By PAUL NATINSKY
Like the rest of the cuts by chainsaw, the 15-percent cap on indirect costs for National Institutes of Health projects is a sharp-edged reduction in spending. Purportedly targeted at reducing waste and inefficiency, the indiscriminate reduction belies that mission.

The most rudimentary of analyses would have proved the approach infeasible. About $9 billion of the NIH’s $35 billion in grants for 2023 were for indirect costs, which include equipment and office space, technology, research security, data processing, biosafety, financial and accounting support, and legal and compliance support. Indirect costs average around 28%, with some over 60%, according to NIH-reported numbers. The costs are negotiated on a project-by-project basis.

The proposed cuts, which remain under legal challenge, would stop many projects in their tracks. Twenty-two states immediately filed suits in federal court after Trump administration rolled out its plan in early February.

“The NIH funding cuts that were peremptorily imposed (and then stopped by the courts) are terrible for the University and even more so for the state of Michigan and for all of our citizens,” said Marianne Udow-Phillips, a lecturer at the University of Michigan School of Public Health, who has worked in a number of roles during a long career in health policy in Michigan.

The University of Michigan receives over $609 million annually from NIH, the third largest research investment in the country, according to a ranking of the “Top 50 NIH-Funded Institutions of 2024” from Genetic Engineering & Biotechnology News.

“These cuts would have dramatically cut funding for critical, lifesaving medical research that would directly affect patients with cancer, heart disease and other life-threatening conditions. They would have harmed children in need of care and our ability to respond and track public health crises,” said Udow-Phillips.

If this sort of thumbnail due diligence took a reporter five minutes and an internet connection to ferret out, efficiency experts streamlining the federal government should have been light years beyond that in mere hours.

The closest thing to actual analysis supporting the cuts finds some basis in the indirect costs incurred by privately funded research, which, according to reporting by U.S. News & World Report, range from 0 to 15 percent, but often achieve that efficiency by working with NIH-supported institutions, using money that comes through that payment stream to offset costs.

Again, as with other Department of Government Efficiency cuts, no attention is paid to the collateral damage such a blunt policy approach can cause.

“The cuts as they were initially implemented were both draconian and poorly thought through, haphazard and devastating to the cutting edge work we do here to advance health and safety for all of our Michigan residents,” said Udow-Phillips.

With the unpredictability of the courts (and the uncertainty that their rulings will be adhered to), UM is not sitting on its hands. The university is in the process of securing financial support for its projects in the event the funding cuts are realized.

In mid-March, UM posted a notice to researchers on its website announcing a plan that makes available “a fixed amount of central funding available to partner with units whose existing federal grants or contracts have experienced an unexpected termination or disruption to the current level of funding provided via an official stop-work order or non-competing renewal delay, or where funding delays would represent a risk to the health and safety of participants.”

The notice further states, “Central funding will be provided to support salaries, benefits, supplies, and other needed direct expenses for up to six months for employees, PhD students, and postdocs who cannot be reassigned to other work and have lost salary coverage as a result of cancellation of the federal grant or contract or where there is a risk to health and safety associated with an immediate stoppage.”

The notice is unclear about exactly where the money is coming from.

The NIH, which was formed in 1887, has a budget of about $48 billion. Historically, funding pauses caused by government shutdowns have precluded new studies and trials from beginning, but have allowed those already initiated to continue—which means there is precedent for considering the impact of sudden changes to funding streams.

Again, the capriciousness of those who proclaim a high level of business acumen shocks.

According to reporting from the New York Times in late March, from the outset of 2025, NIH funding operations have faced interruptions on an unprecedented scale under the direction of the current executive branch, including:

  • impeding grants for dementia and ALS research;
  • hindering procurement of necessary resources, such as those for transporting patient blood samples;
  • preventing a research scientist from consulting with physicians treating children with a devastating rare condition;
  • interrupting the supply of mice for genetic studies, with years of research being imperiled as a result;
  • cutting research grants for training doctoral and postdoctoral students.

And so the healthcare research community watches the court proceedings carefully and makes preparations in the event that the winds of change continue to blow.