Policymakers Wrangle Over NIH Spending

In February, the National Institutes of Health announced that it would be lowering the payments it makes to grant recipients to cover the overhead costs of scientific research, also called indirect costs. Two months later, the NIH laid off some 1,200 employees, as part of wider cuts to federal health agencies. And a draft budget proposal, leaked last week, now suggests the Trump administration will seek to cut the NIH budget by around $20 billion, roughly a 40 percent reduction, in the next fiscal year, alongside a substantial reorganization of the agency.

Such actions have driven fears of a long-term, nationwide decline in biomedical research under President Donald Trump. A headline at Mother Jones described the proposed reform to NIH overhead cost reimbursement as “Trump’s Mindless War on Science.” The layoffs — or “reductions in force,” in government parlance — were variously described as a “bloodbath,” a “massacre,” and a “massive staff purge.” And Jason Owen-Smith, a sociologist at the University of Michigan, told STAT that long term, a $20 billion cut to NIH funding would represent, “conservatively, a fundamental change in the national aspirations of the U.S. in the field of biomedicine.”

Last month, two Senate Democrats hosted a forum blaming Republicans for “gutting NIH research,” during which Sen. Dick Durbin, an Illinois Democrat, warned that “people are going to die” if funds for medical research dry up.

Whether that’s fair or hyperbolic is a matter of partisan disagreement, but advocates argue that the proposed reforms — which come after decades of steady, bipartisan-supported growth in funding for biomedical research — will cut administrative costs and other perceived bloat. This, they argue, will ultimately direct a bigger share of science spending toward actual science. Some argue even that overall funding cuts could prove beneficial for biomedical research.

Many scientists aren’t buying those arguments. They say the Trump administration has overstated the inefficiencies in these systems, and that they seem mostly interested in using science funding as a leash to rein in perceived ideological excesses in academia, rather than making concrete policy improvements. And even within conservative Washington, opinions differ on how best to approach the NIH’s budget and mission. Policy analysts say some Republican policymakers don’t want sweeping cuts to this sort of research funding. In 2017, when the first Trump administration requested a roughly 20 percent cut to the NIH budget, the Republican-controlled Congress increased it instead.

That outcome seems less likely now, and with NIH fully in the administration’s crosshairs, the question of whether the agency — and by extension, the nation’s biomedical research community — can really do more with less money and fewer people has become paramount.

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Today, the NIH receives close to $50 billion from Congress each year to advance biomedical research. (That’s more than double its funding in 1995, accounting for inflation.) Some of that money is spent on in-house research programs that are staffed by thousands of senior scientists. But most of the funds are distributed through grants to research universities, in an academia-government partnership that has its roots in World War II.

That research has contributed to an array of medical breakthroughs, including mRNA vaccines and CAR-T cancer therapies.

Can some of the proposed policy changes make that science-support apparatus more efficient and effective? One area to look at is staffing cuts. In a fact sheet published in late March, the Department of Health and Human Services, which houses NIH, said it would achieve cuts by “centralizing procurement, human resources, and communications” across the agency.

Data from the U.S. Office of Personnel Management, the main human resources agency for the federal government, shows that NIH staffing climbed steadily between 2019 and 2024, including the addition of more than 1,600 administrative staff.

According to Government Executive, a specialty publication covering federal affairs, planned layoffs and voluntary departures at NIH will reduce the agency’s workforce by 3,400 people, which would bring the agency back to 2019 staffing levels. (It’s unclear what proposed cuts to the NIH budget could mean for further layoffs; the draft proposal calls for eliminating four of the agency’s 27 institutes and centers, and consolidating many of the remaining institutes.)

In the first round of cuts, some scientists have lost positions. Jeremy Berg, a professor at the University of Pittsburgh who led an NIH institute from 2003 to 2011, said he was skeptical of the overall approach: “If you’re trying to lose weight, you ideally lose weight by losing weight overall” — rather than, say, just cutting off a leg. “Nobody knows exactly what’s going on, but cutting off entire functional units and hoping that somehow those functions survive in some other reorganization, is something that one should do very carefully,” he said. “And that is not a term that I would use to describe what’s been going on.”

For research institutions that receive federal grants, a bigger issue is their overhead payments. The payments work like this: If NIH gives a $100,000 grant to a university for a professor’s research project, they also give an additional chunk of money to her university to cover what are called indirect costs. This money pays for general infrastructure that’s necessary to support research, but that’s not tied to any single project, like HVAC for buildings that house laboratories; specialized facilities that raise experimental animals; and staff who make sure the university is complying with research regulations.

Every few years, institutions negotiate a rate with the federal government. In theory, a 50 percent indirect cost rate, for example, would mean that the institution gets an additional $50,000 on top of that $100,000 grant. In practice, some portions of the grant — such as student tuition and capital expenses — are not eligible to count toward indirect cost reimbursement. The 50 percent, then, might actually be calculated as if the grant were only for $70,000, meaning the university would get an additional $35,000.

Factoring in those modifications, the average rate is around 27 percent, with some variation among institutions.

There’s a widespread perception — not just on the political right — that universities use some of that money as a kind of general fund, subsidizing other parts of their operations that aren’t necessarily involved in federally funded scientific research. It’s a lot of cash: In the 2023 fiscal year, NIH alone distributed $9 billion in indirect cost reimbursements.

Some policy analysts argue NIH and other federal science agencies could spend much less money on these indirect costs, allowing them to use more of their budgets to directly fund research.

Jay Greene, a senior research fellow at the Heritage Foundation, a conservative think tank, first grew suspicious about indirect costs as a professor and department head at the University of Arkansas, in the 2000s and 2010s. “The whole thing struck me as strange, how hard we were pushed to generate indirect costs,” he recalled recently. Observing the process, he said, “I could see, essentially, the building up of slush funds that were unaccountable.”

He also took issue with the lower indirect reimbursements paid out by private funders, suggesting that large foundations were effectively free-riding on research infrastructure funded by the federal government. “We were using excess indirect rates from taxpayers to cross-subsidize the research agendas of billionaire foundations,” he said.

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Others had concerns as well. In 2017, Donald Trump’s first administration proposed lowering and capping indirect rates but was rebuffed by a Republican-controlled Congress.

In 2021, Greene joined the Heritage Foundation. The next year, he co-authored a report that described indirect cost reimbursements as “funding ideological agendas” on university campuses. Greene argues that universities overstate their costs in order to get the highest possible payment, then use that money to subsidize other activities. “I don’t think people have to be liars to get very high overhead rates,” he told Undark. “It’s an incentivized set of judgments that they make.”

Arguments from the Heritage Foundation report were echoed in Project 2025, an influential policy document developed by the think tank ahead of last year’s election. In February, the NIH suddenly announced that it would cap indirect rates at 15 percent — a move that would have pulled at least $6.5 billion in funding from universities and other grantees, according to the Association of American Medical Colleges. (An announcement from NIH appears to draw from Greene’s 2022 report.)

A federal judge blocked the move earlier this month, although litigation is ongoing — and Congress could circumvent some objections raised in the lawsuit by taking legislative action. Academics familiar with the indirect negotiation process, meanwhile, say these criticisms are based on misapprehensions about the process.

“The current indirect cost rates do not represent the full cost of carrying out research,” said Mark Barteau, an engineering professor at Texas A&M who previously served as the university’s vice President for research. Far from making money on federal research, he and others say, universities are taking a hit.

Barteau cites data showing that indirect cost rates have held steady over recent decades, while the percentage of overall research funding that comes from universities has increased. (One recent paper from two scientists marshals data suggesting that overhead expenses reported by private biotechnology companies are comparable to those charged to the federal government by research universities.)

Barteau has negotiated indirect rates with the federal government, and he pushed back against suggestions that the process is unaccountable. “Every building on campus is audited room by room,” he said, as civil servants make sure the indirect reimbursements are only covering expenses associated with space used for research.

Berg described the process as akin to “the most intrusive tax audit you can imagine.”

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Both critics and defenders of the current process acknowledge it could be more transparent.

The audits and negotiations are not made public, and it’s unclear if large universities often — or ever — open their books to provide a public accounting of how they calculate and justify indirect costs. “But one has to keep in mind that there are other parties to the negotiation, namely the government offices that are charged with doing that, and they are not pushovers,” said Berg. “Their responsibility is to negotiate aggressively on the part of the federal government to make sure the government is not being ripped off.”

Berg argues that cuts to the indirect rate won’t direct more money to science, but rather limit how much research universities can support.

Those kinds of arguments have not assuaged suspicions that universities are padding their budgets, or at least channeling the money into bloated bureaucracies. “There’s a lot of distrust about where the money goes because trust in the public health establishment collapsed in the pandemic,” said Jay Bhattacharya, the NIH Director, during his confirmation hearing in March. “I want to make sure the money goes to the research.” (Bhattacharya himself has received grants from the agency.)

University representatives have made overtures toward negotiation. In early April, a consortium of societies representing research institutions formed a group “to spur the development of a more efficient and transparent model for funding indirect costs on federal research grants.”

“We’ve seen interest in making substantial, rapid changes, as we saw in February, and really are thinking about putting something together in a more deliberative, collaborative way,” said Heather Pierce, Senior Director for Science Policy and Regulatory Counsel at the Association of American Medical Colleges, one of the organizations behind the effort.

There may also be room for common ground between university administrators and Republican policymakers skeptical of both regulatory expansion and administrative overhead. Barteau, for example, said that universities bear high administrative costs, in part, because of a regulatory burden on researchers that has increased steadily in recent decades. “If you want us to reduce administrative overhead, then you’ve got to reduce our administrative and compliance burden,” he said.

Looming in the background are broader questions about the future of bipartisan support for swelling scientific research budgets.

No amount of bloat-trimming could make up for cuts on the scale of $20 billion, said Stuart Buck, executive director of the Good Science Project, a science policy think tank: “I don’t see how it’s mathematically possible.”

Jennifer Zeitzer, an executive at the Federation of American Societies for Experimental Biology, told Science last week that large cuts to overall NIH funding would “completely kneecap biomedical research in this country.”

Some reform-minded commentators are skeptical that funding cuts would necessarily harm health research. In early April, Vinay Prasad, a physician-scientist and prominent critic of public health institutions, wrote a post questioning whether more scientific research necessarily leads to better outcomes for the public’s health. “The majority of science,” he wrote, “is neither true nor useful.”

Greene suggested some overall cuts could have a positive effect. “I do think some tightening of belts could be good for the research community,” he said. “Again, accountability is kind of good. It helps people make sure that they’re really doing the best stuff in the best way.”

In a follow-up interview, he also pushed back against suggestions that large-scale cuts would endanger, for example, the hunt for cancer treatments. “I don’t know that there’s a direct relationship between the level of federal funding and the prospects for curing cancer,” he said. “So I can envision how we might strengthen our fight against cancer if the work were more accountable and applied towards that purpose.”

Buck agreed in principle that more cash doesn’t always translate to more results. (He told the story of an Alzheimer’s researcher complaining to him that an influx of federal money to the field had actually diluted the quality of research, as more labs jockeyed for funding.) But a major contraction in NIH funding, he argued, would have consequences — including damaging the kind of broad, exploratory research program that yields groundbreaking discoveries.

It remains to be seen whether the Republican-controlled Congress will agree to slash the NIH  budget, and if so, by how much. Frederick Hess, the founder and chair of the Conservative Education Reform Network at the American Enterprise Institute, a conservative think tank, said he sees a divide on the right between those who want to keep overall funding steady, or even increase it, while attempting to reduce perceived inefficiencies, and those who may be looking for outright cuts.

The conversation, Hess said, is also colored by suspicion of scientific institutions that have taken political stands. (He pointed to the journal Nature, which endorsed Joe Biden’s presidential campaign in 2020.) When talking about science, he said, it’s rational for Republicans to question whether they’re dealing with “ideological entities that are wrapping themselves in the garb of research.”

Berg, for his part, suggested that some policymakers in Washington seem less interested in the nuts-and-bolts of science reform, and more intent on litigating cultural battles. The Trump Administration has frozen many NIH grants to Harvard, Columbia, and other major research universities over perceived failures to address antisemitism on campuses. And policymakers and science agencies have targeted grants that seem to have even just a tenuous relation to topics like environmental justice, racial equality, LGBTQ health, and diversity, equity, and inclusion, or DEI. “Grants are being scrutinized for anything that looks like it might be somehow connected with a very broad definition of DEI activities,” Berg said. “They don’t seem to be overly concerned about actually funding science. They seem to be more concerned about using NIH as leverage.”

When he spoke with Undark in early April, Berg wanted it known that he was speaking in a personal capacity, outside his post-NIH role as a professor and administrator at the University of Pittsburgh. One of those roles, it turned out, was in jeopardy: The day after the interview, he announced on Bluesky that he had lost his administrative position — “allegedly due to cuts in administrative staff caused by the threats of changes to the indirect cost rate.”