NIH cuts will cost Triangle universities millions. Now NC is suing Trump to block action.
New guidance Friday from the National Institutes of Health has sent a tremor through U.S. research institutions, including the Triangle’s two largest, as Duke University and UNC-Chapel Hill stand to lose hundreds of millions in federal funding if a governmental cap on indirect medical research payments survives a legal challenge.
“We’re talking about massive layoffs across the Triangle if this (rule) holds,” former UNC-Chapel Hill Chancellor Holden Thorp said in a phone interview Monday.
Duke and UNC each rank among the top 15 recipients of NIH grants in the nation. In 2023, they received a combined $1.2 billion from the agency, accounting for more than half the state’s total NIH funding. Duke had 1,025 awards that year alone while UNC reported 1,020.
Most NIH grants consist of both “direct” payments for conducting medical studies and “indirect” payments for administrative costs like building maintenance, shared lab staff, and legal compliance. The government and research institutions negotiate indirect rates, which historically added around 27% to award totals, though major institutions have often received 50% or more to support indirect expenses. For example, UNC-Chapel Hill had negotiated an indirect cost rate of 55%, and Duke’s rate is 61.5%.
The new NIH rule ends negotiations and applies a flat 15% rate for all indirect payments from this point forward. The agency cited its obligation to protect taxpayer dollars.
This cap doesn’t “retroactively” apply to the start date of ongoing grants, meaning distributed money won’t be clawed back, though the agency said “we believe we would have the authority to do so.”
On Monday, North Carolina Attorney General Jeff Jackson joined 21 other Democratic attorneys general to sue the Trump administration and the NIH for what they called an “unlawful” funding cut.
“Effectively halting research to cure and treat human disease will directly impact the well-being of the Plaintiff states’ citizens, who are the beneficiaries of research creating treatments, such as modern gene editing, vaccines such as flu vaccines, and cures for diseases like cancer, infectious diseases, and addiction,” the lawsuit stated.
Later in the day, the U.S. District Court in Massachusetts approved a temporary restraining order on the NIH cuts.
NIH is the largest public supporter of U.S. medical research. In North Carolina, the agency awards grants to nonprofits, foundations, health startups and dozens of universities. In 2023, NC State received $42.9 million through 116 awards. Yet given the NIH’s mission, universities with medical schools like Duke and UNC-Chapel Hill are the state’s biggest recipients.
On Monday, UNC’s faculty executive committee held an emergency meeting to discuss the rate change. Penny Gordon-Larsen, the university’s vice chancellor for research, told colleagues during the virtual meeting that indirect payments were “essential to conducting world-class research” and used to recover expenses already made. She cautioned it was a dynamic situation with future legal decisions likely to shape the outcome.
In a Feb. 8 statement, Gordon-Larsen’s office shared it “planned discussions” with North Carolina congressional leaders this week to discuss the rule’s “significant negative impacts.”
Uproar in academia
In 2023, the NIH spent approximately $35 billion on grants, with around $26 billion on direct costs and $9 billion on indirect costs. The agency contends indirect expenses are “by their very nature” not easily attributed to specific project objectives and thus harder to oversee. The guidance highlights that private funding organizations like the Bill and Melinda Gates Foundation pay lower indirect rates to universities.
This change is one of several the new Trump administration has made at federal agencies in the name of enhancing cost savings and accountability.
“The United States should have the best medical research in the world,” the guidance stated. “It is accordingly vital to ensure that as many funds as possible go towards direct scientific research costs rather than administrative overhead.”
The policy has sparked an uproar among many in academia. “Here in the NC Research Triangle, it will devastate medical & nursing schools & universities,” Gavin Yamey, director of the Center for Policy Impact at the Duke Global Health Institute, wrote on Bluesky this week.
Thorp argued the lower universal rate violates a decades-long collaboration between academia and the government.
“For 70 years, the United States and the institutions have had an agreement that they would more or less equally share the costs of providing the infrastructure that it takes to carry out the American research enterprise,” he said.
In 2023, the agency awarded Duke $188 million for indirect payments and UNC $131 million. This money included an additional $478,000 on a $899,000 grant for UNC researchers to decode “the molecular properties of brain white matter” and $265,000 on a $546,000 grant for a Duke team to study the integration of geriatric care into dialysis clinics.
A universal shift to 15% rates would mean thousands of dollars less per grant — and millions less cumulatively. Duke is the largest employer in Durham County, and UNC is the largest in Orange County.
“Either you cut the people who are administering this and take a huge risk that you’re going to have some massive compliance problem,” Thorp said. “Or you have to cut other programs in the university in order to preserve your ability to take the direct cost of the research grants.”
Outside universities, North Carolina’s largest recipient of NIH funding is RTI International, a research nonprofit based in Research Triangle Park. In 2023, it received $551 million from the federal agency through 107 projects, though most of this money came from a single $417 million COVID-19 research grant which included no indirect payments.
That year, the organization received $23 million in total indirect payments, with multiple projects receiving well above the new 15% cap.
This story was originally published February 10, 2025 at 4:14 PM with the headline "NIH cuts will cost Triangle universities millions. Now NC is suing Trump to block action.."
