A federal judge Monday temporarily halted the National Institutes of Health’s decision to cut “indirect cost” rates for medical research grants following a lawsuit filed by 22 states that included Colorado. 

At issue is the costs that institutions across the country can charge the government for expenses related to conducting research. 

The states argued that the effect of the change — NIH said it would apply a 15% across-the-board rate — would be “immediate and devastating” and it would mean “layoffs, suspension of clinical trials, disruption of ongoing research programs, and laboratory closures.”

In announcing the cuts, NIH said it needs to “carefully steward grant awards,” noting that of the $35 billion it spent in fiscal year 2023, about $26 billion went to “direct costs” for research, while $9 billion was allocated to “overhead” expenses through the indirect cost rate. The agency said the average indirect cost rate has averaged between 27% and 28% over time, with many organizations charging rates of more than 50%.

In Colorado, the cuts would translate to a $74 million impact on the University of Colorado Anschutz Medical Campus. Last year, Colorado research institutions received $566.8 million in grants from the National Institutes of Health (NIH), the primary source of federal dollars for medical research. Most of this research is being conducted at public and private universities and colleges.

Colorado stands to lose roughly $90 million in NIH grants to three institutions of higher learning, according to the states’ complaint.

Colorado Attorney General Phil Weiser said the cuts would be “devastating” to research.

“This illegal action cutting NIH funding — taken abruptly, recklessly, without reflecting on its painful impact, and with no justification for a dramatic change — will harm Colorado universities, undermine important research efforts, and damage our economy,” Weiser said in a statement.

“Government agencies are required to act fairly and reasonably, ensuring that affected parties have notice of potentially dramatic changes and an opportunity to be heard,” added Weiser, who is running to succeed Gov. Jared Polis, who is term-limited. 

Weiser has joined other states in bringing at least six lawsuits against the Trump administration on a string of issues from Elon Musk’s Department of Government Efficiency to an executive order ending birthright citizenship.

The lawsuit named NIH and the U.S. Department of Health and Human Services (HHS).

An HHS spokesperson declined to comment Monday.

In addition to CU Anschutz in Aurora, which is among the largest academically-based healthcare providers in the country, the NIH cuts also include the University of Colorado Boulder, which has received $203.3 million for research, and Colorado State University at $77.9 million.

On Friday, though, NIH officials touted $4 billion in annual savings by slashing the maximum indirect cost rates research institutions can charge the government to 15%.

Officials effectively said these costs have run amok, with some institutions more than 60%.

In her order temporarily blocking the NIH directive, federal judge Angel Kelley set a court hearing for Feb. 21.

Meanwhile, U.S. District Court Judge John McConnell on Monday found that the Trump administration had not fully complied with his order to unfreeze billions in spending and instructed the White House release the federal funding.

The states’ complaint alleged that the action violates the Administrative Procedure Act, including a directive Congress passed in Trump’s first term, which prohibits the NIH from requiring categorical and indiscriminate changes to the reimbursement of indirect costs.

These NIH funding cuts jeopardize life-saving research, said Julia Milzer, a spokesperson for CU Anschutz.

“Reduced research capacity means fewer scientific discoveries, job losses, and delayed advancements on therapies and cures that could improve — and save — lives,” Milzer said in an email to The Denver Gazette. “The results of these cuts would be devastating to research and also the world-class care we provide.”

As the state’s only academic medical campus, CU Anschutz supports more than 1,000 clinical trials with 14,000 enrollments in research studies. Campus medical providers also annually see more than two million adult and pediatric patients.

Medical research funding with NIH grants has led to scientific breakthroughs, including cancer treatment, the first DNA sequencing and the development of the MRI, which creates detailed internal pictures that can aid in the diagnosis of disease.

In announcing the cuts, NIH said most private foundations that fund research provide lower indirect costs and that universities readily accept the money. The NIH cited a study saying the “most common rate of indirect rate reimbursement by foundations was 0%, meaning many foundations do not fund indirect costs whatsoever.”

The NIH also cited an analysis that said of the 72 universities in its sample size, 67 were “willing to accept research grants that had 0% indirect cost coverage.” 

Trump has signed hundreds of executive orders since assuming office last month. Many of his orders are being challenged in court, particularly those involving Congressionally-approved spending.

The Associated Press contributed to this report.