Penn Sues NIH Over Funding Cuts Threatening Research Jobs
The National Institutes of Health’s decision to cap indirect cost funding may result in the loss of millions of research dollars and hundreds of jobs, according to a Penn lawsuit filed on Monday.
Senior Associate Vice Provost and Senior Associate Vice President for Research Elizabeth Peloso provided an affidavit in the lawsuit filed on February 10 that led to a judge temporarily stopping the funding cuts. The “vital research at Penn is made possible by funding provided by the NIH,” she stated in the document, naming Penn as one of the “top” research universities in the country.
According to Peloso, Penn’s research system currently has 1,803 active NIH awards totaling $2.6 billion, including indirect costs that finance overhead research expenses like lab space and support personnel. The NIH cut that was put into effect on February 7 called for capping these cost rates at 15%, which is a substantial drop from the 62.5% rate that Penn had previously negotiated with the federal government.
According to her filing, the 15% cap “would end or seriously jeopardize research projects at Penn.” and cause a loss of $170.9 million in the 2025 fiscal year. Peloso said the cut would also affect an additional 4,020 employees at Penn and jeopardize the jobs of 529 employees directly impacted by indirect costs.
“If the 15% across-the-board indirect rate cap goes into effect, Penn’s ability to pay employees and researchers would dramatically be reduced, resulting in immediate and widespread effects on those employees and their families,” Peloso wrote.
Over $300 million in Penn salaries were paid for the NIH indirect expenditures for the fiscal year 2025.
Peloso further asserted that the cut would interfere with ongoing trials, such as immunotherapy, bone marrow transplant therapy, and cancer treatment, some of which involve patients who have started but not finished treatment. According to the affidavit, there are 126 ongoing NIH clinical trials at Penn-affiliated hospitals that involve more than 50,000 patients.
Additionally, the NIH’s indirect cost support is crucial to ongoing research efforts to create treatments for cancer, autoimmune diseases, and HIV.
Interim Penn President Larry Jameson addressed the budget changes in a statement issued to the Penn community on Tuesday, stating that “the effect of this sudden and major change in research support will be to severely harm our highly impactful research mission.”
Jameson’s claim was echoed by several Penn researchers.
“There’s an incredible sense of uncertainty and chaos.” This was a complete surprise and was put into effect a week after being announced. In an interview with the Daily Pennsylvanian, Emily Baumrin, director of the Penn Medicine Department of Dermatology, stated that these indirect expenditures are what sustain our research initiatives.
