Appeals Court Hears Arguments in Case That Could Reshape Billions in NIH Funding
WASHINGTON – An appeals court is currently considering arguments in a case challenging a recent policy change by the Office of Management and Budget (OMB) regarding indirect cost recovery rates for National Institutes of Health (NIH) research grants, a move that could impact billions of dollars in funding for academic institutions nationwide. The case centers on the NIH’s attempt to implement a uniform 10% cap on indirect costs, also known as facilities and administrative (F&A) costs, for large, multi-institutional research projects.
The policy shift, first proposed in late 2023, has sparked lawsuits from numerous academic groups, including the Association of American Universities, Association of Public and Land-grant Universities, and Association of american Medical colleges, who argue the cap is arbitrary and financially unsustainable for many research institutions. At stake are billions of dollars in research funding, as universities rely on indirect cost reimbursements to cover expenses like building maintenance, utilities, and administrative support.
Amidst the legal battle, a coalition of 10 organizations has proposed an alternative model led by Kelvin Droegemeier, a former Trump governance science advisor. This model offers research institutions two options: a detailed accounting of expenses to convert indirect costs into direct costs, or a fixed percentage reimbursement of a project’s total budget for research and facility costs. Droegemeier’s team shared with STAT that the OMB appreciates the proposal’s transparency but is concerned it could increase federal overhead payments, counter to current agency directives.
Some senators have expressed interest in the proposed model. Gil tran, a member of Droegemeier’s team, told STAT that the OMB likes the proposal’s increased transparency but worries that it could increase federal overhead payments at a time when the agency has been given clear instructions to do the opposite.
The outcome of the court case,combined with ongoing negotiations,is expected to significantly reshape the system for funding research at academic institutions,nonetheless of the court’s final ruling.
