NIH Cuts Threaten to Cede U.S. Life Science Dominance to China

The current debate over capping federal research overhead rates misses the forest for the trees.

Federal investments in medical research have built a thriving U.S. biotech sector that employs 2.3 million people. Funding from the National Institutes of Health (NIH) provides the foundation for this success, supporting universities and research institutions that attract top scientists and foster innovation.

The Trump Administration’s proposed cuts to NIH’s indirect cost reimbursement—dismissed by some as mere “overhead”—threaten to undermine American exceptionalism, ceding our leadership in life sciences, global health and biosecurity to China.

After World War II, the U.S. created the world’s greatest research enterprise, which has driven American innovation for decades.

Rather than centralizing federal research, the U.S. made the decision to conduct research at universities and institutes throughout the country by co-investing in the development of research infrastructure.

By funding world-class facilities, the U.S. attracted the best scientists to conduct breakthrough research, which, in turn, secured private investment to turn that research into life-saving medicines. Today, life science companies invest $65 for every dollar the NIH contributes to a successful drug. That’s an incredible return on investment.

So, this debate isn’t really about overhead. It’s about maintaining the partnership between the federal government, universities, and medical research institutions that have allowed the United States to be the global leader in science and innovation for decades.

These funds keep the lights on, maintain state-of-the-art labs and enable cutting-edge research that powers America’s biotech industry. Reducing them may seem like a well-intended cost-cutting measure, but it’s a dangerous step toward dismantling the very infrastructure that allowed the United States to be the global leader in biotech investment and new drug development.

Meanwhile, China isn’t debating overhead rates. It’s investing aggressively in universities, research parks and industry partnerships. It subsidizes companies conducting research within its borders, making it cheaper to conduct research, clinical trials, and innovate there. The results are staggering: In less than a decade, China has gone from a non-player to licensing nearly one-third of all new molecules acquired by large pharma last year.

Simply put, our economic, health and national security depends on maintaining leadership in developing new treatments, cures and defenses against biothreats. We cannot afford to rely on a foreign competitor—and potential adversary—for the health and safety of the American people.

For generations, our nation’s early investments in research created new industries like biotechnology and precision medicine, transforming lives and driving the U.S. economy. These investments didn’t just benefit coastal research hubs. Universities and research institutions in red, blue and purple states alike depend on NIH funding to fuel local economies, support jobs and drive scientific discovery.

From biotech clusters in North Carolina and Washington to leading research universities in Ohio and Michigan, this funding is critical to maintaining American competitiveness across the country. The argument for capping Facilities & Administrative rates is that institutions can cover the gap in funding through endowments.

The reality is that most institutions, particularly public universities, will need to look to their states, which means increased state taxes, to find the funding — or simply forgo the funding altogether.

This isn’t a distant threat. It’s already hurting U.S. institutions and companies. Research institutions have already started to pause hiring, curb spending and rescind offers to graduate students, risking the loss of the best and brightest talents to other countries that have sought for years to replicate the American innovation engine.

Meanwhile, stock prices of companies supplying research tools plummeted 15-20% after the proposed NIH cuts were announced. The message from the market was clear: Weakening America’s research enterprise has immediate economic consequences.

China understands that. While we debate cuts, it’s doubling down on building facilities, attracting top talent and fostering partnerships with the goal of becoming a global leader in life sciences innovation.

We still have the advantage, but it won’t last without action. Protecting America’s leadership in life sciences isn’t just about national pride—it’s about economic strength, global health and national security.

Think of it this way: Taxpayers could save money by cutting “indirect costs” like fire trucks and fire stations. But no firefighter wants to work without a truck, and no one wants their fire department to arrive on a bicycle. Cutting indirect costs would leave our research system similarly unprepared.

A federal judge has issued a preliminary injunction in the case. Rather than placing a cloud of uncertainty over every research project and forcing our most innovative minds to look abroad for opportunities, we’re calling on the Trump Administration to drop the case regarding NIH overhead cuts and start a meaningful dialogue with industry and research leaders to identify opportunities for efficiency while maintaining our position as the world’s dominant life science powerhouse.

The choice is clear: We can invest to maintain our leadership or watch it slip away to China. America cannot afford to get this wrong.

 

This editorial was co-authored by the leaders of four state biotech associations:

• Eddie Pauline, President and CEO, Ohio Life Sciences
• Laura Gunter, President, North Carolina Life Sciences Organization
• Marc Cummings, President and CEO, Life Science Washington
• Stephen Rapundalo, PhD, President and CEO, Michigan Biosciences Industry Association