At least temporarily staving off what many saw as a crushing blow to U.S. biomedical research, a federal judge yesterday suspended a plan by President Donald Trump’s administration to slash billions of dollars in payments from the National Institutes of Health (NIH) that now go to universities to cover the overhead costs of research.
In two restraining orders issued hours apart in response to lawsuits filed by 22 states and major research institutions, a Massachusetts District Court judge blocked NIH from implementing the policy, which was announced on 7 February and set to take effect yesterday. The plaintiffs argued the policy violates a law governing how the government makes major policy changes, as well as legal directives from Congress.
NIH filed a response to the first order today that indicates the agency will comply.
Researchers expressed relief at the orders, which command the parties to prepare for a 21 February hearing. There, the plaintiffs are expected to ask for a preliminary injunction that would last months or longer. To get that injunction, they will need to persuade the judge that they are likely to succeed later, when the case is argued on its merits.
The Association of American Medical Colleges (AAMC), which led one of the suits, said in a statement it was “pleased that the court agreed with our assertion that the notice would have resulted in irreparable harm to the research mission, leaving institutions no choice but to scale back research activities.”
The NIH policy would have cut reimbursements for “indirect costs” by more than half. These are payments added to a research grant to cover infrastructure, administrative support, utilities, and other costs not directly related to the funded research. Each institution negotiates its indirect cost rate with the government; it can amount to 50% or more of the grant’s direct costs.
The Trump policy would have set a blanket indirect cost rate of 15% for existing and future grants, a move that NIH said would shave $4 billion from indirect payments, which totaled $9 billion in 2023. NIH spent $29 billion on direct research payments that year.
The move reflects long-running criticism from conservatives who see indirect cost payments as a slush fund for research institutions. But the 22 Democratic state attorneys general argued the sudden cut would have “immediate and devastating” effects on universities that had already included their negotiated reimbursements in their budgets. The cut could cause layoffs, canceled clinical trials, disrupted lab research, and “not only poses an immediate threat to the nation’s research infrastructure, but will also have a long-lasting impact on its research capabilities,” the suit argued. The second suit, also filed yesterday by AAMC and other groups as well as hospitals in Boston and New York City, makes similar arguments.
Both suits argue that NIH’s notice violated the Administrative Procedure Act, a law that bars agencies from making “arbitrary and capricious” decisions. For example, they claim NIH failed to explain its reasoning for the cut or consider the impact on grant recipients.
The cut also violates language that Congress attaches to bills funding NIH each year, they say. That language explicitly forbids NIH from changing the rates on its own. Lawmakers added the language in 2018 after the first Trump administration tried unsuccessfully to cut the indirect cost rate to 10%.
In her ruling on the AAMC suit, federal Judge Angel Kelly agreed that the plaintiffs “will sustain immediate and irreparable injury” if the policy took effect.
Universities are now aiming for a longer reprieve. “We are very hopeful that the [21 February] hearing will result in a more permanent extension … while litigation proceeds,” says attorney Heather Pierce, senior director for science policy at AAMC.
Samuel Bagenstos, professor of law and public policy at the University of Michigan, says the fact that Congress has repeatedly “passed a law saying you can’t do this” puts the plaintiffs in a strong legal position. “[NIH] is saying: ‘We are just going to do it anyway,’” says Bagenstos, who served as general counsel to NIH’s parent agency, the Department of Health and Human Services (HHS), during former President Joe Biden’s administration. “Any self-respecting judge would issue an injunction against this.”
In contrast, the Trump administration is likely to argue “that lean budgets lead to innovation, and that [research institutions] are overly reliant on the nanny state,” says Khadijah Silver, supervising attorney for civil rights at Lawyers for Good Government, a nonprofit that provides pro bono legal policy services. But they disagree with those arguments and are doubtful they will work. “I am wracking my head trying to imagine how [the plaintiffs] would not prevail.”
Michael Cannon, director of health policy studies at the libertarian Cato Institute agrees: “I’m not sure the Trump administration is on sound legal footing here,” he says. But Silver predicts that no matter who wins, the loser will appeal to a higher court.
In a response to the first order filed late this afternoon, Deputy Director for Extramural Research Michael Lauer wrote: “I confirm that NIH has not implemented or enforced the indirect cost rate described in the Guide Notice and that the agency will not do so with respect to grantees in the Plaintiff states pending further instructions from the court. I also confirm, as far as the steps the agency has taken, that NIH has instructed all components responsible for disbursement not to implement the rate change within the Plaintiff States.”
The last-minute reprieve on indirect costs does not mean NIH will return to normal business operations. For example, the meetings of institute councils that provide a second stage of grant peer review have been on hold since 22 January because HHS wants to cancel the public portion of those meetings and hold only the closed sessions that review grants.
Making that change, however, apparently requires the government to publish a new notice of each meeting at least 15 days ahead in the Federal Register, the bulletin where meeting notices and proposed regulations must appear. But the Trump administration has imposed a communications pause that bars NIH from posting Federal Register notices, and “we do not have any information” on when it will be lifted, an NIH spokesperson said on background. Study sections, which conduct the first level of peer review, are also being canceled if a notice was not published before 20 January. That means many new grants are on hold at NIH’s 27 institutes.
In another development affecting the health research community, a federal judge today ordered the Centers for Disease Control and Prevention (CDC) and other HHS agencies to immediately restore data and websites that were removed in a purge on 31 January in response to a Trump memo barring “gender ideology.” They include web pages such as CDC’s Youth Risk Behavior Surveillance System and its Social Vulnerability Index. The Food and Drug Administration was also ordered to restore web pages, including ones on ensuring diversity in clinical studies and studying sex differences in response to drugs.
