The Trump administration appears to have abandoned its legal push to limit funding for universities and academic medical centers that cover administrative and operational costs associated with research projects.
In February 2025, the National Institutes of Health shared plans to implement a 15% cap on reimbursements for indirect research costs. Historically, this rate has sat between 27% and 28% for most organizations. The NIH estimated the cap would save more than $4 billion in federal costs annually.
The policy was met with legal challenges from attorneys general in 22 states, along with national associations representing medical schools, teaching hospitals and universities.
In early January, a federal appeals court upheld a lower court ruling to block the cap on indirect research costs. The court determined that NIH’s effort to replace negotiated indirect cost reimbursement rates with a flat rate violated congressional appropriations law and NIH’s own grant regulations.
Under federal law, parties have 90 days to petition the Supreme Court to take up the case after a circuit court judgment. However, the Trump administration did not submit the required paperwork to do so by the April 6 deadline, effectively ending its legal fight, STAT first reported April 8.
While NIH framed the policy as a strategic cost-cutting move to remove administrative overhead, hospitals, health systems and other research institutions argued the cap on indirect costs would undermine the nation’s research capacity, stall scientific process and limit patients’ access to clinical trials and treatments.
Editor’s note: Becker’s has reached out to the Department of Justice for comment and will update this article if more information becomes available.
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