USA: The effects of funding cuts on academic medical centres

Academic medical centres in the US are reacting to the Trump administration’s proposed cuts to medical research grants that cap reimbursements for indirect costs at 15%.

Although the cuts were temporarily blocked on 5 March by a judge in Massachusetts, institutions are already reeling from the proposed cuts.

Reimbursements for overhead costs on medical research projects average about 27%. The Trump administration wants to cut reimbursement to 15%, or more than $4 billion annually, but lawsuits from 22 states and organisations argued the change would limit research activity and endanger patients.

The effects of the cuts could be far-reaching, The New York Times reported. In 2024, the National Institute of Health spent around $32 billion on nearly 60,000 grants that included medical research areas such as cancer, genetics and infectious disease. Of that, $23 billion went to direct research costs, such as researchers’ salaries, and the other $9 billion went to indirect costs which can include laboratory upkeep, utility bills, administrative staff and access to hazardous materials disposal. These indirect costs are essential to making research happen. The 15% cut in overhead costs would reduce funding by at least $5 billion. 

The White House said those savings would be reinvested in more research. Advocates of the policy also told the Times that the cuts would reduce the chances of those funds being put towards programmes that taxpayers do not see, such as diversity, equity and inclusion programmes. Organisations would have to fill the funding gap via other grants or private donations. Advocates for the policy also pointed to other perks many institutions have such as tax exceptions. 

Many research institutions told the Times that if the cuts are finalised, they would simply do less medical research because they would not be able to afford their current programmes without government help. 

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Source: Becker's Hospital Review, 18 March 2025