Daniel Joyce: Hi, my name's Dan Joyce. I'm a urologic oncologist at Vanderbilt University. I have the pleasure of being joined by Ben Pockros today, who's a resident at University of Michigan and has a very impressive history of publishing in health policy and health services research. His recent work in urology practice is an editorial that talks about the recent changes in NIH funding, and we look forward to hearing more about that work. Ben, thanks so much for being here.

Benjamin Pockros: Thanks for inviting me to talk about this really important topic. Really appreciate it.

Daniel Joyce: So go ahead and I know you have some slides here for us. Give us a little overview of what you guys discussed in your editorial, and I'll be very interested to hear some of your thoughts after that on where we go next.

Benjamin Pockros: So yeah, thanks, Dr. Joyce, thanks for inviting me to talk about this work. So the four of us put together an editorial in urology practice, and I think today is another nice opportunity to really help amplify this message to the rest of the research community.

So I put together some slides, and my plan is to first really help define what indirect costs are, and then to provide some concrete examples and numbers to really help contextualize the significance of these potential cuts. Mainly to discuss what potential consequences could be from both the researcher perspective but also the institutional perspective.

What are indirect costs? Well, in technical terms, it's the distribution of grant money that funds institutional overhead costs of doing research. But in more simple terms, I like to think of it as just like the extra tip that NIH gives to institutions to help support and promote and encourage ongoing research efforts.

So the key distinction of indirect costs are that they're not actually directly attributed to one specific grant or one specific study. So for example, we know that to operate a robust research environment, you need to have cybersecurity and biohazard waste disposal systems and safe specimen storage systems and institutional review boards.

And all of these systems can't just rely on a single grant, but they're usually shared resources among many different researchers and often require significant financial investment from universities so that they're delivering the highest quality of oversight. And so that's really what indirect costs are supporting. It's separate from the actual direct cost of the grant.

Now, the average indirect cost rate in this country is 28%. And so again, if you think of it like a tipping system, if an investigator is granted a $1 million grant, the university will actually receive $1.28 million in total funding, and $280,000 of that will be directed to some of these overhead costs.

And although 28% is the average, the indirect rate for most of the top research universities is actually well above 50%. The University of Michigan, the rate is 55%. And really this adds up in the total budget. So out of NIH's $35 billion annual budget, they actually spend a total of $9 billion supporting these indirect costs.

So what happened? Kind of seemingly out of nowhere on February 7th, the NIH announced that the new indirect cost rate would be capped at 15% for all institutions. And a lot has happened over the last couple months. But to put this into context, this has been all the DOGE efforts were going on to reduce government expenditures.

And after that announcement, there were a lot of back and forth among legal experts. But ultimately on April 7th, due to concern that many universities, they already had ongoing investments and expenditures for the year and didn't have any time to prepare for these cuts, a judge issued on April 7th a permanent injunction against the policy.

And since then, again, a lot is going on in the news. But really where we stand today is that the NIH has officially appealed this ruling by the judge in the First Circuit Court. And there's expected to be some sort of ruling or announcement in the next upcoming months.

Okay, so that was the background behind all of this. I think one of the more interesting parts of our editorials that we put together a mock R01 grant to help contextualize what these cuts would look like. And the key word is mock. So don't focus too much on the numbers, but basically this is a $2 million R01 grant.

And you can see here on the left is what the 55% rate is, and on the right would be the 15%. And again, I'm just emphasizing these are the direct costs. So this won't change at all with the policy. And this is like the principal investigator salary or post-doc fellows or specific chemical reagents for a study or a specific data set that someone needs to purchase. None of this should change.

But then look at the difference for indirect costs. Again, on the left-hand column is 55%, and on the right-hand column is what the rate would be if it's reduced to 15%. And notice that this funding has changed from basically $1.1 million to $300,000 for this grant. And so the total grant awarded is only $2.3 million instead of $3.1 million, a $800,000 difference for the university.

And these are huge chunks of funding for universities, and it really adds up if you think about all the grants. And so at the University of Michigan, if the indirect rate was reduced to 15%, it would eliminate about $180 million of NIH funding each year.

So now that I've defined what indirect costs are, really the real focus of the editorial is highlighting how this could specifically impact both researchers and institutions. If institutions receive less funding, they will probably have to restrict protected time from physicians, which is going to make it very challenging to file for grants or develop research plans. And in many ways could kill research careers before they even have the chance to start.

It may lead to financial pressures for physicians to really pivot their focus away from research and only towards clinical medicine, especially for urologists or any surgical subspecialty, because the reality is surgicals productivity can generate substantial revenue for the hospital.

Researchers may need to pivot more towards industry-funded research, which could shift away the principles of scientific discovery to really only those projects that have commercial applications. There are private foundation grants that could be helpful, but they're far more limited and they're going to become increasingly competitive to obtain.

And finally, there's probably going to be staffing cuts among research administrators supported by indirect funding. And so now more administrative responsibilities like regulatory compliance or other paperwork is probably going to be shifted back onto researchers and ultimately diverting their time away from their actual research efforts.

And so ultimately, when you think about all of these potential consequences, our concern is that this is going to dissuade a whole wave of physicians from pursuing academic research careers in the future and maybe cause a brain drain in moving forward.

And then of course, the other half of this is how are our institutions going to respond to these major financial changes? One concern is that research institutions could scale back on the high cost areas of research, like clinical trials or biomedical research. Ultimately to help support the cost of doing research, they may need to shift costs from other areas. So they might have to make their clinical offerings in the hospital more expensive, or they may have to raise tuition for students.

To make up for loss in direct funds, there may be more pressure now internally to increase the internal direct overhead on grants, which is just going to place additional pressures onto researchers. And finally, maybe major institutions have enough endowment to support their ongoing research efforts, but these cuts would be really devastating for smaller programs or institutions that don't really have that endowment. And it's just going to make collaboration really challenging and dwindle opportunities for multi-centered clinical trials.

So that was a lot of talking from me, I'm sorry. But in summary, I hope it's more clear now that these indirect costs could have major implications for both researchers and institutions. Our thoughts are that it may lead to short-term cost savings, but in the long term, it's really going to risk innovation in medical advancements and basically destabilize our entire research ecosystem in the US.

And where we stand today is that this will ultimately be decided by the courts. But until that decision comes out, there's understandably a lot of uneasiness and uncertainty among the research community right now. So those are all my slides. And, Dr. Joyce, wondering if you have any questions and can chat more about this?

Daniel Joyce: Yeah, Ben, thanks so much. Really nice overview of a problem that is creating a lot of fear in the research community right now. And I love the way you've made everything very transparent in this editorial, in these slides. It does really help to understand what is going on here and how it's going to impact both institutions and individual researchers.

I want to be transparent here and I am a health services researcher. This is directly affecting me. I know you have similar aspirations, it will directly affect you. So we are obviously people talking about this, concerned about our own livelihood because of these changes.

Anytime something affects me personally in politics, I like to try to look at the other side and see where is this coming from? Is there some justification? Can I put myself in DOGE's shoes and can I see what they saw when they made this decision? And I guess my question to you is did they have a point? Was there some problem here with indirect costs that needed to be addressed?

Benjamin Pockros: Yeah, so I do think there is actually a point, and we talk a little bit about this in the editorial. There's so much variability in indirect costs. Some institutions it's only 15% and some are like 70%. I think Harvard's is 70%. And so the question is why is there so much variability and is that fair? And is this really just universities bulldozing their way through governments?

Our thought is that there probably should be more transparency in how indirect rates are actually formulated. There's not a lot of transparency. It's basically a black box. And so I do think it's probably important to reform the system, and it's probably fair for the government to ask, do universities need rates as high as 70%?

But ultimately this whole system should be reconfigured in a multidisciplinary approach with a long runway, with a lot of stakeholder input from both universities and researchers. And the whole policy was just kind of thrown out on one day from a unilateral approach and without any advanced notice. And so yeah, I think there could be a lot of reform to the system, but it probably just wasn't delivered in the best way.

Daniel Joyce: So can you talk a little bit about how do those indirect percentages with institutions get decided upon? Why is it that Harvard has 70% and others only 15 or 28%, whatever it might be?

Benjamin Pockros: Yeah, from my understanding, and again, it's a little bit of a black box. It's amazing. When we wrote this editorial, we asked a lot of people in the research administration area, "Hey, do these numbers that we put together, do they look right? Where do these costs go?" And not a lot of people know.

But it's a negotiation that happens every some odd years between an institution and the government. And there's not an exact formula behind it, but basically they come together and agree on a rate. But there's not a specific formula about, "Oh, you're doing research in New York City, maybe those costs are more expensive." Or, "Oh, you're doing CRISPR research, maybe that's more expensive." There's not specific criteria. It's just a negotiation between the two entities.

Daniel Joyce: And I think that's a really important point. I mean, if it's a black box, it opens up, people who may be ignorant to those conversations, a lot of conjecture about what's going on there. It'd be easy to assume that there's just this insider's club of certain people at certain institutions who have ins with the government, who are getting more pieces of the pie because they just have that clout and that ability to do that. Where other institutions are at a huge disadvantage.

You mentioned that smaller institutions might be affected by this more, and they wouldn't be able to do the research that they can now because of these changes. However, you could flip that on the other side and say that actually now you're sort of leveling the playing field. If you have smaller institutions that have a lower reimbursement rate for these indirects, now they're kind of on the same page as some of these bigger institutions that have a much higher indirect rate.

So it's interesting. I agree with you that I think reform probably needed to happen in some way. And totally agree with you that the way things have been done in Washington recently seemed to be go to the extreme and then figure it out after everybody starts raising red flags here and there.

I'd like to talk to you a little bit about how this... You're a young investigator who's thinking about embarking on a career, doing this, applying for grants. How has this affected your outlook? What you're saying would be affected, right? You are the perfect example of somebody that we might lose.

So has it changed your thought process at all? And how do you view your future in light of these changes to indirect costs?

Benjamin Pockros: Yeah. Well, it's not really an optimistic time to jump into a research career. I think even before this, what I could see from our young faculty or any faculty, is it's always challenging to get grant funding. And it's overwhelming to get grant funding and intimidating. And even if you have a really good research idea, it was already competitive and challenging. And this seems like it's going to multiply that challenge by 10.

And so yeah, I think this makes it really daunting for people to want to go into research careers, and we need to be mindful of that. I guess not we, but the government needs to be mindful of that. Is that if they make these sweeping changes, you could look 10 or 20 years down the road and say, "Hey, maybe we lost a whole generation of people going into research."

And that's just for me. A lot of these changes could affect postdoc fellows and their stipends and a whole host of research staff that's hired by institutions to keep things moving along. And this really could have sweeping changes.

I think we're seeing it in the news almost on a daily basis. Various universities closing down research studies, closing grants, doing layoffs. And this is really early in the process before a lot of these funding changes have even taken place. It's just out of fear of what might happen down the road.

And so, yeah, it's something we have to keep an eye on and think about. And my hope is that these indirect changes don't actually happen whenever this announcement's made. But if it does, I think we'll see a lot of scary and unfortunate articles in the news coming forward too.

Daniel Joyce: All right, I'll get you out on this. You were hired by DOGE a year ago or six months ago, whatever it was, and you were looking at NIH grants. What would you have done differently? What would your proposal have been to fix the perceived problem?

Benjamin Pockros: So I have a lack of experience in NIH grants, but from what I've heard, there is a lot of inefficiency in the application process and the review process. And I think if you could help expedite that process, that would probably save everyone a lot of time and headaches. I think if you can make the review process more transparent, that would save everyone time and headaches.

And then really to focus this back on the indirect costs because that's the one thing I know a little bit about. There's still a question about, "Okay, well if we slash the indirect costs, are we just going to slash that from the budget altogether? Or could we actually re-funnel that to more grant funding for the investigators?" And then that's not actually such a bad thing.

Now, based on everything that's coming out on the news, it probably seems like it'll just be slashed from the budget, and that's that. But I think one thing to talk about is if we could re-funnel that to more grants for investigators. I mean, that would actually kind of be a silver lining of this.

Daniel Joyce: Yeah, really great points. Really great work, Ben. It's a real pleasure to talk to you. And I look forward to seeing more work like this in the future as we understand how things are changing after these NIH changes to grant funding. Thanks so much.

Benjamin Pockros: Thanks, Dr. Joyce, for inviting me. And it's a scary world with everything, but this makes it more fun to talk about these topics. So thank you.