Drug Discovery and Development Faces an Ominous Future from NIH Indirect Costs Rate Cuts

On February 7, 2025, the Office of the Director of the National Institutes of Health (NIH) issued a Supplemental Guidance to the 2024 NIH Grants Policy Statement, stating: “For all existing grants to [Institutions of Higher Education], retroactive to the date of issuance of this Supplemental Guidance, award recipients are subject to a 15 percent indirect cost rate.” (1) This reduction in the indirect cost (IDC) rate is a considerable cut in financial support for critical overhead and administrative expenses that are essential for health research. Specifically, IDCs are used for facilities such as laboratory space, scientific instruments, research computing infrastructure, safety and regulatory compliance, research core operations, and support staff. They also play a crucial role in sustaining research institutions, and such drastic cuts could lead to the loss of hundreds of millions of dollars for NIH-funded institutions. The implications are profound, threatening to disrupt a wide spectrum of biomedical research, from basic laboratory investigations to clinical trials. Furthermore, the abrupt nature of these cuts leaves institutions with little time to adjust, placing them in immediate financial distress. The medicinal chemistry community, in particular, will face significant setbacks. NIH-funded academic institutions serve as hubs for early stage drug discovery research, identifying novel drug targets and pioneering new chemical entities that may ultimately become transformative therapeutics. The pathway from discovery to market often depends on academic institutions partnering with industry collaborations that facilitate clinical trials and the path toward regulatory approval showing how these cuts will have impacts beyond. While the full impact of these IDC rate reductions remains uncertain, it is evident that they will slow the drug development pipeline, increasing both the time and difficulty of bringing new medicines to patients. At this juncture, it remains unclear how best to navigate these policy changes, despite lawsuits filed and a temporary restraining order. (2,3) Previous funding decisions have already contributed to widespread uncertainty, and further budgetary constraints are likely to exacerbate these challenges. However, drug discovery has long been recognized as a “team sport”, (4) bringing people together in a singular, multidisciplinary workforce dedicated to translating fundamental research into life-changing treatments. In response to these financial constraints, our research community must advocate for resilient support of biomedical research. This includes securing the necessary funding to promote groundbreaking science and fostering the next generation of scientists through robust educational and training programs. Now, more than ever, we must be united to ensure that scientific progress continues unimpeded and that the discovery and development of life-saving therapies remain a national priority. D.E.H. acknowledges generous support from the National Institute of General Medical Sciences of the NIH (R35GM155353-01). This article references 4 other publications. This article has not yet been cited by other publications.