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As the world flocks towards medical research and innovation, the U.S. is hitting the brakes. Sweeping cuts across federal research programs are threatening to stall scientific progress and could dim the country’s edge. Research and development in the healthcare sector may still be buzzing, but with President Trump’s second term, the funding is fading fast. In this article, we unpack the full scope of the budget cuts and their far-reaching consequences – from canceled clinical trials and stalled drug approvals to mass layoffs and lawsuits.
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NIH erases nearly 800 research projects; indirect costs capped at 15%
The U.S. National Institutes of Health (NIH) – the primary federal agency for biomedical research – slashed nearly 800 projects and vowed to wipe out billions of dollars from biomedical research funding. The NIH is the world’s largest public funder of biomedical research and has a yearly budget of $47 billion, which accounts for more than 60,000 grants. But now, these grants are at stake.
“The NIH, long considered the crown jewel of the U.S. tech and biotech ecosystem, is currently at the center of the storm. With a $47 billion budget, it has powered discoveries from CRISPR to mRNA vaccines. But recent layoffs and funding delays are gumming up the works, slowing the review of proposals and choking off the earliest lifeline for academic innovators,” said Michelle Hoffmann, executive director of the Chicago Biomedical Consortium.
The NIH has struck universities with a cap on indirect costs at 15% of a grant’s value. Indirect costs pertain to expenses that support a project but are not directly tied to a specific project. These costs cover utilities, administrative salaries, and facilities maintenance.
Hoffman thinks that this undermines the infrastructure built to support complex biomedical research. “Laboratories lose essential support for equipment, data systems, compliance, and staff, making it harder to sustain early-stage innovation,” stressed Hoffman.
This is a stark and sudden change to the average indirect cost rate of nearly 30% since 2009, with some universities even benefitting from a 60% indirect cost payment.
While the NIH stated that this measure is to “ensure that as many funds as possible go towards direct scientific research costs rather than administrative overhead,” the move has drawn criticism from many corners, including scientists, healthcare providers, and politicians.
Since these budget cuts were first announced in February, five lawsuits have been filed against the NIH and its parent body, the U.S. Department of Health and Human Services (HHS), led by Robert F. Kennedy, Jr.. These suits – filed in April – were brought to court by academic institutions and non-profit groups alike, two of which address the cancellation of grants.
Two weeks ago, a federal judge who heard three cases against the new indirect cost rate blocked the 15% cap from coming into effect. However, the NIH is appealing the decision. Also this month, 16 U.S. states filed a case against the revocation of research grants that have already been awarded, as well as the heightened delays in new grant applications.
Clinical trials stalled: HIV and infectious disease research in limbo
Meanwhile, these budget cuts affect clinical trials that count on federal funding. Hoffman said: “A wave of NIH-funded clinical trials has been prematurely halted, stalling the development of new therapies and cutting off patient access to potentially life-saving treatments. The ripple effects reach far beyond the lab, slowing progress from discovery to delivery.”
In a post on LinkedIn, Peter Lurie, a plaintiff and a research physician at the Center for Science in the Public Interest in Washington DC, said: “To tell physicians, clinicians, and researchers what they must not study is to tell them what questions not to ask, what answers not to find, and which patients not to help. This will have devastating consequences for those relying on government progress on human immunodeficiency virus (HIV), Alzheimer’s, diabetes, or other public health challenges, if not reversed by the courts.”
Out of the nearly 800 projects that have been canned so far, 29% are linked to HIV/AIDS and 17% to COVID-19. According to a report by Nature, the reason why research on COVID-19 has been cut is because the Trump administration said that the “pandemic is over and people in the United States have moved on from it.” As for scrapping HIV/AIDS projects, the report speculates that it may have to do with Trump’s executive order targeting trans people and healthcare, as HIV/AIDS disproportionately affects sexual and gender minorities.
Shirley Tilghman, a molecular biologist and former president of Princeton University in New Jersey, told Nature that these measures affect a “small but real percentage” of the population who seek answers to “critically important questions about their health.” “You cannot eliminate a segment of the population by executive order, but you can harm them greatly,” said Tilghman.
In the same vein, research surrounding “vaccine hesitancy” has been scaled back, making up 45.5% of studies terminated. At least 33 research grants on the subject, as well as on encouraging vaccine uptake, were axed in March. This isn’t unexpected given Kennedy’s past anti-vaccine stance. When he came into power, the Centers for Disease Control and Prevention (CDC) – a national public health agency in the U.S. – shelved an advertising campaign for the flu shot, and the HHS shrunk state funding that included programs for childhood immunization by billions of dollars.
Layoffs plague U.S. healthcare system
Meanwhile, recent layoffs owing to these budget cuts are “gumming up the works, slowing the review of proposals, and choking off the earliest lifeline for academic innovators,” expressed Hoffman. Several top officials overseeing food and drug safety in the country were laid off in April in efforts by the Trump administration to slim down the workforce by 20,000 health workers. Around 2,400 staff members were let go from the U.S. Food and Drug Administration (FDA), 2,400 from the CDC, and 1,200 from the NIH earlier this month.
As the CDC is entrusted to take action against infectious disease threats, job cuts mean that the effective monitoring of outbreaks could be hampered. This is amid spiking cases of measles and bird flu in the U.S. At the FDA, it is predicted that downsizing may delay an already backed-up approval process for many lifesaving drugs. The fewer the number of employees evaluating the safety and efficacy of drugs, the longer it would take to greenlight them.
How do the budget cuts affect universities and tech transfer?
In an open statement to the American public, 1,900 scientists warned that a “climate of fear has descended on the research community.”
The statement read: “Researchers, afraid of losing their funding or job security, are removing their names from publications, abandoning studies, and rewriting grant proposals and papers to remove scientifically accurate terms that agencies are flagging as objectionable. Although some in the scientific community have protested vocally, most researchers, universities, research institutions, and professional organizations have kept silent to avoid antagonizing the administration and jeopardizing their funding.”
The federal government is investigating more than 50 universities as part of its anti-DEI (diversity, equity, inclusion) crackdown. New York-based Columbia University was one of the first few universities to be slammed with funding cuts. In March, the White House canceled $400 million worth of funding, demanding that the Ivy League school comply with policy changes. Columbia is currently in talks with the federal government to reverse the budget cuts.
Similarly, in a major blow to tech transfer, several universities have had their research funding cut. Illinois-based Northwestern University’s spokesperson Jon Yates said that scientific research was “at jeopardy” after the government froze about $790 million in funding. As for the University of Pennsylvania, the federal government chopped off $175 million from its research budget, citing the school’s policies on transgender athletes.
The school pointed out that the freezes and cancellations would threaten lifesaving and life-improving research, “the loss of which will be felt by society,” in a press release. “Understandably, we are hearing concerns not only from scientists affected directly, but more broadly from students and young faculty embarking on careers in research.”
“It’s just chaos,” said Daniel Judd, head of Universities at science partnering company Inpart. “No one’s all that certain about what’s going on or what will happen.”
However, Harvard University has predicted what’s about to happen, and things look bleak. The Massachusetts Ivy League school was hit with a steep research funding freeze – $2.2 billion to be exact – three weeks ago. Several researchers at the school received stop-work orders, one of whom was Sarah Fortune, Professor at the Harvard School of Public Health. Fortune had been researching tuberculosis for over a decade and was involved in a $60 million research project. Part of the research was a vaccine study on primates, whose lives are now at risk as the team scrambles for funds to support them and prevent them from being euthanized.
Another study that the school has stalled is focused on treatments for amyotrophic lateral sclerosis (ALS), a neurodegenerative disease that affects nerve cells. David Walt, a professor at Harvard Medical School and Brigham and Women’s Hospital running the ALS project, said in an interview with CNN that “this cancellation will cost lives.”
Nevertheless, it doesn’t look like Harvard will bend to the government’s demands to enact certain admission reforms to end the freeze. Instead, the university is now taking the federal government to court, citing that this is a violation of Harvard’s constitutional rights.
At Colorado State University, Jean Peccoud, Professor of Chemical & Biological Engineering, conducts research in mammalian synthetic biology. Peccoud is developing predictive models of behaviors encoded in synthetic DNA sequences and has banked on federal agencies, such as the NIH and the National Science Foundation (NSF), to fund about 30% of his research every year. His spinout company commercializes the technology developed in the university lab. But now there lies uncertainty over the availability of these funds in the coming years.
“The situation is very disruptive. People working in academic environments are being laid off, and the number of graduate students we can support is significantly reduced. This brutal change of policy may compromise the ability of research institutions to maintain active research programs,” said Peccoud, who has figured out a way to stay afloat.
Seeking alternatives: weaning off federal funding
Instead of submitting basic research proposals through the university, Peccoud now relies on his company to market services using the resources available in his lab. While this may not work for a lot of researchers who solely rely on federal funding, Peccoud sees this challenge as an opportunity.
“The academic community will have to connect with the rest of the industry and focus on research issues that have a more immediate value than the projects funded by the agencies supporting academic research. It’s a welcome reality check that can improve the impact of research and the quality of the training we provide to our students. It will also force academic institutions to streamline their administrative processes and run leaner operations,” said Peccoud.
To dampen the aftermath of these freezes and budget cuts, Hoffman thinks that organizations like the Chicago Biomedical Consortium, a Chicago-based nonprofit aimed at encouraging collaboration among scientists in the region, are stepping in where federal funding falls short to support innovation at its most fragile stage. Instead of depending on only one form of funding, Hoffman expressed that a “more diverse funding mix” could be key to progressing therapeutic research.
“Industry partnerships, philanthropic capital, state investment, and venture funding are increasingly picking up the slack to keep early-stage science moving forward. Sustaining that momentum also means making the case to lawmakers. Advocacy efforts aimed at reinforcing the value of fundamental research are critical to keeping the pipeline of biomedical innovation alive,” added Hoffman.
At a time when a global trade war has been launched by the U.S., there has also been a slowdown in biotech and pharma deals, according to a report by Reuters. But how can these deals take place in the future if there isn’t scientific research and technology to hinge on?
“Federal budget cuts are throttling innovation at its source,” said Hoffman. “The fallout is already visible; clinical trials have been paused, labs are understaffed, and a generation of researchers has been left in limbo. Without a course correction, the next decade could bring fewer transformative therapies – and fewer people to invent them.”
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