New NIH Funding Policy May Lower Medicine Costs

Jan 18, 2026, 2:43 AM

Hover over text to view sources

The National Institutes of Health (NIH) has implemented a new funding policy that caps indirect costs at 15% for research grants. This change is anticipated to have significant implications for the cost of medicine in the United States, potentially leading to lower prices for consumers.

Historically, NIH grants have included higher indirect cost rates, often exceeding 50%, which cover administrative expenses and facility maintenance. By reducing this cap, the NIH aims to ensure that a greater portion of research funding is allocated directly to scientific inquiry rather than overhead costs. This shift is expected to enhance the efficiency of research funding, allowing more resources to be directed towards the development of new treatments and therapies.

The NIH's decision comes in response to criticisms that excessive indirect costs have been a barrier to effective research funding. In fiscal year 2023, the NIH allocated over $35 billion across nearly 50,000 grants, with approximately $9 billion designated for indirect costs. By standardizing the indirect cost rate, the NIH hopes to align its funding practices more closely with those of private foundations, which typically offer lower indirect cost reimbursements.

One of the primary benefits of this policy change is the potential reduction in research and development (R&D) costs for pharmaceutical companies. Lower R&D costs can lead to decreased prices for new drugs, making them more accessible to patients. The FDA has also been exploring innovative methods to streamline drug development, such as reducing reliance on animal testing, which could further lower costs and expedite the availability of new treatments.

Critics of the previous funding model argued that high indirect costs were unsustainable and detrimental to the overall health of the research ecosystem. By capping these costs, the NIH aims to foster a more competitive environment for research institutions, encouraging them to innovate and optimize their operations. This could ultimately lead to a more robust pipeline of new therapies and lower prices for consumers.

Moreover, the NIH's new policy is expected to encourage institutions to seek alternative funding sources, including private foundations that often impose stricter limits on indirect costs. This diversification of funding could stimulate more efficient research practices and foster collaboration between public and private sectors.

In summary, the NIH's decision to cap indirect costs at 15% represents a significant shift in how federal research funding is allocated. By prioritizing direct research costs, this policy has the potential to lower medicine prices and enhance the overall efficiency of the US healthcare system. As the implementation of this policy unfolds, its impact on drug pricing and availability will be closely monitored by stakeholders across the healthcare landscape.

USF Health Morsani College of Medicine Achieves Top 10 NIH Rankings

The USF Health Morsani College of Medicine has achieved national recognition with two departments ranking in the Top 10 for NIH funding. This accomplishment reflects the college's commitment to cutting-edge research and its role in advancing medical science.

Northwestern Study Reveals App's Role in Long COVID Recovery Tracking

A recent study from Northwestern Medicine highlights the effectiveness of a mobile app in tracking recovery patterns among long COVID patients. The app, which allows users to log symptoms and perceived improvements, revealed that recovery is often non-linear, with many patients experiencing fluctuations in their health.

EU and US Establish Joint AI Principles for Medicines Industry

The European Medicines Agency and the US Food and Drug Administration have launched ten joint principles for the use of AI in the medicines industry. This initiative aims to harmonize regulatory practices and enhance patient safety while fostering innovation in drug development.

EMA and FDA Establish Joint Principles for AI in Medicine

The European Medicines Agency (EMA) and the US Food and Drug Administration (FDA) have jointly established ten principles to guide the responsible use of artificial intelligence (AI) in the development of medicines. This initiative aims to enhance collaboration between regulators and improve the safety and efficacy of medical products.

NVIDIA and Natera Collaborate on AI for Precision Medicine

NVIDIA and Natera have announced a collaboration to enhance AI foundation models for precision medicine. This partnership aims to leverage Natera's extensive datasets and NVIDIA's computing power to improve diagnostics and personalized therapies.