By Katie Daigle-Alexander

The “eds and meds” sector – or the academic and healthcare institutions employing more than one million people and fueling the Massachusetts economy – finds itself on uncertain ground under the Trump Presidency.

Following a similar action attempted during President Trump’s first term, the Trump Administration announced on February 7 that it would cap “indirect costs” for grants issued through the National Institutes of Health (NIH) at 15 percent, effective immediately. Deemed part of the Administration’s attempts to scale back spending, the cut is said to save the federal government $4 billion a year.

What’s Behind the Decision

Funding indirect costs is a vital component of ensuring the success of research projects. When a researcher or institute is awarded an NIH grant, they negotiate a separate percentage of funds to pay for the indirect costs, or overhead expenses, associated with the project, which can include operations, maintenance, staffing, equipment, and infrastructure.

Last fiscal year, Massachusetts was the largest recipient of NIH funding per capita, with 219 organizations across the Commonwealth securing a total of $3.46 billion to fund nearly 5,000 research projects. Of this amount, $1 billion was allocated for indirect costs. Massachusetts stands to lose nearly $550 million under this policy.

The Administration claims that 15 percent is reasonable, citing several private foundations, such as the Gates Foundation and Chan Zuckerberg Initiative, that cap “indirect cost” allocations for the research they fund at between 10 to 15 percent. However, since NIH indirect cost agreements are individually negotiated and tailored to address each project’s unique needs, rates can vary drastically, meaning this policy will have disproportionate impacts from one awardee to another.

Reactions and Impact

The Administration’s decree has been met with steep legal opposition. Citing legal protections that prevent broad cuts from being made to NIH research grants, a lawsuit issued by a coalition of 22 state attorneys general, including Massachusetts Attorney General Andrea Campbell, has resulted in a temporary restraining order (TRO) that prohibits the Trump Administration from implementing the policy.

On February 21, U.S. District Judge Angel Kelley of Massachusetts extended the TRO, which was set to expire on February 24. A final judgment about whether to issue an injunction or allow the policy to move forward has not yet been reached.

If the TRO expires, establishing a standard for indirect costs will have far reaching implications for the Massachusetts life sciences, healthcare, and academic sectors. In an amicus brief filed by the Massachusetts life sciences trade organization MassBio, the organization highlights three ways the policy could disrupt research and patient access.

The brief notes the policy would:

• Upset the basic scientific research conducted by life science companies and academia that is foundational to applied research and the root of almost all FDA-approved medications, vaccines, and therapies. Disruption at the research stage will have resounding consequences for academic institutions, venture capital partners, and biopharma companies of all sizes investing in and seeking to bring new treatments and cures to patients through innovation, development, and commercialization.
• Hinder the advancement of clinical trials, diminishing timely patient access to and enrollment in potentially life-altering, life-extending, or life-saving studies, as well as efforts to evaluate the safety and efficacy of potential treatments and therapies. Cutting funding that supports clinical trials will have immeasurable impacts on drugs in the review and approval pipeline;
• And jeopardize Massachusetts’ and the nation’s dominance in medical advancement. Reducing funding for research and development opens the door for other competing countries to assume the mantle of leading innovation on a global scale.

What Comes Next

Congress has long appropriated NIH funding to address indirect costs on an annual basis – it’s what researchers have come to rely on and expect. Suddenly and indiscriminately reducing funding will shake the very core of research that protects public health, seeks to address unmet medical need, and stimulates growth in our economy.

It’s likely that many of the impacts of this policy would be immediately felt in job losses, as well as the scaling back or elimination of research projects and drug trials. But, what’s harder to quantify are the absences that will be created by this policy – the loss of research that could help us tackle the next pandemic; the termination of clinical trials that could help patients with life threatening illness; or absence of scientists who have moved to countries that better fund their scientific communities.

It will remain to be seen how the courts ultimately treat this policy and what the final outcome may be. But what remains for certain is that the stakes are high – for all of us.