A U.S. appeals court has ruled against the Trump administration’s moves to implement drastic cuts to federal grant funding provided by the National Institutes of Health (NIH) to cover overhead costs incurred during medical and scientific research.
The US Court of Appeals for the First Circuit issued the ruling on Monday, reaffirming a nationwide injunction given by the US District Court for the District of Massachusetts in favor of more than 20 states, medical associations, and universities, which challenged the move last year.
The three-judge panel of the Boston-based court held that NIH’s plans to cap indirect research cost rates at 15% of funding for direct research costs were unlawful and violated the US Department of Health and Human Services’ regulations.
“Congress went to great lengths to ensure that NIH could not displace negotiated indirect cost reimbursement rates with a uniform rate,” Reuters reported, quoting comments written by U.S. Circuit Judge Kermit Lipez.
Indirect research costs cover expenses linked to facilities such as lab equipment, utilities, and staffing, and they support several research initiatives but cannot be linked to a single research project.
When NIH announced funding cuts, the agency argued that Harvard, Yale, and other leading universities expensed more than 60% as indirect costs despite having multibillion-dollar endowments under control.
22 Democratic state attorneys general, the Association of American Medical Colleges, and the Association of American Universities filed the lawsuit in February 2025 over the move.
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