House Takes Biomed Research Indirect Costs Off the Table–For Now


This week our health-care Hill reporter Alex Ruoff got a nice little scoop that the House is shelving a White House proposal to make research institutions pay for a larger share of the administrative costs tied to running a biomedical research study.

Rep. Tom Cole (R-Okla.) told Alex this tidbit the evening before the House Appropriations Committee released its proposed labor-health spending plan, which we wrote about this week. That bill gave NIH a $1.1 billion increase (Cole is chairman of the labor-health subcommittee). The NIH figures were a clear rejection of the Trump administration’s plan to slice out nearly a quarter of the NIH’s $34 billion, in large part by shaving off these so-called indirect costs.

“We’re going to tread very lightly there because I think you could do a lot of damage to the biomedical infrastructure of the country,” Cole told Alex. There’s going to be a hearing in the fall.

So what are indirect costs, anyway? And why do they matter?

Indirect costs, which are also known as facilities and administrative or F&A costs, are charges that can’t be tied to a specific research project. So the electric bill that keeps the laboratories running, or the institutional review board that must approve any study involving people. (Sally Rockey, who used to be in charge of the NIH’s extramural programs, put together a video and blog that explains indirect costs.)

At the annual State of American Science event I attended a few days ago, university executives in charge of research programs (vice presidents, provosts, etc.) said the proposal to decrease the cap from 28 percent down to 10 percent would be devastating for their research programs as they are real costs that are essential to the conduct of research.

Daniel Lowenstein, provost of the University of California San Francisco, said July 14 the term “indirect cost” is a misnomer. “It really is an administrative cost.”

Republicans are split in how they feel about funding this. HHS Secretary Tom Price and Rep. Andy Harris (R-Md.)—who was rumored to be in consideration for the NIH director’s job—said it’s a way to make things more efficient by putting more money to the cost of doing research. But Sen. Lamar Alexander (R-Tenn.), who is chairman of the Health, Education, Labor and Pensions Committee, called it “one of the most harebrained recommendations in the budget.”

Either way, the indirect cost thing is off the table for now. Cole said his subcommittee will hold a hearing on the issue this fall. But it doesn’t look like it will be in the bill when the House Appropriations Committee votes next week, July 19, on the bill.

Stay on top of new developments in health law and regulation with a free trial to the Health Law Resource Center.

Learn more about Bloomberg Law and sign up for a free trial.