Research institutions across Texas could lose hundreds of millions of dollars in federal funding under a new National Institutes of Health (NIH) policy.
Medical research, especially in the biomedical field, stands as the most vulnerable to an updated policy that would cap the indirect cost rate at 15%, drastically reducing available funding. Indirect cost rates dictate how much recipients can be reimbursed for overhead costs. These costs range from paying support staff to maintaining lab space.
Prior to the announcement, the average indirect cost rate for research institutions was around 28%, though some charged rates as high as 60%. While the change in policy won’t affect direct costs that support specific research projects, researchers and academic administrators are concerned for the future of medical research if funds are suddenly depleted.
The capped cost rate means research institutions such as MD Anderson, Baylor College of Medicine and The University of Texas (UT) Southwestern Medical Center will be hit the hardest. According to an NIH database, Baylor benefited from $326 million in grant awards in 2024, with 28% of that originating from indirect cost rates. MD Anderson is in a similar position, having earned $190.9 million with a 32% indirect cost rate.
The loss of millions in medical research would potentially lead to layoffs, suspension of clinical trials and disruption of ongoing research and laboratory programs. In response to the policy, a judge has temporarily blocked the grant cuts after 22 states filed a lawsuit. However, since Texas did not file its own lawsuit, the policy still applies to the state’s research institutions.
The policy went into effect Feb. 10, 2025, and will be applied to all current and future grants. The cap will not be retroactively applied to the initial date of issuance of grants to institutions.
(Photo courtesy of Lucas Vasques on Unsplash.)