Judge issues temporary restraining orders over NIH indirect cost policy

A federal judge in Massachusetts has granted two temporary restraining orders blocking the recent decision by the US National Institutes of Health (NIH) to cap the amount that research grant recipients can receive for facility and administrative costs, payments known as indirect costs.

On the evening of Feb. 7, the health agency announced that it would limit the indirect cost rate for both new and existing grants to 15% starting Feb. 10. That rate is substantially lower than the 27–28% rate that universities receive, on average, according to the NIH memo.

Three lawsuits were filed Feb. 10 in response to the policy change. That same day, Judge Angel Kelley granted a temporary restraining order in response to the first suit, filed by 22 state attorneys general, pausing the policy change in those states. On Feb. 11, Kelley halted the policy change nationwide in response to a second lawsuit, filed on behalf of medical centers and medical schools. Hearings on both orders are scheduled for Feb. 21.

When a research grant is awarded, a portion is set aside to reimburse universities for overhead costs. Some of those expenses include utilities, lab maintenance, hazardous waste disposal, and nonresearch personnel.

Universities negotiate their indirect cost rates individually with funding agencies in a process regulated by the Office of Management and Budget. According to a Feb. 7 post on X by the NIH, the indirect cost rate can surpass 60% for some universities.

In its memo, the agency says that $9 billion of the $35 billion it spent on research grants in 2023 went to reimbursing overhead costs and that lowering this amount would ensure a larger portion goes to research.

Michelle Arkin, a chemical biologist at the University of California, San Francisco, says that while grant money use could probably be streamlined, “to have a blanket number thrown at everything all at once without a rationale is bewildering.”

Several research and university organizations have criticized the NIH policy change. For example, in a joint statement, the Association of American Medical Colleges CEO David J. Skorton and Chief Scientific Officer Elena Fuentes-Afflick say the cap “will mean less research.”

COGR, an association of research universities, affiliated medical centers, and independent research institutions, shared a similar sentiment in a LinkedIn post saying that “capping these costs is cutting research—period.”

The University of California quickly announced its support of the initial lawsuit filed by the state attorneys general and later joined 12 universities in the third of the three suits filed against the NIH Feb. 10.

The University of California system received $2.6 billion from the NIH last year and stands to lose “hundreds of million dollars annually” if the 15% indirect cost cap remains, the system says in its statement.

The NIH policy change is the second time the Donald J. Trump administration has attempted to reduce the indirect cost rate for research institutions. In 2017, it proposed lowering the NIH’s indirect rate to 10% of its total research spending.

Back then, the proposal was part of a budget request sent to Congress. Representatives blocked the change.

With additional reporting by Laurel Oldach