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The Trump administration has cut US government spending on health research to a 10-year low, forcing universities to dip into their endowment funds and hurting companies that sell lab supplies.
Treasury department data shows cash disbursed from the National Institutes of Health dropped to $2.8bn in May, down 28 per cent from April and the lowest absolute-dollar outlay since September 2014, according to Jefferies, an investment bank.
However, universities won a big legal battle on Monday that throws the NIH’s grant terminations into doubt. A federal judge in Boston ruled that NIH’s refusal to pay grants was arbitrary and illegal, according to Reuters. The judge, who was appointed by Republican president Ronald Reagan, ruled for 16 states and other organisations that challenged the NIH’s grant terminations.
“Today is an extraordinary win for American science,” Scott Delaney, a research scientist at Harvard University, said in an interview after the judge’s ruling. The grants could be immediately restored as a result of today’s ruling, he said, but added the litigation was likely to continue as not all pieces of the lawsuit were addressed on Monday.
Already in June, pancreatic cancer grant funding for the University of Florida and cash for a coronavirus study at Washington State University have been eliminated, according to Grant Watch, a website set up by researchers to track funding cuts.
The research halted goes well beyond diversity, equity and inclusion projects that the Trump administration has criticised.
For decades, the US has funded billions of dollars in research at universities, which had the scientific expertise that the government lacked. The NIH is the biggest government provider of medical and health research. Its budget totalled $47.7bn in 2024 and four-fifths of that money is disbursed to universities and hospitals as grants for specific projects, according to the Congressional Research Service.
But these grants are now under attack as President Donald Trump withholds federal funds for Harvard, Columbia and other universities over their alleged left-wing bias and tolerance of antisemitism on campus.
Trump has also launched a broader assault on federal government spending. While it is unclear how influential Elon Musk’s so-called Department of Government Efficiency (Doge) cost-cutting programme has been at NIH, court documents challenging the grant terminations have unearthed Doge officials’ emails.
The frozen NIH funds have blown a hole in university budgets across the country. For example, Northwestern University has been spending about $40mn a month to cover the missing NIH funds, according to Carole LaBonne, a professor at the Chicago-area school.
“Research labs are looking at really stark choices about laying off personnel and not being able to take graduate students,” she said.
Northwestern had not been paid since late March but had received no official notification from the government about a funding freeze, a university spokesman said. He confirmed the university was spending tens of millions of dollars a month to continue research.
Still, the funding freezes have forced universities to cancel existing purchase orders with companies, according to sources involved in these transactions. Already, companies that sell to university labs have been hit hard by the NIH cuts.
At a Senate hearing last week, Jay Bhattacharya, NIH director, faced fire from Democrats and Republicans over the grant terminations. He said there was an appeals process for halted grants and that he hoped universities “will come to terms so that we can move forward”.
At Thermo Fisher Scientific, which sells centrifuges, hydrochloric acid and other lab needs, chief executive Marc Casper said in April that demand from academia would be soft for the rest of this year. US academic and government business represented only about 7 per cent of Thermo Fisher’s revenue, a company spokeswoman said, adding, “we’ve assumed slightly more muted sales for the remainder of the year”.
Other companies stung by the budget cuts include 10x Genomics, a gene- sequencing company, as well as lab equipment businesses Standard BioTools and Pacific Biosciences, according to Jefferies.
“Yes, there are headwinds right now,” Jacob Thaysen, chief executive of Illumina, a gene-sequencing company, said in May, referring to US budget cuts. “I do believe this is a short-term or temporary headwind and will come out on the other side stronger.”
An Illumina spokeswoman said: “We are working with policymakers to advocate for the preservation of critical research funding.”