Court orders hold on Trump’s medical research funding cuts

A United States federal district judge in Boston has granted an injunction requested by Massachusetts and 21 other states that pauses cuts totalling US$4 billion to research institutions, including America’s premier research universities, announced by the National Institutes of Health (NIH) on 7 February.

The NIH is an agency of the Department of Health and Human Services (DHHS); the Secretary of DHHS is a member of President Donald J Trump’s cabinet.

The capping of indirect costs that the NIH will cover at 15% was made without consultation with medical institutes, research centres or universities such as the Massachusetts Institute of Technology, California Institute of Technology and Johns Hopkins University, which will lose millions of dollars under the NIH’s cap.

These three universities, as well as eight other research universities and the American Council on Education (ACE), have filed a parallel lawsuit against the NIH or any other research university.

According to the NIH, the cap is necessary because a number of institutions were overcharging for indirect costs in agreements negotiated with the NIH.

In her order, Judge Angel Kelley ordered the Trump administration to “file a status report with the Court within 24 hours of the entry of this Order, and at biweekly intervals thereafter, confirming the regular disbursement and obligation of federal financial assistance funds and reporting all steps that NIH, HHS [the Department of Health and Human Services], and their officers, employees, servants, agents, appointees, and successors have taken to comply with the Court’s temporary restraining order”.

Judge Kelley’s ruling was made the same day that John J McConnell Jr, a federal district judge in Rhode Island – who last week ordered Trump’s administration to restore funding to a number of government agencies, including USAID, halted via a number of executive orders – issued another ruling ordering the president to comply with the “plain text” of his previous ruling and restore all funds.

Though McConnell’s original ruling did not deal with the NIH, at the end of his second ruling, he singled it out, saying its funding must be restored.

“The Defendants [that is, the US government] must resume the funding of institutes and other agencies of the Defendants (for example, the National Institutes for Health) that are included in the scope of the Court’s TRO” [Temporary Restraining Order, ie, the original injunction], the order stated.

In a media statement announcing the lawsuit it brought with 13 universities, the ACE said: “Besides harming the ability of research universities to continue doing critical NIH research that seeks out new and more effective approaches to treating cancer, heart disease, and dementia, among others, and translating basic science into cures, this cut would also undermine universities’ essential training of the next generation of biomedical and health science researchers.

“The loss of this American workforce pipeline would be a blow to the US economy, to American science and innovation, to patients and their families, and to our nation’s position in the world as a leader in medical research.

“It would be, quite simply, a self-inflicted wound.”

The lights will go out

In its statement issued before the suit was filed by the 22 states, David J Skorton MD, president and CEO of the Association of American Medical Colleges, and the organisation’s Chief Scientific Officer Elena Fuentes-Afflick MD, said in part: “The administration’s announcement that it plans to cut federal support of biomedical research by drastically reducing reimbursement of research costs related to peer-reviewed grants from the NIH will diminish the nation’s research capacity, slowing scientific progress and depriving patients, families, and communities across the country of new treatments, diagnostics, and preventative interventions.

“The government’s support of facilities and administrative costs allows medical research to happen. These real and documented research expenses include physical lab operations and maintenance, security, data processing and storage, and daily operations of critical research infrastructure.

“Make no mistake. This announcement will mean less research. Lights in labs nationwide will literally go out. Researchers and staff will lose their jobs.”

Michael V Drake, president of the University of California, stated in a post supporting California’s attorney general, who has signed on to the case, said: “As the world’s leading public research institution, we depend on NIH funds to perform our vital mission. A cut this size is nothing short of catastrophic for countless Americans who depend on UC’s scientific advances to save lives and improve healthcare. This is not only an attack on science, but on America’s health writ large.”

Indirect cost rate

In its statement announcing the cap on payments for indirect costs at 15% of the grant, the NIH said in fiscal year 2024, the NIH spent more than US$35 billion on almost 50,000 competitive grants to more than 300,000 researchers at more than 2,500 universities, medical schools, and other research institutions.

Of this funding, approximately US$26 billion went to direct costs for research, while US$9 billion was allocated to overhead through NIH’s indirect cost rate.

Such costs, the NIH says, are divided into two categories: facilities and administration. The facilities category is “defined as depreciation on buildings, equipment, and capital improvements, interest on debt associated with certain buildings, equipment, and capital improvements, and operations and maintenance expenses.”

The administrative category can include “general administration and general expenses such as the director’s office, accounting, personnel, and all other types of expenditures not listed specifically under one of the subcategories of ‘Facilities’”.

According to the NIH, the average indirect cost rate (ICR) is approximately 28%, with some institutions reporting an ICR of upwards of 60%.

The NIH justified cutting the ICR to 15% by saying that “a recent study found that the most common rate of indirect rate reimbursement by foundations was 0%, meaning many foundations do not fund indirect costs whatsoever.

In addition, many of the nation’s largest funders of research – such as the Bill and Melinda Gates Foundation – have a maximum indirect rate of 15%. And in the case of the Gates Foundation, the maximum indirect costs rate is 10% for institutions of higher education”.

The NIH provided neither a source for the study referenced, nor did it name the foundations that do not fund indirect costs.

In its discussion of direct and indirect costs of research programmes, the complaint by the 22 plaintiffs provides a more fulsome list of indirect costs. These may include “work and safety regulatory committees that are mandated by the federal government for certain research programs” as well as costs “necessary to comply with specialised ventilation requirements, or research quarters and facilities suitable for optimising biosafety and radiation safety”.

Violations of existing laws

The complaint contains five counts that argue that both the form and substance of the NIH’s cuts violate the Administrative Procedure Act, the federal statute under which agencies like the NIH operate.

The first argues that the changes announced on 7 February were arbitrary and capricious because they fail to take account of the institutions’ reliance on the grants for which the NIH has already accepted the ICR of those institutions.

“Changing political considerations or priorities [for example, those of the Trump administration] are not alone sufficient to justify significant changes in policy” to previously agreed-upon ICR. Further, there is no indication that Acting Director of the NIH Dr Matthew J Memoli “meaningfully weighed those reliance interests against the putative policy concerns laid out in the Rate of Change Notice (RCN)”.

A new head of the NIH cannot be named until there is a new Health and Human Services Secretary; at present, the US Senate, which must confirm cabinet members, has not set a date to vote on the nomination of Robert F Kennedy Jr for the position.

This count goes on to tell the court that indirect cost agreements are not “arbitrarily selected by recipient institutions” but are the result of “extensive data-driven negotiation and engagement between Plaintiff States and teams of cost accounting experts representing the interest of government and granting agencies”.

Nor does the RCN explain the NIH’s reasoning or why rates used by private granting agencies “should serve as benchmarks for NIH’s indirect costs”.

The second count argues that the NIH violated the section of the APA that was passed in 2024 that undid a regulation passed during Trump’s first term that instituted a 10% funding cut.

The third count argues that the NIH violated the part of the APA that states: “Negotiated indirect cost rates must be accepted by all Federal awards”. This count also argues that the NIH violated the APA by failing to publish “procedures” and “general decision-making criteria”.

The fourth count argues that the NIH violated the APA by imposing a retroactive action; the new policy applies to grants that have been signed but have not yet begun.

The fifth count argues that the NIH violated the APA, which “generally requires that before a federal agency adopts a rule, it must first publish the proposed rule in the Federal Register and provide interested parties with an opportunity to submit comments and information concerning the proposal,” which, in a 2018 case led the First Circuit (Appeals) Court to rule that: “Failure to abide by these requirements renders a rule procedurally invalid”.

Significant cuts

The court filing details the devastating financial impact the NIH cuts will have. Michigan State University’s medical scientific research programmes received US$136 million in NIH funding. Because of the nature of much of this research, the university negotiated an ICR of 57%; “a reduction to 15% would mean a loss of approximately US$27 million that MSU uses to support its research.”

Last year, California State University (CSU) received US$158 million from the NIH. The CSU had negotiated ICRs varying from 20% to 50%. The “new cap will impact the CSU’s ability to maintain their current programmes,” notes the complaint.

Rutgers University in New Jersey received approximately US$250 million in funding, “which supports nearly 1,200 separate grants and more than 2,400 employees,” says the complaint. The university had negotiated an ICR of 57%. A 15% ICR works out to a cut of US$21.5 million in the fiscal year ending in June and a US$57 million cut for the fiscal year 2026.

The University of New Mexico stands to lose US$14.5 million, while the Oregon Health and Science University, which received US$297 million in NIH grants and contracts in 2023, stands to lose US$80 million because it had an ICR of 56%.

Damage to R&D

According to Bryan Alexander, a senior scholar at Georgetown University and author of the forthcoming book Peak Higher Education: How to Survive the Emerging Academic Crisis (Johns Hopkins UP), the NIH’s cuts tie into the “broader anti-expertise, anti-academic mood” in the United States – and contribute to it.

“It’s going to have a number of negative effects. In medicine and health, we will fall behind in the development of all kinds of therapies and care, which, of course, will have material effects on people’s lives. It is also going to degrade research and development in academia and negatively affect many careers as well as academic units, not to mention colleges and universities.

“It may be that the kind of research the NIH has been funding will become a kind of ‘unfunded mandate’. Universities are going to have to cough up money to keep their rankings and keep their researchers from going somewhere else.

“And, on the international level, it will hurt research and development, primarily because the US will be less competitive. But it will also hurt international researchers involved in cooperative research being done between the United States and other countries,” he said.

In its statement, the ACE said that it was looking forward to presenting its case to a judge to show that “the proposed actions run afoul of the longstanding regulatory frameworks governing federal grants and foundational principles of administrative law.

“Judicial relief is amply justified and urgently needed. This action is ill-conceived and self-defeating for both America’s patients and their families as well as the nation as a whole”.