Michigan is suing the National Institutes of Health over changes to NIH’s grant policy.
The new guidance, which took effect Monday, limits the reimbursement rate for indirect costs related to grant-funded research at 15%. The indirect costs cover spending on areas like facilities and administration, including some personnel.
The new 15% reimbursement rate is far less than what many research institutions have already negotiated with the federal government, according to the multi-state lawsuit.
Michigan Attorney General Dana Nessel said the rate change is effectively a cut to research funding in the state, especially for institutions like the University of Michigan, Michigan State University, and Wayne State University.
“They will cut thousands of jobs here in Michigan. They'll disrupt tens of thousands of research projects here, many of which are already currently underway, and focus on improving health outcomes and, of course, preventing deaths, unnecessary deaths,” Nessel said Monday in a virtual press conference to announce the lawsuit.
The lawsuit seeks a temporary restraining order against the policy statement so research institutions in the plaintiff states can continue with funding as expected.
By Monday evening, a judge had issued a temporary restraining order to stop the NIH changes from taking place.
In its own response to the changes, the University of Michigan noted that its negotiated reimbursement rate stands at 56%.
Arthur Lupia is interim vice president for research and innovation at U of M.
“The University of Michigan conducted approximately $801 million in research funded by the National Institutes of Health in 2024. The university’s agreement with NIH sets the university’s indirect cost rate at 56% to cover critical aspects of research, including highly-trained personnel who assure the safety of patients and sophisticated laboratory equipment that fuels research in the treatment of diseases like cancer, Alzheimer’s and Parkinson’s,” a statement from Lupia read.
“Reducing that rate to 15% will eliminate approximately $181 million in funding and will leave gaping holes in budgets, immediately and needlessly constraining the university’s ability to save lives through medical breakthroughs and drug discoveries, support national security through research in areas like computer science, data science and engineering, and create thousands of jobs in technology areas that are key to the economic strength of the state and the nation.”
But the Trump Administration has vehemently defended the policy statement and pushed back at any categorization of it as a spending cut to research.
In response to a critical article from The Washington Post, White House communications staff emailed a series of quotes from the NIH’s guidance. It said many private foundations that offer research grants reimburse indirect costs at lower rates than what the NIH had provided.
“The United States should have the best medical research in the world. It is accordingly vital to ensure that as many funds as possible go towards direct scientific research costs rather than administrative overhead. NIH is accordingly imposing a standard indirect cost rate on all grants of 15%,” the press released quoted the NIH document as saying.
Beyond the issue of what a fair reimbursement rate would be, however, is whether the Trump Administration can change that rate without Congress stepping in.
The attorney generals suing argue that answer is no.
“The Rate Change Notice contravenes Congress’s express directives in the appropriation acts governing the NIH, and HHS’s own regulations that prohibit NIH from requiring such categorial, indiscriminate changes to indirect cost rates. In issuing the Rate Change Notice, the NIH has also acted beyond its statutory authority, and has failed to promulgate the change using notice and comment rulemaking,” the lawsuit reads.
Meanwhile, a federal court Monday granted a win to the states, including Michigan, that are suing the Trump Administration in a separate lawsuit over other funding measures.
The U.S. District Court for the District of Rhode Island issued a temporary restraining order against pending freezes to federal funding based on President Donald Trump’s recent executive orders.
The attorneys general suing over the NIH policies said they weren’t aware yet Monday what that would mean for the latest lawsuit.
