The Donald J. Trump administration appears to be abandoning its legal battle to limit how much the US National Institutes of Health can reimburse research institutions for the indirect costs of research, such as facility maintenance and laboratory utilities. The news was first reported by Stat.
On Feb. 7, 2025, the NIH announced it was implementing a 15% rate cap on these reimbursements, replacing federally negotiated rates that typically range from 30% to 70%. The new policy was immediately challenged by state attorneys general, universities, and organizations, such as the Association of American Medical Colleges (AAMC).
The change “would have cost the research enterprise $6.5 billion,” of previously committed funding says Heather Pierce, a senior director of science policy and regulatory counsel at the AAMC.
Just under a year later, on Jan. 6, a federal appeals court upheld a district court ruling to permanently block the rate cap for indirect costs at the NIH, declaring the agency’s policy unlawful. Along with violating regulations by the Department of Health and Human Services, which houses the NIH, the 15% cap violates an appropriations provision, first enacted by Congress in 2017, that “prevents NIH from changing the way indirect costs are reimbursed,” the appeals court decision (PDF) says.
After the appeals court ruling, the Trump administration had 90 days to file a petition to have the case heard by the US Supreme Court. But the deadline came and went without a request being filed.
“That shuts the door on that litigation,” Pierce says. “That change they tried to make on February 7 is deemed to be unlawful and can’t be implemented now.”
The NIH lawsuit isn’t the only one the Trump administration has decided to stop pursuing. Earlier this month, the government voluntarily dismissed its appeal (PDF) of a court ruling preventing the Department of Energy from capping its reimbursement rate at 15%. It also dropped its appeal of similar court rulings involving the National Science Foundation and the Department of Defense.
It’s unclear why the administration withdrew from these lawsuits. Neither the White House nor the Department of Justice responded to C&EN’s request for comment by publication time.
The court cases may have reached their conclusion, but Pierce says that doesn’t end the discussion around indirect costs. Long-standing concerns about the current system remain. “Not whether it’s effective, but whether it’s sufficiently transparent and sufficiently explainable to policymakers and the American taxpayer,” she explains.
AAMC has been heavily involved in creating and pushing the Financial Accountability in Research (FAIR) model, which proposes a different way of tracking indirect cost expenses. “My expectation is that those fruitful and robust conversations continue. They continue with Congress; they continue with the administration,” Pierce says.
Even though the Trump administration seems to have abandoned its legal pursuit of these caps on indirect costs, it’s possible that it could continue to push these policies through other means. Back in August, Trump signed an executive order that directs federal agencies to give preference to institutions with lower indirect cost rates during funding decisions.
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