April 15th, 2025
Written by: Catrina Hacker
The United States is a world leader in funding biomedical research1. Over the last few months, the current administration has made efforts to cut unprecedented amounts of government spending on biomedical research2, as active and successful research programs have been forced to grind to a halt. It’s more important than ever to understand how biomedical research funding works, why government funding for it is so important, and what impact the United States’ investment in biomedical research has had already.
Where does research funding come from?
Trillions of dollars are spent each year on biomedical research at universities, government labs, hospitals, and private companies like pharmaceutical or biotechnology companies. For the sake of this post, we’ll limit ourselves to discussing federal investments in biomedical research at public and private research universities in the United States (think schools like University of Michigan or Duke University).
Most federal government funding comes through the National Institutes of Health (NIH). The NIH is made up of 27 Institutes and Centers that specialize in different areas of research (like allergies, aging, cancer, and mental health). While the NIH has a campus in Bethesda, Maryland where some researchers work, most of their budget is awarded to researchers at universities via grants. By awarding grants to universities rather than starting new labs on their campus, the NIH can take advantage of existing expertise and infrastructure (like buildings and personnel) to support even more research than they could afford to do on their own. Academic researchers also get some funding from businesses, nonprofit organizations, and the university’s own bank accounts, but these are smaller contributions than what comes from the government (more on this later).
A history of success
How did the government get involved in funding research in the first place? Before World War II, university funding for research came from local industry sponsors, philanthropists, and universities themselves3. In the 1920s, this shifted heavily toward industry, with companies paying university professors to conduct research to help in developing their products. This arrangement had two major downsides. First, many scientists couldn’t share their research with colleagues because it risked spreading company secrets, slowing down scientific progress4. Second, research funding became heavily tied to volatile business cycles, making it difficult to make steady progress. When the stock market crash that led to the Great Depression occurred in 1929, it hurt science research too, since companies could no longer afford to pay scientists to conduct research for them3.
With World War II on the horizon, President Franklin Delano Roosevelt began to invest government money into scientific research across many areas in the late 1930s and 1940s3. At the same time, Americans were becoming increasingly worried about public health issues. For example, in 1937, the federal government founded the National Cancer Institute (part of NIH)5, investing money into research about a noncommunicable disease (not contagious) for the first time. NIH researchers also played a key role during World War II as they worked on projects such as developing vaccines and determining how to keep pilots safe flying at high altitudes6.
In the decades after the war, funding continued to grow rapidly across all areas of research, and scientific research in the United States began to thrive. Researchers could actively collaborate and discuss their work, and the United States made steady progress in tackling some of the toughest scientific questions of the time. The United States became a world leader in biomedical research1, attracting global talent and initiating many of the most impactful scientific discoveries of the 20th century.
The payoff from this growing investment was felt strongly by all Americans. Over the 20th century, life expectancy in the United States went up over 30 years, 25 of which can be attributed directly to advances in public health7. The United States invested in biomedical research and their investments paid off. So far, that success has carried into the 21st century. Between 2010 and 2019, NIH contributions aided in developing 354 of 356 newly-approved drugs8 and in 2023, every $1 of NIH funding contributed to $2.46 in economic activity9. It’s hard to find another investment as profitable or reliable.
What are the costs associated with biomedical research?
Even if you’re on board with funding biomedical research you might wonder why it costs so much. Expenses can be broadly broken up into costs that go directly toward conducting the research, called direct costs, and costs that are essential to support the research but that aren’t directly involved in conducting the research (resources that are often available to support many labs on a research campus, as opposed to just one), called indirect costs. When the NIH awards an academic researcher a grant, they award the researcher the requested amount to cover direct costs and then an additional amount to the university to cover indirect costs that make the research possible. Each university receives a different fraction of grant funding for indirect costs based on their needs.
Direct costs
Perhaps the most obvious direct cost is the equipment to perform the experiments themselves. A lot of cutting-edge science experiments require expensive materials and equipment that can perform the specialized procedures and analyses necessary to make new insights. Once the equipment is acquired, a lead scientist needs to hire people to do the experiments. Labs are typically filled with graduate students working on their master’s or PhD degrees, postdoctoral researchers who recently received their PhD, and various other personnel with roles like lab managers or undergraduate research assistants.
While the cost of personnel is typically a large part of a lab’s direct costs, being a government-funded scientific researcher is not a high-paying career. The NIH pays $28,224 annually to graduate student researchers, $61,008 to first-year postdoctoral researchers, and maximally $74,088 to postdoctoral researchers with seven or more years of experience (that’s seven years of work experience after getting a PhD!)10. Importantly, NIH funding sponsors the training of many young scientists who work in academic research labs until they earn their degrees and move on to a variety of roles such as in academia, at private biomedical companies, in government positions, and teaching. NIH funding is essential to not only progress the research, but to train the next generation of scientists who will populate the scientific workforce in- and outside academic research.
Indirect costs
In addition to the equipment and personnel directly engaged in research, there are several other expenses that make research possible on university campuses. For example, there are specific and strict rules that must be followed to conduct ethical human and animal research. Ensuring that scientists stick to these rules requires hiring specialized personnel who oversee these ethical considerations. There are also many staff who do important things like make sure that grant funding is properly spent and provide IT support to researchers. Universities also pay utilities bills in the buildings where research is conducted, pay maintenance and janitorial staff to keep workspaces clean and working properly, and pay specialized services to do important things like dispose of hazardous waste and maintain safe work environments. With so many people involved in making science happen, perhaps it’s unsurprising that NIH funding supported more than 400,000 jobs across the United States in 20249.
The strict and competitive process of receiving NIH grants
Funds for biomedical research are important, but they aren’t given out easily. In fact, getting grant funding from the NIH is a competitive process that can feel brutal due to its low success rate. Funds are awarded through a strict process that ensures only the most important and scientifically sound projects are funded.
The process begins when a scientist has an idea for a research project that fits the funding priorities of the NIH. The researcher then compiles their grant proposal. For the NIH, grant proposals are hundreds of pages long and include, among other things, an explanation of the proposed research, a justification for why the work is important and likely to succeed, a breakdown of financial needs, and proof that the researcher has access to the resources and expertise needed to complete the project. Preparing a grant application takes months of hard work and thoughtful consideration.
Once a grant application is submitted, the NIH recruits a group of experts in the same field, usually other professors with years of experience running their own labs, to review the application. They discuss whether the research is worthwhile and whether the researcher is capable of doing the proposed experiments. The group concludes their review by providing a score for each application so that they can be ranked against each other. Once all the grants are scored, employees at the NIH determine how many proposals they can fund and select that many of the top-rated proposals. The exact percentage of funded applications varies based on available funds and the number of applications, but the number is typically 10-25%11. That means that even with many of the smartest scientists in the country sending in applications, only 10-25% of them will get their projects funded in each evaluation period.
For scientists who aren’t funded, they get valuable feedback from the review process that helps them to improve their proposals and submit again. The feedback helps to improve the overall quality of science being conducted by NIH-funded researchers and ensures that only the best and most important research gets funded. It also keeps scientists accountable to other experts in their field as they get invaluable feedback from other experts about how their research could be improved.
How does federal spending compare to other sources?
The federal government isn’t the only one investing in biomedical research at universities. Researchers also get funding from other sources like private foundations, businesses, or the university itself. According to a report published by the National Science Foundation, universities in the United States spent $108 billion on research and development in 202312. Of that total, the federal government contributed $59.6 billion (55%), nonprofits contributed $6.7 billion (6%), universities contributed $19.2 billion (18%), and businesses contributed $6.2 billion (6%).
Why can’t other sources contribute more? The balance of federal and private investment in research is important to make sure that different kinds of important research get funded. Businesses are motivated by profits and tend to fund research that they think will give them the highest return on their investment. This can come at the expense of important research that may not lead to immediate profit now but will be a building block toward later developments. Private foundations, on the other hand, are often specialized to match the interests of wealthy donors and don’t span all possible research areas. When foundation grants are awarded to academic researchers, they can typically only be used to address these specific research questions.
Universities already invest heavily in their researchers, and most can’t afford to spend more13. For example, when a university hires a new faculty member, they invest a lot of their own money to get the lab started. The researcher is expected to use that money to lay the groundwork of their research program so that they can be a competitive applicant for other grants later in their careers. Even universities with large endowments can’t spend more, because there are strict rules limiting how they can use the endowment money14. Unless a donor specifies that the money should be used for research, the university can’t use it for that. Even when a donor does make a contribution toward research, there are strict rules about how much of that donation the university can spend each year (the rest funds the university’s investment portfolio).
Funding for biomedical research is essential
The details of how biomedical research is funded might be complicated, but the big picture is simple: when the United States invests in biomedical research, everyone benefits. Dollars spent on research have clear economic and public health returns in the present and make important investments in our future by training the next generation of scientists. The NIH makes up only 0.7% of the total United States budget15,16. For a relatively small investment, the United States sees a huge payoff.
Pulling back on investment in biomedical research now would be a grave mistake. The population of the United States is aging. The percentage of Americans aged 65 or older is projected to increase by 47% between 2022 and 205017. As the population ages, untreatable neurodegenerative diseases like Alzheimer’s and Parkinson’s disease, which preferentially impact older Americans, are likely to become more prevalent18. Americans are also increasingly facing chronic health challenges like obesity, heart disease, and respiratory disease that will pose major public health challenges over the coming decades19. In the 20th century, a collective agreement to invest in public health increased the life expectancy of all Americans7. Let’s learn from history and make the same investment now so that we can look back on the 21st century as having had the same level of success.
References
1. Gaind, N. How the NIH dominates the world’s health research — in charts. Nature 639, 554–555 (2025).
2. Kozlov, M. & Ryan, C. How Trump 2.0 is slashing NIH-backed research — in charts. Nature (2025) doi:10.1038/d41586-025-01099-8.
3. The History and Future of Funding for Scientific Research | The Brink. Boston University https://www.bu.edu/articles/2015/funding-for-scientific-research/ (2015).
4. Kaiser, D. The search for clean cash. Nature 472, 30–31 (2011).
5. History – NCI. https://www.cancer.gov/about-nci/overview/history (2015).
6. WWII Research and the Grants Program – Office of NIH History and Stetten Museum. https://history.nih.gov/display/history/WWII+Research+and+the+Grants+Program.
7. Ten Great Public Health Achievements — United States, 1900-1999. https://www.cdc.gov/mmwr/preview/mmwrhtml/00056796.htm.
8. Galkina Cleary, E., Jackson, M. J., Zhou, E. W. & Ledley, F. D. Comparison of Research Spending on New Drug Approvals by the National Institutes of Health vs the Pharmaceutical Industry, 2010-2019. JAMA Health Forum 4, e230511 (2023).
9. Direct Economic Contributions. National Institutes of Health (NIH) https://www.nih.gov/about-nih/what-we-do/impact-nih-research/serving-society/direct-economic-contributions (2023).
10. Salary Cap, Stipends, & Training Funds | NIAID: National Institute of Allergy and Infectious Diseases. https://www.niaid.nih.gov/grants-contracts/salary-cap-stipends (2024).
11. Fiscal Year 2024 Funding Strategy for Research Grants – National Institute of Mental Health (NIMH). https://www.nimh.nih.gov/funding/funding-strategy-for-research-grants/fiscal-year-2024-interim-funding-strategy-for-research-grants.
12. Higher Education Research and Development (HERD) Survey 2023 | NSF – National Science Foundation. https://ncses.nsf.gov/surveys/higher-education-research-development/2023#data.
13. Frequently Asked Questions about Facilities and Administrative (F&A) Costs of Federally Sponsored University Research | Association of American Universities (AAU). https://www.aau.edu/key-issues/frequently-asked-questions-about-facilities-and-administrative-costs (2025).
14. Bowles, K. J. Why Can’t We Spend the Endowment? https://www.insidehighered.com/blogs/just-explain-it-me/why-can%E2%80%99t-we-spend-endowment.
15. Monthly Budget Review: Summary for Fiscal Year 2024 | Congressional Budget Office. https://www.cbo.gov/publication/60843/html.
16. Budget. National Institutes of Health (NIH) https://www.nih.gov/about-nih/what-we-do/budget (2014).
17. Fact Sheet: Aging in the United States. PRB https://www.prb.org/resources/fact-sheet-aging-in-the-united-states/.
18. Neurodegenerative Diseases. National Institute of Environmental Health Sciences https://www.niehs.nih.gov/research/supported/health/neurodegenerative.
19. Hacker, K. The Burden of Chronic Disease. Mayo Clin. Proc. Innov. Qual. Outcomes 8, 112–119 (2024).
Cover photo by Takacs Alexandra on Unsplash
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