At CLL Society, we monitor policy changes affecting our patients, including research, new treatments, and existing treatment availability.
As you have certainly heard by now, the National Institutes of Health (NIH) recently announced it was cutting support for indirect costs paid to universities, medical centers, and other grant recipients.
What are these costs and how might they affect ongoing and future research?
Definitions:
Direct research costs may seem obvious. These are expenses that can be linked to a specific project. They can include scientists’ salaries, as well as things like the lab equipment and supplies needed to complete a project.
Indirect research costs, by contrast, and the target of recently announced cuts, are those that cannot be tied to a single project. They can include costs to keep the lights on in the lab, to pay for water and heating, to keep equipment in working order, or the cost of administrators to help with preparing, submitting, and handling grants. These are also called “facilities and administrative costs” (F&A).
Evolution of F&A:
In the 1950s, NIH tacked on an additional 8% to each grant to support indirect expenses. That was later bumped up to 20%. Starting in 1965, NIH began using rates negotiated between the federal government and individual grantee institutions, who would share detailed financial information with the federal government about their operational expenses. This negotiation would result in a rate that would apply to all grants awarded to that institution, typically for the next 2-4 years. These rates generally range from around 30% to nearly 70%.
Citing nonprofit organizations’ (e.g., Chan Zuckerberg Initiative, Robert Wood Johnson Foundation, Gates Foundation, etc.) indirect cost caps of 10% to 15%, the NIH announced cutting indirect support to 15% for all grantees.
Impact:
Research institutions argue they cannot sustain even certain basic operations at the rate cut set by NIH earlier this month. Recipients are concerned that the cuts may lead to hiring freezes, layoffs, halting of research studies, and decreased quality of patient care. They argue buildings with physical lab space could end up closing and, longer term, our scientific talent may move to other countries.
In its short announcement, the Administration stood behind the need for strong U.S. leadership in scientific research but argued for better stewardship of taxpayer dollars and the need to shift indirect spending towards more direct research.
Grantees will likely file lawsuits against the recent action.
Additional reading:
Association of American Universities (AAU)
Frequently Asked Questions about Facilities and Administrative (F&A) Costs of Federally Sponsored University Research
COGR
F&A and the Cost of Research
Association of American Medical Colleges (AAMC)
Cost of Federally Sponsored Research
AAMC Statement on Drastic Cuts to NIH-Funded Research
Research!America
Research!America Issues Statement in Response to Destructive Cuts to NIH-Funded Research
Association of Public and Land-grant Universities (APLU)
APLU Statement on Cuts to Reimbursement of NIH Facilities & Administrative Costs
