies. Another portion (typically 25-33 percent) covers necessary research infrastructure and operating expenses that the university provides to support the research. These research expenses – officially “indirect costs” but more descriptively called facilities and administrative (F&A) costs – include: state-of-the art research laboratories; high-speed data processing; national security protections (e.g., export controls); patient safety (e.g., human subjects protections); radiation safety and hazardous waste disposal; personnel required to support essential administrative and regulatory compliance work, maintenance staff, and other activities necessary for supporting research.”
Do universities ‘profit’ from the F&A cost reimbursements they receive associated with federal research grants? “No, universities absolutely do not financially gain from their F&A recoveries. As defined by the federal government, these are reimbursements for costs incurred by universities in conducting research on behalf of the government, and hence, it is impossible for the costs reimbursements to result in a profit. In fact, universities are not even fully reimbursed for the expenses they incur to provide the necessary infrastructure and support to conduct federal research. According to data collected by the NSF, in FY23 universities contributed approximately $6.8 billion in facilities and administrative expenditures not reimbursed by the government, many of which were not covered because of an Office of Management and Budget (OMB) cap limiting the amount the government can repay universities for administrative and compliance related expenses, including federal mandates.”
My friend and colleague Dr. Megan Ranney, Dean of the Yale School of Public Health summarized the AAU document and added her own expertise on Bluesky.
Selectively singling out certain institutions…
You may have noticed in the NIH post on Twitter/X that they specifically called out Harvard, Yale, and Johns Hopkins University for high indirect rates. (The rates are different at each institution, and were agreed upon by the NIH in the past.) Interestingly, a post on Bluesky pointed out the blatant bad faith here. “Children’s Hospital of Pennsylvania has indirect rate of 70% [sic; I think it’s actually 78%], but they probably didn’t want to list that atop Harvard because defunding a children’s hospital might be perceived as problematic. This is devastating.”
Gutting the non-government workforce and the bad-faith rationales behind it.
Over on LinkedIn, Mark Abraham of DataHaven predicted tens of thousands of layoffs resulting from this move.
President Trump and his DOGE henchmen have been busy trying to gut the federal government workforce. But this move will likely cause tens of thousands of private-sector job losses. So, it’s not just the public sector that this administration wants to send into unemployment, but others who they don’t favor.
Given the draconian, unilateral, and immediate effect (the policy is meant to be instituted even on existing grants starting in just two days, on Monday January 10), this can hardly be about saving money. It’s about creating misery and chaos. Remember, as Harlan Krumholz said in the video that he made for us, there are surely ways to make the system more efficient. But this kind of action is not the way to make progress. It is, however, a way to desecrate and destroy a source of national pride and international esteem.
As the highly-respected Johns Hopkins University researcher Dr. Jack Iwashnya succinctly put it: “Trump admin to medical research: “F— off and die.”
It’s time for our universities to step up and do something.
I doubt that the major universities will roll over and play dead on this one. After all, it’s not like they’re the United States Congress or anything! I hope (and imagine) that this news will finally be the wake-up call for these institutions to get into the fight against the cynical and nihilistic agenda that the new Trump administration has pursued, lo these past three months weeks. We need to save American science and, it bears mentioning, American jobs.
Indeed, with the future of American ingenuity and its economy at stake, it’s time for our great institutions of higher learning to stand up and give it the ol’ college try. And by that, I mean lawyer up!
Share this post