I’ve spent more than two decades of work in biomedical research policy, and there is no issue I hate talking about more than indirect costs.
These costs, which are more correctly called facilities and administration (F&A) costs, are the expenses associated with research that are hard to assign to individual research projects, like utilities, physical laboratory buildings, or security needs, so they are charged using rates negotiated at the institutional level, between universities or research institutions, and the federal government.
Make no mistake: These costs are essential to conducting medical research. Without them the scientific enterprise grinds to a halt. That is why the Trump administration’s proposal to abruptly reduce the F&A reimbursement rate at the National Institutes of Health will do catastrophic damage to the research our country counts on to combat disease and improve the health of all Americans.
If these costs are so important, why do I hate talking about them? First, because it is an incredibly complicated and wonky topic to explain. The F&A reimbursement rate that the federal government pays universities and research institutions is determined by a complicated set of policies and processes dictated by the Office of Management and Budget (OMB) and obscure federal agencies most people have never heard of, like the Division of Cost Allocation at the Department of Health and Human Services. This centralized process, which includes extraordinary amounts of documentation and strict oversight, was established for the purpose of efficiency and accountability, because negotiating a separate F&A rate for hundreds of thousands of research grants on an individual basis makes no sense at all.
However, efficiency is not the same as simplicity. Just mentioning phrases like “applicable cost principles” and “modified total direct costs” is enough to make even the most patient of audience’s eyes glaze over. It is no wonder that in recent discussions of NIH reform and optimization, the simplification of indirect cost rates is a perennial topic.
There are a number of ideas that could and should be seriously considered when thinking about how to make our nation’s premier biomedical research agency more optimally fulfill its mission, including a more streamlined way to fully cover the real costs of research. But I think we can all agree they should be predicated on the principle of not causing harm to the world leader in supporting science to improve human health.
The second reason indirect costs are not fun to discuss is it is a topic that frequently pits stakeholders in the research community against each other in false and unproductive debate. Many scientists express opposition to F&A costs, believing that the money could be better spent on direct funding to them or suggesting that it is being used to enrich university administration. This is a fundamental misunderstanding of how these costs work. F&A rates are a reimbursement for research costs already spent, part of the long-standing partnership agreement between research institutions and the federal government and are regularly reviewed to make sure those expenses haven’t changed. Abrupt caps in F&A rates, as the Trump administration has done, is just like you putting the costs of a business trip on your personal credit card, only for your employer to decide they are not going to reimburse you for those expenses. Researchers might assume that fewer dollars dedicated to F&A will somehow mean more money in direct research funds, but this doesn’t reflect the reality on the ground that those very real costs need to come from somewhere. Simply put, cuts to F&A at NIH are cuts to life-saving biomedical research.
Finally, and perhaps most importantly, the reason I hate talking about indirect costs is because it distracts from the reasons I became a biomedical research advocate in the first place: because I truly believe in NIH’s role in supporting science that helps Americans live healthier and longer lives.
As a scientist, I have seen first-hand how fundamental knowledge leads to treatments and cures for debilitating and deadly diseases. As a policy wonk, I know that the U.S. has dominated and outcompeted the world in biomedical research because of our nation’s longstanding and bipartisan commitment to federal funding of medical research, and that the distribution of these funds to scientists in every state drives economic activity in cities and towns all over the country. As a former federal leader who spent many years at NIH, I have witnessed the indescribable hope that research represents to patients and their loved ones whose lives have been upended by cancer or Parkinson’s disease or Alzheimer’s. And as a mother who has suffered the loss of a child to an incurable disease, I want nothing more than to make sure no other person has to experience that inconceivable, soul wrenching pain.
These are the same reasons why leaders in Congress have come together, through decades of partisan storms, to work across the aisle in ensuring NIH has the funding it needs to make all of our lives better.
The administration’s plan to cap NIH F&A rates is arguably illegal, in explicit violation of appropriations law that prevents NIH from deviating from the federal process for negotiating these costs. While that may be a question for the courts to decide, it is up to Congress to take up the more imminent question: Are you willing to stand silent and watch while the medical research ecosystem you built is undone, through reckless and unaccountable policy changes?
If Congress or the administration wants to talk about how NIH can find new and better ways “carefully steward grant awards to ensure taxpayer dollars are used in ways that benefit the American people and improve their quality of life,” as the notice announcing the F&A cap put it, then I will happily be the first in line to talk about legitimate policy proposals about how to make NIH even better than it is today.
But the disruptive change in NIH’s F&A policy will only serve to hurt those whose work leads to tomorrow’s medical advances and all the people whose lives and futures depend on the promise medical research provides.
Carrie Wolinetz is chair of the health bioscience innovations practice at Lewis-Burke Associates and former chief of staff to the director of NIH.