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• 22 states have filed a lawsuit to block the Trump administration’s plan to cut National Institutes of Health (NIH) funding for research overhead costs.
• The cuts could lead to layoffs, disrupt clinical trials, and close laboratories, according to the states.
• The lawsuit argues the administration acted arbitrarily and violated federal law by capping the reimbursement rate for indirect costs.

Quick Brief

2-Minute Digest

Essential Context

The Trump administration announced a plan to cap NIH payments for overhead costs at universities and medical research centers at 15%, a significant reduction from current rates that can be as high as 50% or more. This move has sparked a legal challenge from 22 states, which argue that the cuts will severely impact medical research and violate federal law.

Core Players

• The Trump Administration – Behind the proposed funding cuts.
• 22 State Attorneys General – Filed the lawsuit to block the cuts.
• National Institutes of Health (NIH) – The agency affected by the funding cuts.
• University of California – Submitted a declaration in support of the lawsuit.

Key Numbers

• $4 billion – Annual savings claimed by NIH from the new 15% cap.
• $35 billion – Total annual funding awarded by NIH for medical research.
• 15% – New cap on indirect cost reimbursement.
• 28% – Average current indirect cost rate reported by NIH.
• 50%+ – Some institutions’ current negotiated indirect cost rates.

Full Depth

Complete Coverage

The Catalyst

The Trump administration’s decision to reduce the reimbursement rate for indirect costs in NIH grants was announced on February 8, 2025. This sudden change sparked immediate backlash from the scientific community and state governments.

“The administration’s decision to cap NIH reimbursement rates could force scientists to shutter their lifesaving research on cancer, diabetes, Alzheimer’s, addiction, infectious diseases, and more,” said New York Attorney General Letitia James.

Inside Forces

The lawsuit filed by the 22 state attorneys general argues that the administration’s action is arbitrary and capricious and violates the Administrative Procedure Act. The states also claim that the move contradicts a 2018 law that prohibits NIH from unilaterally changing the indirect cost rates.

Historically, indirect costs have been negotiated between the government and universities, with rates varying significantly between institutions. The new cap would retroactively apply to both new and existing grants.

Power Dynamics

The Trump administration’s move is part of broader efforts to reduce government spending. However, the scientific community and academic institutions are pushing back, arguing that these cuts will have devastating effects on medical research.

University leaders, such as UC President Michael Drake, have been vocal about the impact: “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.”

Outside Impact

The cuts could lead to significant disruptions in medical research, including layoffs, suspension of clinical trials, and closure of laboratories. States with strong research economies, such as California, Massachusetts, and North Carolina, are particularly concerned about the local economic and health impacts.

The lawsuit has highlighted the critical role of indirect funding in maintaining the infrastructure necessary for research, including lab maintenance, IT services, and administrative support.

Future Forces

A judge has temporarily halted the NIH cuts following the lawsuit, but the long-term outcome remains uncertain. The case will likely set a precedent for future funding decisions involving federal research grants.

Pending the court’s decision, research institutions are in limbo, unsure of how to proceed with their projects. The uncertainty is already affecting morale and planning within the scientific community.

Data Points

• February 8, 2025: NIH announces the plan to cap indirect cost reimbursement at 15%.
• February 10, 2025: 22 states file a lawsuit to block the NIH funding cuts.
• $9 billion: Amount of NIH funding used for overhead and administration in fiscal 2023.
• 57% and 64%: Current indirect cost rates for some UCLA and UC San Francisco research projects, respectively.