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New memo from the NIH [1]

['This Content Is Not Subject To Review Daily Kos Staff Prior To Publication.']

Date: 2025-02-08

Haven't seen this posted on here, so I thought I would bring this up.

Let us start with the announcement. On X/Twitter, obviously.





x Last year, $9B of the $35B that the National Institutes of Health (NIH) granted for research was used for administrative overhead, what is known as “indirect costs.” Today, NIH lowered the maximum indirect cost rate research institutions can charge the government to 15%, above… pic.twitter.com/FSUYpEGKsr — NIH (@NIH) February 7, 2025

The new memo states that NIH indirect rates are capped at 15%.

An “indirect rate” refers to the ratio of allowed “indirect” expenses to the “direct” expenses incurred by the NIH grant/contract. The “direct” expense refers to the expense directly associated with the grant, while the “indirect” expense is one that does not directly benefit the grant/contract, but is necessary for keeping the research institution going. Examples of allowed indirect expenses would be rent, and electricity, and the IT infrastructure etc.

Here is the key: research institutions are supposed to have an accounting system in place that can differentiate between different types of expenses, and the indirect rates are required to be tied to actual indirect expenses…. as audited by the governments own audit agency. Harvard U cannot just arbitrarily claim an indirect rate of 69% ~ that number has to pass the government audits on allowed indirect expenses.

Is there abuse in the system ? Sure.

And some of the abuse is very egregious. Some companies/institutions exist just to game the system for the benefit of the shareholders. If someone were truly serious about reform, they would go about fighting that abuse. Any government employee who handles such grants can likely give you a list of reforms that should be implemented to fight that abuse.

But, coming back to the memo itself. It is not aimed at fighting abuse in the system.

Rather, it seeks to hack the system itself to pieces.

Consider Harvard’s overhead rate of 69%. This may seem high, but it funds scientists at several Harvard Centers, including: Harvard Medical School, Broad Institute (at Harvard + MIT; this does genomic research), Chan school of public health (this does epidemiology research), Harvard Stem Cell Initiates, and the Harvard Brain Science Initiative. These scientists take on new research directions that is too early to be funded by existing NIH programs, and their work gets classed under an indirect account. The NIH doesn't ever fund anything “risky”… that is one of the major flaws of the system… so anything that is unduly risky has to be funded by other “indirect” activities. Essentially, scientists use those indirect accounts to test out new research ideas. Once an idea has developed enough validation data, then they propose to do that same work under an NIH funded grant, just with a little added vigor.

So capping the overhead to 15% would shut down that pipeline of new ideas that goes into biomedical research. The NIH would save $ 4B (as the memo claims), but it would shut down the spigot of new ideas. Essentially, this would be unilateral surrender of the US lead in biomedical sciences. That won’t happen overnight, but it would not take that long either ~ 5 years is my rough guess.



Unless the NIH could funnel the saved $4B back towards risky ideas… but the likelihood of that is lower than me walking on water that I am simultaneously turning into wine.



So why is Elon doing it ? My opinion… he thinks that any $$ that is being spent that does not benefit him personally is a $$ that is being wasted.



Disclaimer: I have no (existing or past) affiliation with Harvard University, and I do not have any NIH grants/contracts… the memo does not affect me personally. But I have friends, and I know the system quite well.

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[1] Url: https://www.dailykos.com/story/2025/2/8/2302441/-New-memo-from-the-NIH

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