Science News & Analysis

NIH caps research overhead funding, threatening billions in medical research (February 7, 2025)

February 7, 2025 — The Trump administration's National Institutes of Health quietly published new guidance capping indirect cost reimbursements — the overhead funding that supports laboratory infrastructure, equipment, and support staff at universities and hospitals — at a flat 15 percent, effectively cutting approximately $4 billion in medical research funding. The cap applied retroactively to existing grants, not just new awards.

Indirect costs cover the real expenses that make research possible: building maintenance, IT systems, compliance staff, and the physical infrastructure of working laboratories. The Council on Government Relations warned the change was "catastrophic," with institutions forced to reallocate research funds to cover the gap or shut down ongoing studies. Courts quickly became involved: two federal judges issued temporary restraining orders blocking the freeze in late January and early February, and on April 4, 2025, a federal judge issued a permanent injunction blocking the cap as "arbitrary and capricious" under the Administrative Procedures Act.

Despite the injunction, the disruption to the research pipeline was substantial. The NIH had already canceled or frozen thousands of grants between January and April, with nearly 40 percent of terminated grants having not yet produced findings — meaning years of prior public investment would yield no results. The National Science Foundation and Department of Energy subsequently attempted similar 15 percent caps on their own grants, drawing further legal challenges.