NIH Announces Cut to Reimbursement of Research Facilities and Administrative Costs

The National Institutes of Health (NIH) announced Feb. 7, it will cut reimbursement of research facilities and administrative (F&A) costs, often referred to as indirect costs. As shared in a factsheet from the American Association of Medical Colleges, F&A costs cover critical research activities, including “libraries, physical lab operation and maintenance, utility costs, security, and other similar needs.”

The memo explains, “For any new grant issued, and for all existing grants to Institutions of Higher Education retroactive to the date of issuance of this Supplemental Guidance, award recipients are subject to a 15 percent indirect cost rate. This rate will allow grant recipients a reasonable and realistic recovery of indirect costs while helping NIH ensure that grant funds are, to the maximum extent possible, spent on furthering its mission. This policy shall be applied to all current grants for go forward expenses from February 10, 2025 forward as well as for all new grants issued. We will not be applying this cap retroactively back to the initial date of issuance of current grants to IHEs, although we believe we would have the authority to do so under 45 CFR 75.414(c).”

Individual members of Congress have spoken out on the guidance. Sen. Susan Collins (R-ME) issued a statement noting that the fiscal year 2024 appropriations legislation prohibits modifying indirect costs, and opposing the "arbitrary cap on the indirect costs that are part of NIH grants and negotiated between the grant recipient and NIH.” Sen. Patty Murray (D-WA) issued a statement stating “This funding helps produce breakthroughs that change patients’ lives, prepare us for pandemics and other health threats, and ensure the U.S. continues to be the global leader in biomedical research”. Rep. Rosa DeLauro (D-CT) also issued a statement saying the cap on F&A costs “would cut billions of dollars in funding for life saving research to develop cures and treatments for diseases.”

On Feb. 10, a federal judge in Massachusetts granted a temporary restraining order to 22 states that filed suit seeking to halt the implementation of this guidance capping F&A costs. Additionally, the AAMC filed a separate lawsuit, resulting in a temporary restraining order that prevents the notice from the NIH from going into effect, expanding the action nationwide.

The American College of Radiology® (ACR®) continues to monitor communications from the White House and federal agencies about this action, along with the related impacts on federally funded programs and grants supporting medical research.

For more information, contact Katie Grady, ACR Government Affairs Director.