Trump policy capping NIH indirect costs at 15% will cripple biomedical research

You're arguing with a dental office receptionist who got their covid info from youtube and visiting the Hobby Lobby.

 

Just admit 52.5% is more than enough and the federal government trying to clean up spending is doing the right thing.

Does that mean it needs to be 15%? No. But no way it should be 50%. If people knew the nonsense spent on crap at UF…they would be just as upset. From Fuchs to Sasse. Of course football coaches get a pass…

 

I run our Family Dental Practice. And certainly do not think I know this space like an expert. But Prasad (whom I disagree with on many issues) is someone I came across and respect. Even he says 15% is likely a starting point. His point is that some of these deals are over the top and wasteful. Sit back and wait. Let the dust settle. Odds are things get negotiated to a more reasonable number.

That is what he says if you watch and listen to all of his thoughts. He does say that he is usually not for this kind of hard core tactic. But understands it right now.

 

I listened. He said a bunch of inaccurate exaggerated crap with a sprinkling of truth.

 

Profits are not unlimited.

It’s not a pill.

Since most will be on medicare the cost will be limited in some fashion.

And sure they are doing it for some profit otherwise they are out of business.

I’ll guarantee the scientists and researchers are doing for public good. I know a good many of them personally.

 

Let me give you an example. Say you're a contractor and you're hired to do a kitchen reno for $100k. Your original plan was to say spend $40k on labor and $60k on materials, but now your customer tells you that only a maximum of 15% is allowed to be spent on materials. Do you think you can do the same job with $15k in materials compared to $60k?

That's not the perfect example, because a contractor could theoretically just pay himself extra with the $85k he gets from labor and buy the extra materials needed out of pocket, but a research institution can't do that. $85k budgeted for direct costs MUST be spent on very specific direct costs.

The important thing to note here is that in research, direct costs and indirect costs exist in a set ratio. Perhaps that ratio can be changed, but that's not gonna happen overnight and highly unlikely to change as drastically as from 40:60 to 85:15. Saying that the NIH can now only pay for ~1/3 the current proportion of indirect costs means that research institutes needs to pay for the rest ~2/3. Perhaps that 2/3 is just fat that needs to be trimmed, but you nor anyone else have stated how that can be done, and even if it can be done it will take far too long.

What's gonna happen is an acceleration of the trend that's already happening, a movement of cutting edge medical research (related to my field) abroad, particularly to China. Frontier researchers cannot sit idle for a year or few while the system sorts itself out as you so optimistically predicted, they cannot afford to fall behind the cutting edge. This isn't like a medical system having to deal with some budgetary mess for a couple years while switching to a different payment system. Being cut off a couple years from their research could have catastrophic consequences for their careers as competitors move ahead, attract funding that may have otherwise gone to you, or worse yet come out with results that render your entire research irrelevant and unpublishable.

 

Debt is not bad when it generates a good return. Getting rid of debt is not good if you're passing up on good return.

The private sector is very efficient...in making money. Foundational research doesn't make money, but it enables further research that does. You know what's making mega money these days? Licensing drugs from China.

https://www.wsj.com/health/pharma/the-drug-industry-is-having-its-own-deepseek-moment-68589d70

Just to give you an idea of the amount of profits involved, Keytruda, a PD-1 inhibitor, as mentioned above costs $11,000 per dose. A Chinese competitor's PD-1 inhibitor costs $280 per dose in China. A California company (not Summit, a different company) licensed the Chinese med and has received FDA approval for sale in the US, and they'll be selling it at $9,000 per dose. It's still a bargain compared to Keytruda, but it's a 30x mark-up from China. Running trials in the US and obtaining FDA approval is expensive, sure, but it's peanuts compared to the billions of dollars per annum that can be made licensing a foreign drug for sale in the US.

Now tell me, why would anybody be doing any more research here in the future when they can just license tech from abroad and make a killer profit reselling here? All private sector money will be pouring into China in the very, very near future, and without NIH grants research will simply die off in the US.

 

You are redirecting the discussion. The crux of this entire discussion is whether or not a 50%+ burden rate on NIH is necessary and warranted. I surely wouldn’t rely on any academic to tell me it is …. as they are not independent and objective. They simply want as much money from the federal government as they can grab.

What’s needed from research institutions is substantive evidence that the 50%+ in overhead burden is warranted based upon an objective analysis showing a proper allocation of identifiable indirect costs for NIH related projects.

 

Those researchers aren’t the issue. The fact that the only breakthroughs that occur at publicly traded pharmas can be traced back to potential future cash flows to shareholders is the concern. This is why public sector research is vital

 

This just demonstrates you have no understanding. The fact they have you asking what they value is in publicly funded health research to actually directly benefit Americans with a TOTAL cost of $48 billion per year.
While extending the tax cuts they want to in order to benefit mostly the wealthy is estimated at 4.2 trillion over 10 years by CBO.
Take 10 minutes and inform yourself.

I’d also love for you to show us where someone (not a YouTuber grifter) has analyzed the costs in a manner you are claiming. Because the universities do have to demonstrate what you are claiming they don’t when they apply for the funding in the first place. They are also subject to audits.

 

Oh geez …. I’m not questioning the value of research by private and public universities and other similar entities. I’m simply addressing the fact many have unequivocally claimed a reduction in the NHU burden rate will cause significant financial problems for these recipients ….. yet there has been no meaningful, objective analysis presented to prove the burden reduction will adversely impact these research programs.

But, you know that’s the point I’m making …. but just choose to evade responding.

 

So in your opinion. Does UF need 52.5% IDC to operate?

 

UF allocates its costs based on its DS-2 as required by federal law.
2 CFR 200 Audited Financial Statements – Finance & Accounting

DS-2 Disclosure Statements – Finance & Accounting

 

Are there entire departments that require physical plant resources to perform Gates foundation research? I bet you don’t even know what an indirect cost is. They don’t cover that on Rogan

 

I think they can probably survive with less especially if it was a fixed rate which would make planning easier. But they need warning and it should be a gradual reduction and if nih were funneling the idc back into direct costs for researchers the university would need time to determine how best to support that additional direct cost spending. My guess is they would ask the state for more money.

 

Then how don’t you understand that gutting budgets will harm a public research university research output/ability? Why do you think DOD prohibits cutting indirect rates as noted in the F&A agreement for UF right here.
https://research.ufl.edu/wp-content/uploads/FA-agreement.pdf

 

so in other words 0 net change to the taxpayer as the indirect costs must be paid somehow

 

basically yeah. I think maybe some minor cuts would work. But they’d be small. This really would just pass more costs to states.