By SUSAN JONES
The Trump administration’s efforts to cap indirect costs from the National Institutes of Health at 15 percent are still on hold after a hearing before a federal judge on Feb. 21, but the issue is far from resolved.
U.S. District Judge Angel Kelley extended the temporary restraining order she had imposed just before the cuts were to take place on Feb. 10, giving her time to make a final decision.
For Pitt, the cuts would “result in irreparable harm to University operations and to the important, lifesaving research that we do,” Chancellor Joan Gabel said in an email to the community on Feb. 21. The Chronicle of Higher Education, using data from the NIH, estimates that Pitt would lose $121.3 million this year if the cap was imposed.
The NIH is Pitt’s largest federal research sponsor at nearly $700 million (sixth nationally), funding that represents over half of the University’s $1.2 billion in research expenditures (17th nationally), primarily focused on the health sciences.
Indirect costs are for those things not directly involved in the research but necessary to keep it going. Pitt’s current rate is 59%, which is calculated on an allowable portion of the original grant — some administrative and other costs are not included in that figure.
“It refers to if you’re running a lab, there’s also an electricity bill and somebody who has to fill out the paperwork to make sure you’re compliant,” Gabel said at a state budget hearing on Feb. 20 in Harrisburg. “We can’t do the research without it.”
(See this video from Sally Rockey, NIH deputy director for extramural research, in 2015 for a clear description of indirect costs.)
State attorneys general from 22 states (but not Pennsylvania) filed for the original temporary restraining order to stop the NIH indirect costs cuts. The restraining order was expanded nationwide after suits were filed by two other groups led by the Association of American Medical Colleges and Association of American Universities.
Pennsylvania’s attorney general, Republican David Sunday, when asked about why the state did not join in the suits, said, “We are speaking with institutions throughout Pennsylvania which are impacted by NIH’s change in policy and are in the process of assessing the best approach to protect their interests.”
Court arguments
During the Feb. 21 hearing, attorneys for the states and universities argued that the NIH cuts violate the Administrative Procedure Act, which outlines how federal agencies are supposed to make proposed regulatory changes.
The attorneys argued that a 15% cap “that is not individualized for different grant recipients or institutions is unlawful because it’s contrary to the statute … and contrary to the regulations which govern how these costs are determined and how these payments are dispersed. … The issuance of the notice is squarely within what the case law instructs as arbitrary and capricious.”
They noted that different institutions have different cost needs. Advanced, cutting edge medical research — like much of what is done at Pitt — involves expensive equipment for the direct research but also for maintaining the right air quality and monitoring animal controls. These differ from NIH grants that might involve social sciences that are dealing with public health questions that don’t occur in the lab.
The judge noted that several presidents — including Clinton, Obama and Trump in his first term — have tried to cap indirect costs but have not been successful. “Some were blocked by Congress, under their authority controlling the purse. How is it that President Trump, in his second term, can unilaterally cap these previously negotiated indirect cost rates Congress prevented him from doing previously after extensive appropriations hearing?” she asked.
The Trump administration lawyer, Brian Lea, argued that the order falls under the “broad discretionary power of the executive branch about how to allocate funding.” He also said that the money “saved” from the rate cap would be reallocated to other research projects. “(It) will be taken to pay direct costs and plowed into new grants that will be using the same funding formula.”
The plaintiffs attorneys responded that there was nothing in the NIH order detailing that the funds would be redistributed. And even if that did happen, researchers would be reluctant to start new projects knowing that their indirect costs would be capped at 15%. “If the costs that are necessary for your research are no longer going to be provided, then you’re not going to go into that line of research again.”
The attorneys concluded the hearing details from some of the 83 declarations from universities on how the cuts would cause irreparable harm to their research.
For instance, Caltech built a state-of-the-art neuroscience research building in 2020 to house multiple projects, at a cost of $200 million. It expected to recoup some of the cost of the building through indirect costs. “It’s still going to have to make its debt payments. Those aren’t going to go away, and the money is going to have to come from somewhere else. There’s going to be a hole in the research budget at Caltech.”
Likewise they cited the expense of maintaining a primate research lab at the University of Washington. “There’s specialized people, specialized care that has to go into taking care of those animals. If this rate goes into effect, it’s not going to cost any less to care for those animals. There’s going to be a hole in the budget.” Washington’s declaration said they might have to euthanize some of valuable research animals that might be in the middle of an experiment, which would then be lost.
The Trump administration lawyer said that the harm would not be irreparable and that many institutions could shift money around from endowments to cover these costs.
Jeremy Berg — Pitt’s associate senior vice chancellor for science strategy and planning, health sciences, former editor of Science and a previous director of the National Institute of General Medical Sciences, which is part of NIH — told Stat that he was encouraged but not surprised Kelley kept the restraining order in place. He added that he remains confident the 15% cap on indirect cost cuts will be struck down in the courts.
“I was pretty optimistic going into it that the people bringing the suit had a strong case,” he said after the hearing. “Nothing I heard dissuaded me.”
Susan Jones is editor of the University Times. Reach her at suejones@pitt.edu or 724-244-4042.
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