Cuts Proposed for NIH Funding for Facilities and Operating Costs

In addition to the “proposed” sweeping reduction to the National Institutes of Health (NIH) budget, which is not expected to be supported by Congress, President Trump’s fiscal year 2018 budget includes significant reductions to NIH support for costs associated with conducting federally supported research, causing concern within the medical research community.

The total cost of federally sponsored research includes both direct and facilities and administrative (F&A) expenses (previously referred to as “indirect costs”). Direct costs are used to cover portions of researcher salaries and necessary equipment and supplies, while F&A costs refer to necessary research infrastructure and operating expenses that the university provides to support research.

Despite F&A costs as a percentage of federal funding remaining relatively unchanged at approximately 27% for more than a decade, they have become a popular target among politicians looking to reduce federal expenses because of a misconception by the public that F&A costs do not support research. F&A expenses are essential research costs including but not limited to personnel support, physical infrastructure, energy and utility expenses, costs of regulatory compliance, and other government-mandated expenses. These expenses are necessary to conduct high-quality medical research. A reduction in F&A costs would make research unaffordable for many institutions and lead to a reduction in critical biomedical research.

The proposed reduction in F&A costs can be achieved through two routes. Congress could pass a statute that caps the F&A costs an institution can be reimbursed for; this, however, is seen as unlikely due to the bipartisan support for medical research.

The more likely route is a lengthy process in which the Office of Management and Budget could issue new guidance. This process would occur over several years and would require public comment on the proposed guidance. The American Society of Nephrology has encouraged the administration to support medical research and reconsider its proposal on F&A costs, and will continue to track this issue.

August 2017 (Vol. 9, Number 8)