Big Cuts Threaten UAB and Birmingham
By Steve Spencer
On January 27, the Trump administration issued an order freezing payments on all federal grants. In response, Democratic attorneys general from 22 states filed a lawsuit contending that the President could not unilaterally override laws governing federal spending, and that the Administration’s policy unconstitutionally nullified Congress's power to decide how federal funds are spent.
This is a very big deal to Alabama. In 2022, the state received $18.7 billion or 43.1 percent of its total revenue from federal grants, according to The Pew Charitable Trusts. This doesn’t include over $20 billion in federal transfer payments.
The effects of the freeze will vary in different parts of the state, but this is certain: it could have a devastating effect on Birmingham. It’s not a secret that UAB has been the main driver of growth and prosperity in Birmingham. Many city leaders believe Birmingham could become a medical device capital. Now all that’s in question.
In the meantime, the drama has continued, as U.S. District Judge Loren AliKhan issued a temporary block on the funding freeze in late January. However, a few weeks later, a federal judge found that the administration had continued to freeze some federal funds in violation of the Judge’s order.
Even without the funding freeze, the White House has enacted barriers to the process for research grants. The NIH Study Sections meet in three cycles – winter, spring and fall – to review grant applications. Many winter 2025 meetings have been cancelled due to the administration constructing another roadblock: they barred NIH from posting meeting notices on the Federal Register, which they are legally required to do within 15 days of a meeting. Without the notice, there could be no meeting; without the meeting, no grants. In addition, the White House also changed the required notice period from 15 days to 35 days before grant-review meetings so that, even if the agency will at some point be allowed to post notices, the grant renewal process will move slower.
The next shoe to drop was a deep cut in Indirect Costs (IDC). NIH dollars come with an indirect cost recovery rate which is used to support the infrastructure necessary for research: maintenance, utilities, support staff, and equipment, everything from microscopes, centrifuges to DNA sequencers, mass spectrometers and all points in between. The Trump Administration plans to cut IDC from an average of 50 percent to 15 percent.
To understand how important Indirect Costs are, University of Pennsylvania issued this: “Conducting academic research incurs significant infrastructure costs – such as construction of specialized labs, utilities costs, technical equipment, and regulatory compliance. These indirect costs, have been carefully negotiated for decades using a rigorous review process. Even at the current rate of 62.5 percent, government funding covers only about half of these infrastructure costs.”
What This Means to UAB and Other Institutions
UAB employs over 28,000 people and it’s economic impact on Alabama amounts to $12 billion a year. In fiscal year 2023, UAB received $413.7 million in National Institutes of Health (NIH) funding, which put it in the top one percent of all NIH-funded institutions. That year, UAB's Marnix E. Heersink School of Medicine received nearly $274 million in NIH funding, the school's highest NIH funding total ever, and the UAB School of Nursing received $10.3 million, while the UAB School of Public Health received $42 million .
The funding freeze lays a brutal hit on UAB, and all the other institutions in Alabama that receive NIH funds, including Southern Research, Auburn University, HudsonAlpha Institute for Biotechnology in Huntsville, the University of South Alabama, Stillman College, and Tuskegee University.
Even if the freeze is suspended, which at this point is an open question, the cut in IDC is potentially devastating. One source says this will result in $40 million annually lost to UAB. However, if UAB does $400 million in NIH grants, I calculate the loss to the institution at closer to $130 million. That could mean a loss in local economic activity of nearly $300 million.
Much of this may move north, as there has been talk in Canada of creating their own Marshall-type plan to bring research scientists there.
What This Means to Medicine
Over a decade of NIH supported research led to the idea that messenger RNA could be used as a platform for vaccines, which led to the COVID vaccinations. NIH-backed research led to the development of the HPV vaccine, advancements in HIV treatment, CRISPR gene editing technology, and accurate blood tests for Alzheimer's disease, to name just a few of the many advances. Where would we be today without the Human Genome Project which was funded by the NIH? 386 of the 387 drugs the Food and Drug Administration approved between 2000 and 2019, and more than 100 Nobel prizes have been awarded to scientists based on NIH-funded work. So it’s safe to say that with these cuts, no one should expect the same medical progress in the future.
