Oregon Health & Science University stands to lose tens of millions in federal funding under the Trump administration’s directive to cap National Institutes of Health payments to research institutions to help cover overhead costs.

On Friday, the NIH announced it would immediately set a 15% cap on “indirect” funding that institutions receive as part of research grants. These funds pay for building maintenance, supplies, support staff and other administrative expenses tied to conducting research, and many universities and research institutes previously received indirect funding at a rate above 50%.

A judge temporarily halted the funding cuts Monday in response to a lawsuit brought by Oregon and 21 other states, providing time for the states and the public research institutions they represent to make their case.

If allowed to proceed, though, change would deal a major blow to OHSU, Oregon’s largest recipient of NIH funding. OHSU received $277 million from the NIH in fiscal year 2024, according to federal data, $73.6 million of it for indirect costs.

Steven Stadum, OHSU’s interim president, told staff in an email Saturday that the university’s indirect cost reimbursement rate is 56%. Each institution typically negotiates its own reimbursement rate with the government as a flat percentage that gets added to each grant award. He said that the university’s current negotiated rate already does not cover true research costs.

Willamette Week first reported Stadum’s email.

“The research conducted at OHSU leads to life-saving therapies and technologies and contributes to the global effort that seeks to improve human health and well-being,” Stadum wrote. “Research is a foundational pillar of what makes us an academic health center, and we must do all we can to protect it.”

The University of Oregon received more than $40 million in NIH funding, $10.4 million of which would be indirect funds subject to the new cap, and Oregon State University received $21 million, with $5 million in indirect funds.

“Though there is reason to believe this action is prohibited by law, a reduction of this magnitude—should it take effect—would be devastating to OHSU and other universities, hospitals and research institutes across the U.S. engaged in scientific research,” Stadum wrote.

The funding cap was supposed to take effect Monday. But the attorneys general of Oregon and 21 other states filed suit against the Trump administration Monday morning, and a federal judge temporarily blocked the rate cut.

Sara Hottman, an OHSU spokesperson, said the university filed a declaration in support of the lawsuit Monday.

The NIH is one of the largest sources of funding for universities and research institutions in the U.S. Last year, the agency spent roughly $25 billion on direct research costs, in addition to the $9.25 billion on indirect costs.

A steep reduction in indirect funding, the states’ lawsuit argued, would “result in layoffs, suspension of clinical trials, disruption of ongoing research programs, and laboratory closures.”

According to the lawsuit, OHSU stands to lose $80 million that could immediately impact the university’s “ability to fund critical facilities, research compliance, and animal care.” (It’s unclear how the figure in the lawsuit was derived.)

“It would also compromise OHSU’s ability to carry out ongoing clinical trials and could immediately and directly impact patient care,” the lawsuit wrote.

The states’ lawsuit argued that the NIH’s decision to limit payments for overhead costs violates federal law, citing part of a 2018 appropriations act that prohibits modifications to NIH’s indirect cost funding.

The NIH on Friday cited federal regulations adopted nearly a decade ago that grant it the authority to deviate from negotiated indirect cost rates. In the announcement, the NIH argued that the change would bring its indirect cost rates in line with metrics used by private sector foundations.

“Most private foundations that fund research provide substantially lower indirect costs than the federal government, and universities readily accept grants from these foundations,” the NIH wrote. “This rate will allow grant recipients a reasonable and realistic recovery of indirect costs.”

Hours after states filed their lawsuit, a federal judge issued a temporary restraining order blocking the NIH directive. A hearing is scheduled for Feb. 21.

— Kristine de Leon covers consumer health, retail, small business and data enterprise stories.

Reach her at kdeleon@oregonian.com.

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