Report on Research Compliance 22, no. 4 (April, 2025)
Research universities have had one less worry (at least temporarily) since Judge Angel Kelley of the U.S. District Court for the District of Massachusetts granted a preliminary restraining order prohibiting NIH from imposing a 15% cap on indirect cost rates. But make no mistake: despite the March 5 ruling, indirect costs remain a target, particularly among members of Congress—and on both sides of the aisle.
That was evident during the Senate Health, Education, Labor and Pensions (HELP) Committee’s confirmation hearing for Jay Bhattacharya, M.D., to be NIH director, which coincidentally occurred on March 5.[1] Bhattacharya himself didn’t offer a strong defense of indirect payments, at one point referring to them as “a tip,” and stating that, “I don’t know where that [payment] goes.”
When questioned during the hearing by Sen. Patty Murray, D-Wash., however, Bhattacharya was able to quickly—and accurately—state that his home institution of Stanford University’s indirect cost rate is 55%.
Kelley ruled, in part, that the policy NIH announced Feb. 7 was prohibited by Congressional appropriations riders in place since 2017 (and included in the most recent continuing resolution funding the government through Sept. 30).
Calling the cap “an illegal plan [amounting] to a massive funding cut for research institutions,” Murray quizzed Bhattacharya on Stanford’s and pronounced his reply “correct.”
“If the 15% cap was implemented, Stanford would lose approximately $160 million per year,” Murray said. “So, what do you say today to your colleagues at Stanford? Researchers in my home state of Washington, scientists across the country?”
Replied Bhattacharya, “I’ve been a researcher at Stanford. I’ve earned NIH grants” while there. “The money that comes to me, the direct costs as researchers, I understand exactly where that money goes. The indirect costs are kind of a tip, a 55% tip on top of that, that goes to the administration.”
Murray said Bhattacharya “would tell Stanford researchers they don’t need that. You’re saying Stanford’s different than anybody else.”
“No, he replied. “Please let me finish. What I mean is that I don’t know where that goes. I think that a lot of it likely goes to the things that are worthwhile. And, I’ve heard lots of folks, including from Stanford, who say that—I agree with them—[this is] support for buildings, light bulbs to make sure that we can see in the lab, and a whole host of other important things.”
He added that “there’s a lot of distrust about where the money goes because the trust in the public health establishment collapsed in the pandemic. I think transparency regarding indirect costs is absolutely worthwhile. And it’s just something that universities can fix by working together to make sure that where that money goes is made clear.”
Murray asked Bhattacharya another question before he was able to finish his next thought. “I want to make sure that the money goes to the research. If it goes to things that are not research and are labeled indirect costs…” he said, with the last part of this sentence trailing off.
Sen. Susan Collins, R-Maine, said she was “strongly opposed” to the cap and noted that all indirect cost rates are individually negotiated. “And it’s legitimate to say that we should take another look at that. Are we doing the right amount for Stanford versus Jackson Laboratories or the University of Maine? But to impose this arbitrary cap makes no sense at all. Furthermore, and I really want to stress this, this is against the law.”
Sen. Roger Marshall, R-Kan., said that “most of us understand that [indirect payments are] just another grift for universities, and we’re paying [an] unfair share of overhead.” He said he is “concerned” that “two-thirds of research dollars are funneled to four or five states.” Marshall added that “spreading the love” to “flyover states” would “prevent inbreeding.”
Indirect costs for Kansas institutions “are gonna be less than the coast,” Marshall continued. “If their indirect costs are that high, it’s their own problem. It’s not my fault. If we can do the research more efficiently, less expensive[ly] at Kansas State University or [University of Kansas], then let’s move it there.”
Sen. John Hickenlooper, D-Colo., told Bhattacharya that “the solution is some sort of more transparent, well-thought-out, fair system by which research in the center of the country, the south, the northeast, west, is all on a level playing field. How long, let’s assume, that we get the legal stuff sorted out, the chaos comes down a little bit, how long would it take to create a new system like that?”
He replied that he didn’t know whether “it’d take a new system necessarily.” More transparency, “audits of university spending of indirect costs, would help, I think, inform decisions,” Bhattacharya said.
Sen. John Husted, R-Ohio, said there are “lots of conversation[s] these days on NIH grants and talking about containing costs of how we do scientific research, but make sure we’re putting more lead on the target of that research rather than administrative costs.”
Many Ohio institutions “are willing to work with you in sharpening their pencils, getting better, forcing change in how these grants are used, distributed and focused on real research that needs to be done,” Husted said.
1 Theresa Defino, “Bhattacharya: NIH Will Change for ‘Healthy Again’ Agenda, Award Halts, Layoffs to Be ‘Assessed,’” Report on Research Compliance 22, no. 4 (April 2025).
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