By Stephen P. Ethier
Last week, the Trump administration announced that it is cutting $4 billion from the budget of the National Institutes of Health (NIH), claiming that this money is being wasted on administrative costs. Specifically, the funding cuts being mandated by the administration relate to “indirect costs,” which it wants to reduce or eliminate.
Most Americans don’t understand how biomedical research carried out in university laboratories is funded, and, up until now, there was no reason why they should. But these cuts, along with other funding cancelations that have just been implemented, have the potential to have a large impact on the health of Americans.
What are these “indirect costs” and what exactly do they support? Before I delve further into this topic, let me say that I spent 40 years as a biomedical research scientist who ran research laboratories at the University of Michigan, Wayne State University, and, most recently, the Medical University of South Carolina.
It is important for people to understand that biomedical scientists like me working in a university laboratory, particularly a medical school laboratory, where the lion’s share of the research and training of future scientists is carried out, actually operate like a small business. The university provides me with laboratory space in a building that it built, and it is outfitted with infrastructure, laboratory furniture, and equipment.
When I write grant proposals to the NIH, I include a budget that covers both my salary and the salaries of my research technicians who do the day-to-day work in the lab. I also budget for the tuition, fees and benefits of the graduate students I train, and the salaries of the post-doctoral fellows who work with me.
In addition, I budget for every piece of equipment, every chemical reagent, and every test tube we require to carry out the research projects. These are the direct costs. Thus, I run my lab like a small business, as I am responsible for salaries and supplies for everyone in my lab. The products that we generate in this business are the peer reviewed publications that result from our work. It is these publications that help to push our field forward.
What does not go into my budgets is the money used to pay for the electricity, the phones, the internet, the plumbing, the housekeeping and all of the capital costs required to keep the lights on in my laboratory. When the elevator breaks down, I don’t have to pitch in to pay for that. Neither did I have to pay to build the building my lab is in.
Where does that money come from? The answer is indirect costs. These are the funds that the administration wants to cut or eliminate. The indirect costs of biomedical research are covered by money that the university gets from the NIH when my laboratory grant is funded.
A typical laboratory like mine has a research budget of about $250,000 per year, per grant. Most labs run on two to three grants. This money covers all of the direct costs of running my research operation.
For every $250,000 that comes directly to me to run my operation, approximately $125,000 per year in indirect costs goes to the university. Indirect cost rates are negotiated by each university with the NIH.
The university uses this indirect cost funding to keep the lights on in the labs and to keep the research buildings fully operational. When I have a grant, I’m not only funding my own research operation, I am essentially paying rent to the University for the space I am using. The rent money comes from the indirect costs that I generate with my grants.
Since the research that we do is paid for by our NIH grants, which is funded by your tax dollars, we are required to make public the results of our work. We do this by publishing papers, and presenting our research findings and discoveries at local, regional, national, and international conferences.
As a result, discoveries made in academic research laboratories become the medicine of tomorrow. Every single drug used to treat disease and every type of medical device or equipment used to treat patients are the result of basic research findings from academic labs.
When you consider the scope of the biomedical research operations in American universities and medical schools, the hundreds of research buildings fully outfitted with state-of-the-art equipment and highly trained scientists and the future scientists we are training, it is clear that research universities cannot operate without this indirect cost funding.
Universities, and especially public universities, simply don’t have the resources to cover those expenses. The buildings that are used for biomedical research cost hundreds of millions of dollars to build and maintain. When the indirect costs funding dries up, the university has no choice but to close laboratories.
Please don’t be fooled by the idea that indirect costs fund unnecessary “administrative” costs. Indirect cost funds are a vital part of America’s medical research apparatus. Without them, the system will collapse.
Stephen P. Ethier Ph.D. is Professor of Pathology and Laboratory Medicine at the Medical University of South Carolina, in Charleston. Before joining MUSC in January 2012, Ethier was the Associate Director for Basic Research and Deputy Director of the Barbara Ann Karmanos Cancer Institute (an NCI-designated Comprehensive Cancer Center), and Professor of Oncology at Wayne State University in Detroit, Mich. Prior to that, Ethier was a member of the University of Michigan Medical School faculty and over 17 years rose through the ranks to become Professor in the Department of Radiation Oncology and was named the Ruth Tuttle-Freeman Research Professor of Radiation Oncology in 2002. While at Michigan, Ethier was the co-leader of the Breast Oncology Program of the University of Michigan Comprehensive Cancer Center. Ethier has spent his career studying the biology of breast cancer. In recent years, his work has been focused on the genomic alterations that drive cancer development and progression.
