by Karla Ciaglo
Connecticut Attorney General William Tong, along with 21 other attorneys general, has filed a lawsuit against the US Department of Health and Human Services and the National Institutes of Health (NIH) in response to changes in NIH’s grant funding policy.
The lawsuit aims to block a 15% cap on indirect cost reimbursements for NIH grants, which fund expenses such as facility maintenance, salaries, and administrative costs at research institutions.
The lawsuit contends that the policy change, scheduled to take effect on Feb. 10, was implemented without following proper administrative procedures. The University of Connecticut and UConn Health Center estimate that the change would result in a loss of $35 million, impacting research on cancer, Alzheimer’s disease, depression, autism, heart disease, chronic kidney disease, and tick-borne diseases. In 2024, UConn and the UConn Health Center received $620,648,927 in NIH funding.
Filed in the US District Court for Massachusetts, the lawsuit argues that the revised policy contradicts existing negotiated indirect cost rates, which have historically ranged between 27% and 28%, with some institutions receiving over 50%. The attorneys general assert that the new cap does not consider the financial structures of research institutions that rely on negotiated rates.
“NIH is reducing its indirect recovery rate to 15% on current and future grants, which represents a substantial decrease from our current negotiated rate (UConn: 61%; UCH: 66.5%),” a statement from UConn leadership noted. “If implemented as announced, this change will impact our ability to conduct research and create financial challenges for the university.”
The statement further highlighted that similar effects would be felt by research institutions nationwide, adding, “This change will impair our ability to produce innovative research that benefits all parts of society and place a significant financial strain on the university. We are not alone in this impact, as this funding change will similarly affect most research-active institutions of higher education across the country.”
UConn President Radenka Maric, Provost Anne D’Alleva, Executive Vice President for Health Affairs and CEO of UConn Health Dr. Andy Agwunobi, and Vice President for Research Pamir Alpay issued the statement.
The NIH has defended the policy change, citing alignment with funding models used by private research foundations. For example, the Bill and Melinda Gates Foundation caps indirect costs at 10% for institutions of higher education. The NIH’s policy sets a standard indirect cost rate of 15%, which is higher than the 10% de minimis rate in federal regulations, a default rate available to organizations without a negotiated federal agreement.
Research institutions and universities have expressed concerns about potential disruptions to ongoing research projects, clinical trials, and laboratory operations. Some institutions are reviewing the policy’s implications and considering legal options.
The NIH operates with an annual budget of nearly $48 billion, with approximately 83% allocated to external research funding through competitive grants. These grants support more than 300,000 researchers at over 2,500 institutions. About 11% of the budget funds NIH-conducted research, while the remaining 6% covers administrative and infrastructure expenses. The NIH credits its funding with contributions to advancements in medical research, including cancer treatments, DNA sequencing, and imaging technologies.
The attorneys general leading the lawsuit include representatives from Massachusetts, Illinois, and Michigan, joined by officials from Arizona, California, Connecticut, Colorado, Delaware, Hawaii, Maine, Maryland, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Rhode Island, Vermont, Washington, and Wisconsin.
In addition to the lawsuit, Tong is advocating for consumer protection legislation targeting deceptive pricing practices in Connecticut. A proposed amendment to House Bill 6856 would regulate product downsizing, requiring suppliers, including distributors, manufacturers, packagers, suppliers, and wholesalers, to either proportionally reduce prices or clearly disclose reductions for at least 12 months. The regulation would apply to food products covered under the Supplemental Nutrition Assistance Program, including dairy, meats, cereals, and baby formula.
Set to take effect on July 1, 2025, the amendment establishes enforcement provisions under the state’s unfair trade practices laws. Noncompliant suppliers could face legal action from the Attorney General’s Office, which would have exclusive authority to investigate and enforce the regulations.
Price Gouging
Additionally, Tong is proposing an expansion of Connecticut’s price gouging laws beyond declared emergencies. The new legislation would allow the Attorney General, in consultation with state agencies, to designate an “abnormal economic disruption” as a trigger for enforcement. The measure would apply to all levels of the supply chain, preventing wholesalers and distributors from imposing excessive price increases without justification.
During the COVID-19 pandemic, investigations found that retailers often raised prices due to increased costs from suppliers. The proposed changes aim to address price adjustments across the supply chain.