Moves by the Trump administration to reduce HHS’s discretionary budget by 26.2% could have unintended adverse consequences. They not only could undermine the nation’s standing in the field of medical research, but also could derail progress in human health advances, promising medical findings, and public health preparedness. Cuts to discretionary spending by the National Institutes of Health (NIH) pose a particularly significant threat in this regard, because they ignore the NIH’s enormous potential for advancing scientific knowledge and medical advancement that benefit global health.

The NIH is a government agency that was created in 1837 and officially designated by Congress in 1930.^a As part of HHS, it stands today as the world’s biggest funder of biomedical research and development, with an annual budget of about $48 billion, about 80% of which is spent on research grants.^b In total, the NIH awards nearly 60,000 grants each year to more than 300,000 researchers at over 2,500 colleges and medical centers. The NIH has been described as “a crucible of basic science research — the kind of work that industry generally does not do.”^c

A May 2 letter from the Office of Management and Budget (OMB) to Sen. Susan Collins (R-Maine) indicates the Trump administration proposes cutting the HHS discretionary budget by 26.2%, from $127.0 billion in fiscal year 2025 to $93.8 billion in fiscal year 2026.^d Over half of the reduction will come from a $18 billion or roughly 40% cut to the NIH’s budget. Although the recommended budget includes $27 billion for NIH research, the letter states that “NIH research would align with the President’s priorities to address chronic disease and other epidemics, implementing all executive orders and eliminating research on climate change, radical gender ideology, and divisive racialism.”

Trump administration actions for cutting NIH’s research grant budget

There are three ways the Trump administration aims to implement the NIH research grant cuts.

1 Grant terminations. NIH grants may be terminated if they are not aligned with the president’s priorities. In fact, according to a May 13 Senate Health, Education, Labor and Pensions Committee minority staff report, the Trump administration cut $2.7 billion from the NIH budget in the first three months of 2025, terminating over 715 NIH research grants.^e

2 Indirect-cost payment rate cap. On Feb. 7, Matthew Memoli, then the NIH acting director, announced plans to cap the indirect-cost payment rate for all new and existing grants at 15%, a significant decrease versus the existing average of 27% to 28%, though many institutions have much higher indirect cost percentages.^f Funding for indirect costs covers shared resources such as utilities, lab animal care, information technology, libraries and support staff whose work supports multiple departments.

One analysis found that the indirect cost payment rate reduction could reduce funding by at least $5 billion, with the 10 institutions that receive the most money from the NIH standing to lose more than $100 million annually on average.^g Examples include Johns Hopkins University, $200 million; the University of California, Los Angeles, nearly $200 million, Duke University, $194 million; Stanford University, $160 million; and St. Jude Children’s Research Hospital, $78 million.^h

3 Enforcement actions for alleged antisemitic discrimination. On March 10, the U.S. Department of Education’s Office for Civil Rights (OCR) sent letters to 60 colleges and universities warning them of potential enforcement actions if they do not fulfill their obligations under Title VI of the Civil Rights Act to protect Jewish students on campus, including uninterrupted access to campus facilities and educational opportunities.ⁱ Accordingly, Harvard University was one of the first institutions to be penalized, with at least 350 grants from the NIH, the National Science Foundation and other federal agencies canceled at Harvard Medical School.^j

The role of Congress

As always, OMB budget proposals must be approved by the U.S. Senate, with 60 votes required for passage, which means that seven Democratic votes would be needed. Moreover, historically the NIH has enjoyed strong bipartisan support, so the 40% cut is unlikely. Congress generally supports the NIH because of the key role it plays in advancing medical research, improving public health, and stimulating the economy by creating jobs and promoting innovation in the life sciences and biotechnology sectors. All of these would be threatened by the Trump administration’s proposed cuts.

Judicial challenges to grant cuts

The NIH research grant cuts have been challenged in the courts. After a temporary restraining order in February to halt the indirect cost payment rate cap and two further extensions of the order, on April 4, Judge Angel Kelley of the U.S. District Court in Massachusetts issued a permanent injunction. The NIH filed a notice of appeal to the U.S. Court of Appeals for the First Circuit on April 8 to challenge the permanent injunction. Also on April 4, attorneys general from 16 states filed a lawsuit in the U.S. District Court in Massachusetts against HHS and the NIH, asking for preliminary and permanent injunctions that would block the NIH research grant cancellations and require the health agencies to review delayed applications.

Research institutions’ varied responses

Some colleges and medical centers have stopped research activities, including clinical trials, altogether. Others, such as the University of California, Los Angeles, have implemented budget cuts and hiring freezes. Some, such as Columbia University, have laid off staff.

A few private universities with large endowments, such as Harvard University, Johns Hopkins University and Northwestern University, have attempted to self-fund research, drawing upon unrestricted endowment earnings as a short-term, stop-gap solution.

A more sustainable, longer-term strategy is cross-subsidization, by which the hospital and health system help fund research activities by producing additional revenue (and margin). Outpatient services — such as urgent care facilities, pharmacy services (outpatient, retail and specialty pharmacies), and expansion of outpatient procedures — arguably constitute the most attractive avenue for the needed revenue and income generation.

Conclusion

Although the NIH research grant cuts will continue to be contested in the courts, and the U.S. Senate has ultimate authority to approve the federal budget, much damage has already been done to the biomedical research environment by the termination of hundreds of grants and the proposed indirect cost payment rate cap, as well as other threatened cuts. Under this dark cloud of uncertainty, America’s institutions of higher learning must continue to make the case for public-funded research, draw upon alternative funding sources and solicit financial assistance from their hospital and health-system partners.

a. NIH, “NIH . . . Turning discovery into health,” page last reviewed Jan. 21, 2025.
b. NIH, “Budget: Research for the people,” page last reviewed June 13, 2025.
c. Rosenthal, E., “How Trump aims to slash federal support for research, public health, and Medicaid,” KFF Health News, May 20, 2025.
d. Vought, R., “Letter to the Honorable Susan Collins,” Office of Management and Budget, May 2, 2025.
e. United States Senate Health, Education, Labor and Pensions Committee, “Trump’s war on science,” May 13, 2025.
f. Office of the Director, NIH, “Supplemental guidance to the 2024 NIH Grants Policy Statement: indirect cost rates,” Feb. 7, 2025.
g. Badger, E., et al., “How Trump’s medical research cuts would hit colleges and hospitals in every state,” The New York Times, Feb. 13, 2025.
h. Unglesbee, B., “Johns Hopkins University self-funds some research in wake of federal cuts,” Higher Ed Dive, April 29, 2025; Bollu, S., and Murphy, J., “UCLA researchers express concerns on academic funding cuts, NIH indirect costs cap,” Daily Bruin, April 27, 2025; Fan, R., “Duke researchers discuss ‘chilling effect’ of Trump’s NIH funding cuts on research, future of academia,” The Duke Chronicle, March 3, 2025; Martinez, J., et al., “Update on NIH announcement of its intention to place cap on indirect costs,” Stanford Report, Feb. 8, 2025; Cohen, J., “NIH funding cuts don’t just target elite universities,” Undark, March 10, 2025.
i. U.S. Department of Education, “U.S. Department of Education’s Office for Civil Rights sends letters to 60 universities under investigation for antisemitic discrimination and harassment,” press release, March 10, 2025.
j. Kekatos, M., “At least 350 Harvard medical grants were terminated by the Trump administration. Here are some of them,” ABC News, May 29, 2025