ARTICLE · 14 FEBRUARY 2025

Capping It All Off: NIH Caps Indirect Rates For Grants

Wiley Rein

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On February 7, 2025, the Office of the Director for the National Institutes of Health (NIH) issued a Notice (Notice No. NOT-OD-25-068) imposing a cap of 15% on the indirect...

United StatesGovernment, Public Sector

Morgan W. Huston

SUMMARY: On February 7, 2025, the Office of the Director for the National Institutes of Health (NIH) issued a Notice (Notice No. NOT-OD-25-068) imposing a cap of 15% on the indirect cost rates that can be charged to the Government on both new and certain existing grant awards. The Notice became effective upon its issuance. Twenty-two state Attorneys General challenged the Notice in a February 10 lawsuit that seeks to prevent NIH from implementing the cap within their states, and a temporary restraining order was granted for those plaintiff states pending a February 21 hearing.

PURPOSE: The Notice states that "[t]he United States should have the best medical research in the world" and reasons that, as such, funding should go toward direct scientific research as opposed to overhead. According to the Notice, "[t]his [15%] rate will allow grant recipients a reasonable and realistic recovery of indirect costs while helping NIH ensure that grant funds are, to the maximum

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