The U.S. Court of Appeals for the First Circuit released a decision on Jan. 5 reaffirming the lower court’s move to block funding limitations that the National Institutes of Health proposed last year. The circuit court placed a permanent injunction on the proposed policy.
The case was originally filed last February in response to the NIH’s attempt to institute a 15% rate cap on indirect funds, limiting the amount of money that would be reimbursed for NIH-related research. Currently, the NIH is the largest source of funding for medical research in the United States.
The case was heard by U.S. circuit judge Kermit Lipez, who stated in his decision that the “NIH’s attempt ... to impose a 15% indirect cost reimbursement rate violates the congressionally enacted appropriations rider and [theDepartment of Health and Human Services’] duly adopted regulations.”
Tufts University joined the lawsuit at the direction of University President Sunil Kumar and the Board of Trustees, along with national-level higher education organizations, other research universities and 22 states. These plaintiffs argued that the policy was not in accordance with the Administrative Procedure Act and therefore violated the law. In addition, the proposed 15% rate cap was far lower than the rates Tufts had previously negotiated, which ranged from 58% to 65% for on-campus research.
“If the changes had been left unchallenged, Tufts and other research institutions would have experienced significant adverse funding impacts,” Mary Jeka, senior vice president for university relations and general counsel at Tufts, wrote in a statement to the Daily.
The NIH has traditionally allowed for reimbursements for indirect costs, meaning awarded funds are reimbursed rather than provided as a lump sum. Previously, the reimbursement rate was negotiated by each institution, but the proposed policy would have created a universal cap on all indirect cost reimbursements.
Lipez wrote in his judgment that the NIH could not simply impose a universal rate cap and must instead use the institution’s negotiated reimbursement rate.
In a statement released last year when the suit was first filed, the Association of American Universities — of which Tufts is a member — called the proposed rate caps “ill-conceived and self-defeating for both America’s patients and their families as well as the nation as a whole.”
The NIH argued that a similar change proposed by the administration of President Donald Trump in 2017 to impose a 10% cap on indirect cost reimbursements was intended to direct more funding toward higher-priority research through direct grants.
However, there are concerns that those direct grants would have to be redirected to cover necessary facility or administrative costs, likely at a higher rate than any potential increase in direct grant size.
“If they get rid of the indirect [funding], they [still] have the direct. I’m going to have to take … from my direct costs … to pay for university services,” Ralph Isberg, professor of molecular and microbiology at the Tufts University School of Medicine and co-director of Tufts’ Center for Integrated Management of Antimicrobial Resistance, said.
According to Isberg, the proposed NIH changes would place an excessive burden on universities, especially institutions like Tufts, where a limited endowment leaves little room for financial flexibility.
“It’s all based on funds,” he said. “The medical school, which is where most of the research has been done, [has] almost no endowment for research, and the [overall] endowment is small to begin with. … The medical school, in order to support research, is totally dependent on tuition and overhead.”
Isberg also pointed out that the pressures to constrict research funding are not new and that many people do not see the necessity of publicly-funded science research.
“It’s very hard to explain to the public and to Congress that basic science research is important and that everything should be applied and … clinically related,” Isberg said. “This has been an ongoing fight since I was in elementary school.”
Despite the First Circuit court’s decision, uncertainty remains about the future of federal research funding and its implications for universities.
“Looking forward, questions remain about the future of federal grant funding. We are monitoring these issues closely and will determine how to address them as they arise based on their impact on the university’s mission,” Jeka wrote.
