Opinion | The Pharmaceutical Industry Heads Into Elon Musk’s Wood Chipper

In a month of one bombshell after another (and many all at the same time), it can be hard to track the damage that the Trump administration is inflicting. But unlike attacks on predictable issues like D.E.I. and foreign aid, the announcement on Friday that the National Institutes of Health would slash funding for medical research doesn’t make even cynical political sense. It’s a decision that would endanger Americans’ health, go against decades of bipartisan support and could torch one of the nation’s most astounding, productive and envied industries. On Monday, a Federal District Court judge temporarily blocked the cuts for the 22 states that have sued to halt them, but don’t count on the administration to just drop the matter.

The N.I.H.’s announcement was made, of course, in the language of “efficiency.” “Can you believe that universities with tens of billions in endowments were siphoning off 60 percent of research award money for ‘overhead’?” Elon Musk wrote. “What a rip-off!” The actual percentage is less than half that, but sure, put it all in the wood chipper.

The problem with doing that is that these grants are a crucial reason that America has the most advanced biomedical research infrastructure — the N.I.H. awards grants to more than 300,000 researchers at more than 2,500 institutions, including the Mayo Clinic and the MD Anderson Cancer Center in Texas — along with some of the biggest pharmaceutical companies in the world. Every dollar in N.I.H. grants spurs $2.09 in economic activity, and every $100 million in investment leads to 78 patents and $598 million in further research, according to N.I.H. calculations. Those “overheads” help cover basic infrastructure that make all this possible.

The grants have been the source of new treatments for cancer, heart disease, diabetes, strokes and H.I.V.; wonder drugs like Ozempic; groundbreaking techniques like I.V.F. and laparoscopies. Cutting them will significantly narrow the pipeline to future cures and drugs.

Some of the biggest victims will be public institutions, especially those in red states. No wonder that, even in this era of Donald Trump’s total dominance of the Republican Party, the junior senator from Alabama, Katie Britt, quickly called for “a smart, targeted approach” that would not “hinder lifesaving, groundbreaking research at high-achieving institutions.”

Her motivation? Maybe it’s because the University of Alabama, Birmingham, one of the largest employers in her state, received more than $1 billion in recent years from the N.I.H., with an impressive record of results. In fiscal year 2023 alone, N.I.H. grants totaled $1.85 billion across dozens of institutions in Texas, and $914 million in Florida. Tennessee received $770 million and so on. Britt is one of a long line of Republicans who have championed federal research dollars for universities and the N.I.H.’s work with higher education. In 2015, Newt Gingrich argued for doubling the N.I.H. budget because, on top of all the other benefits, good health saves money. In contrast, the severe cuts announced Friday would follow the playbook advocated by Project 2025, which maintained that such payments “cross-subsidize leftist agendas.”

It’s true that those wealthy East Coast universities that Musk called out for ridicule will probably be able to weather the storm. But their red-state cousins may not.

By law, all applicants for N.I.H. grants divide their budgets between “direct costs” — the research itself — and “indirects,” which are more general costs like lab equipment, utility bills, payroll services and so on. Indirects also help cover N.I.H.’s very expensive requirements for tracking dangerous chemicals, hazardous waste disposal, radiation safety, fire security and so on.

It’s hard to calculate that precisely (how much did it cost to have the lights on for 10 hours last Tuesday?) so decades ago, the government decided to do it as a percentage — written into the terms of the grant — of the whole. Which is the actually efficient way to do it.

So that $1 billion that the University of Alabama, Birmingham, received from the N.I.H. in recent years? If the N.I.H. cuts had been in place, the school would have had to come up with about $228 million to keep the lights on and to comply with all the regulations. Since the entire endowment of U.A.B. is about $1 billion, it couldn’t simply have written the check. Instead, it would most likely have had to shut down a good deal of its research.

Now multiply that effect across all the labs across America that are working long hours to come up with better diabetes medications, new drugs to fight childhood cancers, interventions to help with chronic pain and bad backs and busted knees and all the things that ail Americans. This will make Americans sick again, and move American companies to the back of a fast-moving and very profitable industry.

A lot of what N.I.H. has funded is basic research that pharmaceutical companies rely on — and which they rely on to develop their products — but won’t fund, in part because it’s not possible to say with certainty where the research will lead.

Take the blockbuster weight-loss drug Ozempic. It has its origins in the kind of basic science research that gets made fun of as wasteful: In the 1980s two N.I.H. scientists were studying the effect of Gila monster lizards’ venom, using guinea pigs as a proxy for human physiology. When the scientists noticed that it caused a particular pancreatic enzyme to spike, however, they realized that they might have the makings of a new diabetes drug. The scientists took their findings to Eli Lilly, Bristol Myers Squibb, Sanofi and Novo Nordisk, all of which turned them down. They did eventually get interest from a start-up, and today that research has led to not just an innovative new diabetes drug but also the megaseller we know as Ozempic — many lives saved, much health improved, tens of billions in economic activity generated.

Scientists from across the country have taken to social media to desperately explain that their institution would have no choice but to fire people and shutter much of their research.

Make no mistake, the N.I.H. does need change. Reductions in indirect rates may well be justified for certain institutions. It’s reasonable to ask if the N.I.H. has gotten too cozy with some. Maybe other payment methods are better for a portion of these expenses. Maybe the N.I.H.’s auditing can be improved. There is administrative bloat in many parts of higher education, and the N.I.H. award process has gotten increasingly bureaucratic and unwieldy.

Hang on, a few more complaints: Many scientists say the N.I.H. has been playing it too safe, funding surer but less ambitious bets rather than taking some smart chances on big swings, especially from junior scientists. Finally, China, which just upended the A.I. world with DeepSeek, is nipping at the heels of the U.S. in biomedical research, too.

So cost-savings and reforms might be on the agenda for the new N.I.H. direc —

Wait. Dr. Jay Bhattacharya, Trump’s pick to lead the institution, hasn’t even been installed yet. Why this rush to these sweeping changes before his first day on the job?

It’s not as if he was promising to preserve the status quo. Bhattacharya has been a harsh and loud critic of the N.I.H. I’ve not always agreed with him, but he was right that many pandemic policies deserved criticism and evaluation. The N.I.H. has been sluggish and overly defensive.

But it appears that Bhattacharya won’t even make it to his new position before the N.I.H. undergoes one of the most drastic changes in decades — led not by him, but DOGE, the group named for a dog that was an internet meme that became a satirical cryptocoin. Can’t wait. A blitzkrieg requires speed and surprise to confuse the enemy.

It was nice having the world’s most important, most vital medical research infrastructure. But enough.

To the wood chipper!