A federal judge on Wednesday issued a nationwide preliminary injunction blocking the Trump administration from slashing National Institutes of Health payments for research overhead, a decision that suggests plaintiffs seeking to overturn the sweeping policy change are likely to eventually succeed.
The order halts implementation of a cap on payments for indirect costs — facility and administrative fees linked to research — while the judge hears full arguments in three lawsuits that will determine the fate of billions of federal dollars that flow to universities, medical centers, and other grant recipients.
In her ruling, Judge Angel Kelley of the U.S. District Court for the District of Massachusetts wrote, “Considering the irreparable harm likely to befall similarly situated nonparties, the chaos that would result both for institutions and NIH from a patchwork of injunctions, the diffuse nature of the Plaintiffs, and the nature of the suit, a nationwide preliminary injunction is the appropriate and reasonable remedy.”
Kelley added that “it is likely Plaintiffs will succeed on the merits, rendering the [NIH] notice unlawful.”
The cases were filed by 22 state attorneys general; associations representing the nation’s medical, pharmacy, and public health schools; and organizations representing private and public universities, including the University of California system.
A preliminary injunction requires a determination that a plaintiff’s case is likely to succeed on the merits. The order is sure to be welcome news to the plaintiffs — and, more broadly, to the many universities and researchers that have lamented that a cap on research overhead payments would stymie scientific progress. Some universities have paused or cut back on graduate student admissions and instituted hiring freezes due to concern over future funding.
“I’m a little hopeful,” Davey Smith, assistant vice chancellor of clinical and translational research at the University of California, San Diego, told STAT after hearing about the preliminary injunction. “However, there’s a voice in the back of my head [saying] that I don’t think this was ever about the money. This was all about just throwing a big wrench into our science programs.”
The news marks the latest twist in a closely watched case that was kicked off when NIH, the nation’s premier funder of biomedical research, issued a late afternoon announcement on Feb. 7 that it would substantially limit payments for indirect costs. These costs include research expenses that can’t easily be linked to a particular project, such as the cost of heating and keeping the lights on in a laboratory, as well as administrator salaries.
Research institutions negotiate how much they’re paid for overhead with the federal government. Those negotiated rates are tacked onto each grant as a percentage of a project’s direct costs — expenses that can be linked to specific projects, such as lab supplies or scientists’ salaries.
Indirect cost rates generally range between 30% and 70%, with many top institutions paid at rates upward of 50% because they have more expensive, specialized research equipment used across projects and state-of-the-art facilities. Big-name universities also tend to have larger administrative structures, though there has been a 26% cap on the administrative portion of indirect costs since the 1990s.
The NIH’s new policy would replace these negotiated rates with a 15% cap on total indirect costs for all new and future grants, a move the agency estimated would reduce indirect payments by $4 billion a year. In its announcement, NIH suggested the money could be reallocated to award more grants, saying that it is “vital to ensure that as many funds as possible go towards direct scientific research costs rather than administrative overhead.”
The administration has also noted that many private foundations provide far less support for indirect costs than the government, though that comparison is complicated by the fact that private and government funders sometimes define direct and indirect costs in different ways.
Many academics vehemently opposed the new cap, arguing that indirect costs are real and essential research expenses, and that suddenly cutting off support for overhead could kill biomedical discovery and lead to layoffs. A STAT examination of publicly available financial documents and internal university emails revealed that some institutions stand to lose $100 million or more if the policy takes effect — including prestigious schools in conservative states.
It didn’t take long for this debate to move into the courts. On Feb. 10, the day the NIH policy was set to kick in, states, universities, and organizations representing various parts of the nation’s research ecosystem sued the federal government and requested a temporary restraining order. Kelley quickly granted those requests, and heard arguments on issuing a preliminary injunction at a Feb. 21 hearing in Boston.
The plaintiffs have made similar arguments across the cases, arguing in part that the government violated the Administrative Procedure Act, a federal law that governs how agencies implement new regulations, by issuing an “arbitrary and capricious” policy change that was abruptly announced and poorly explained. They’ve also argued that language included by Congress in appropriations bills prevents NIH from implementing major changes to how it reimburses indirect costs.
Jeremy Berg, former editor of the journal Science and a previous director of the National Institute of General Medical Sciences, which is part of NIH, said that he was pleased but not surprised by Kelley’s order in light of this congressional language.
“I hope this will help universities and other institutions sort of take a breath,” he said.
Heather Pierce, senior director for science policy and regulatory counsel at the Association of American Medical Colleges, a plaintiff in one of the cases, lauded Wednesday’s order.
“Today’s ruling is a very positive step. It’s a win for science. It’s a win for patients. It’s a win for all of us that rely on scientific progress. It’s very heartening to see the depth of understanding of the impact of this sudden and, now we see illegal, move,” she said.
A spokesperson for the Department of Health and Human Services said the agency does not comment on ongoing litigation, and an NIH spokesperson did not respond immediately to a request for comment on the ruling.
The administration has countered in legal filings that it “acted in accordance with the governing regulations,” that the district court doesn’t have jurisdiction to decide the case, and that plaintiffs haven’t shown they’d suffer “irreparable injury” if the indirect cost cap were implemented.
Even if the NIH policy is ultimately struck down in court, experts worry that the fact it was announced at all could contribute to a scientific brain drain from the U.S. Researchers and academic clinicians note that many scientists feel that the Trump administration is mounting a full-scale assault on their profession, and they cite as examples unprecedented disruptions to grant reviews and the termination of grants and programs related to diversity, equity, and inclusion.
Some U.S. researchers have already expanded job searches to include Europe and China because of the current climate, though opportunities abroad are limited due to scarce funding and open positions, and populist parties in Europe are increasingly embracing anti-vaccine figures.
Anil Oza contributed reporting.