SAN FRANCISCO - eTradeWire -- The National Institutes of Health (NIH) has announced a significant reduction in grant allocations for indirect costs, a move that could upend financial stability for research institutions nationwide.

In the 2023 fiscal year alone, the NIH awarded more than $35 billion in funding to nearly 50,000 research projects across over 2,500 universities, medical schools, and institutions. These grants, which supported over 300,000 researchers, played a critical role in advancing medical and scientific breakthroughs.

However, as of Monday, a drastic policy shift will cap indirect funding at 15 percent, down from an average of nearly 30 percent, with some institutions previously receiving overhead allocations exceeding 60 percent. The cuts are expected to save the NIH approximately $4 billion annually but leave universities scrambling to bridge the funding gap.

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The NIH is the world's largest public funder of biomedical and health research, playing a pivotal role in the discovery of treatments, vaccines, and innovative healthcare solutions. The organization directs funding into critical areas such as cancer research, infectious disease prevention, neuroscience, and genomics, among many others. These investments have led to life-saving advancements, including the rapid development of COVID-19 vaccines, the discovery of groundbreaking cancer immunotherapies, and innovative treatments for chronic diseases like diabetes and Alzheimer's.

Throughout its history, NIH-backed research has had profound public health impacts. For instance, the agency's funding helped support the Human Genome Project, which revolutionized personalized medicine. NIH grants were also instrumental in pioneering antiretroviral therapies for HIV/AIDS, effectively transforming the disease from a death sentence into a manageable condition. The institution has consistently played a leading role in addressing global health crises, including the 2014 Ebola outbreak and the COVID-19 pandemic, with its research leading to life-saving vaccines and therapeutic interventions.

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For many research institutions, indirect costs—also referred to as Facilities and Administrative (F&A) costs—are a fundamental component of their NIH grants. These funds cover essential operational expenses, including laboratory maintenance, research compliance, security, and administrative support. Without these resources, universities must either divert funds from other sources or reduce research capacity.

https://www.investorhire.com/news/healthcare-and-economic-impact/healthcare-costs-and-insurance-markets/nih-slashes-research-funding-february-8-2025