Caltech Joins Lawsuit Suing NIH Over Funding Cuts

Caltech joined several other leading American research universities in a lawsuit against the National Institutes of Health (NIH). Filed on February 10, the lawsuit challenges what it describes as “a flagrantly unlawful action… that, if allowed to stand, will devastate medical research at America’s universities.”

On February 7, the NIH announced that indirect costs for all new and existing grants would be standardized at a rate of 15%. When a grant is awarded, direct costs are how much is spent on the research itself, while indirect costs are an additional percentage added to cover overhead and administrative expenses. Caltech received $62M in NIH awards in Fiscal Year 2024, with $18.76M being indirect costs. Since 1965, institutions have been able to negotiate their indirect cost rates for NIH grants, which have averaged between 27% and 28% over time.

In Fiscal Year 2023, the NIH spent over $35B on grants. Approximately $26B went to direct costs, while $9B went to indirect costs. The NIH has stated that the agency “is obligated to carefully steward grant awards to ensure taxpayer dollars are used in ways that benefit the American people,” and that the standard 15% rate “will save more than $4B a year.”

A federal judge temporarily blocked the cuts on February 10 after two other lawsuits were filed—one by 22 state attorneys general and the other led by the Association of American Medical Colleges. Following a two-hour hearing on February 21, the block was indefinitely extended until the judge issues a new ruling, for which no date has been set.

At the hearing, the plaintiffs of the three lawsuits argued that the NIH’s decision violates the separation of powers and congressional appropriations law. “This is not cutting down on grant funding,” said Brian Lea, an attorney for the NIH. “This is about changing the slices of the pie, which falls squarely within the executive’s discretion.” The NIH also justified the 15% rate by stating that indirect costs are “difficult to oversee.” However, the plaintiffs highlighted the rigorous negotiation process and audit schedule that verify the proper use of funds.

The plaintiffs also argued that a standard 15% rate would cause “irreparable harm” to medical advancements and university research. John Bueker, an attorney for the plaintiffs, cited potential consequences including reduced acceptances of graduate students and halted clinical trials, which are “a last hope for a lot of people.” The lawsuit that Caltech joined states:

“Medical schools, scientific research institutes, and other grant recipients across the country have structured their programs and development of physical infrastructure assuming that the substantially higher indirect cost recovery rates would remain in place, and that any changes to those rates would be based on actual changes in cost… Even at larger, well-resourced institutions, this unlawful action will impose enormous harms, including on these institutions’ ability to contribute to medical and scientific breakthroughs.”

Adam Unikowsky, another attorney for the plaintiffs, noted Caltech’s $200M Chen Neuroscience Research Building which is expected to be partly paid by NIH indirect cost reimbursements. “There’s going to be a hole in Caltech’s research budget, and actually a big one,” Unikowsky said.

In an email to the Caltech community on February 10, President Thomas Rosenbaum, Provost David Tirrell, and General Counsel Jennifer Lum announced the Institute’s participation in the joint lawsuit, underscoring the importance of NIH awards to the Institute’s research.

“With the support of NIH funds, Caltech researchers are advancing the diagnosis and treatment of neurodevelopmental disorders, creating tools to improve imaging of tumors, developing new strategies for engineering therapeutic antibodies for treatment of viral infections, and providing new insights into the origins of addiction, birth defects, Parkinson’s disease, and other disorders,” the email stated. “These are just a few examples of the projects that are supported with the NIH investment in Caltech research, and provide a sense of what we stand to lose.”