A Penn lawsuit filed on Monday alleged that the National Institutes of Health's decision to cap indirect cost funding could eliminate hundreds of jobs and millions in research funding.
The Feb. 10 lawsuit — which resulted in a judge temporarily halting the funding cuts — included an affidavit from Senior Associate Vice Provost and Senior Associate Vice President for Research Elizabeth Peloso. In the document, she named Penn as one of the nation’s “top” research universities and said that the “vital research at Penn is made possible by funding provided by the NIH.”
Peloso wrote that Penn has 1,803 active NIH awards — amounting to a total of $2.6 billion — across its research system, including indirect costs that provide funding for overhead research such as lab spaces and support staff. The NIH cut implemented on Feb. 7 proposed to cap these cost rates at 15%, a significant decrease from Penn’s previously negotiated rate with the federal government, which was 62.5%.
In the filing, she claimed that the 15% cap will result in a loss of $170.9 million in the 2025 calendar year, and “would end or seriously jeopardize research projects at Penn.” The cut would also threaten the jobs of 529 staff members directly affected by indirect costs and impact an additional 4,020 employees at Penn, according to Peloso.
"If the 15% across-the-board indirect rate cap goes into effect, Penn’s ability to pay employees and researchers would dramatically be reduced, resulting in immediate and widespread effects on those employees and their families," Peloso wrote.
In the 2025 fiscal year, NIH indirect costs funded over $300 million in salaries at Penn.
Peloso also claimed that the cut would disrupt ongoing trials including cancer treatment, immunotherapy, and bone marrow transplant therapy, some of which include patients that have begun, but not completed treatment. There are currently 126 active NIH clinical trials with over 50 thousand patients at Penn-affiliated hospitals, according to the affidavit.
Additionally, active studies aiming to develop therapies for HIV, autoimmune disease, and cancer are all heavily dependent upon indirect costs funding from the NIH.
In an email sent to the Penn community on Tuesday, Interim Penn President Larry Jameson addressed the funding cuts, writing that “the effect of this sudden and major change in research support will be to severely harm our highly impactful research mission.”
Many Penn researchers echoed Jameson’s statement.
“There’s an incredible sense of uncertainty and chaos. This really came out of nowhere and was implemented within a week of notification. These indirect costs are what keep our research programs going,” Penn Medicine Department of Dermatology Director Emily Baumrin said in an interview with the Daily Pennsylvanian.
School of Veterinary Medicine professor Christopher Hunter wrote that the funding cuts would impact “very real costs associated with the administration and facilities required to allow research to occur.”
“Cuts in this model of support endangers almost all research at Penn,” Hunter wrote.
In his Feb. 11 email, Jameson added that Penn will “identify solutions to minimize the impact” of the NIH directive, including the lawsuit that Penn filed on Monday along with 12 other universities nationwide.
The Feb. 7 action comes as President and 1968 Wharton graduate Donald Trump’s administration has pushed for a variety of federal funding cuts, including a spending freeze on grants and loans, that was rejected by a federal court on Tuesday.
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