Background On February 7, 2025, the NIH announced a new policy capping indirect costs (facilities and administrative costs) at 15% of total costs for all grants, effective February 10, 2025. This represents a significant change from the previous system where indirect cost rates were negotiated individually with institutions, often ranging from 30-70%. The policy affects both new grants and existing grants moving forward.

Resolution Criteria

• Resolves NO if:

  • A court permanently overturns the indirect cost cap

  • The administration reverses the policy

  • Any other action that effectively reverts the policy to its original state

  • The market creator determines the issue appears definitively resolved

• Resolves YES if by December 31st, 2026:

  • The original 15% cap remains in effect

  • A similar policy that effectively eliminates >15% of total funding for research costs is in place and appears permanent

  • Note: A congressional budget cut of ≥15% to NIH funding would not count as a similar policy

The market creator will be the final arbiter for any ambiguous situations and will not participate in trading.

Considerations

• Research institutions have historically opposed similar proposals through lobbying and negotiations

• Legal challenges or legislative actions could potentially emerge

• The policy's implementation may face practical challenges from research institutions that depend on higher indirect cost rates

• Clinical research and trials may be particularly impacted by this cap

• Previous attempts to implement similar policies have been reversed due to institutional pressure

• Update 2025-02-09 (PST) (AI summary of creator comment): Ambiguity in Resolution:

  • The resolution will be based on the de facto reality of funding at the time the issue is determined to be settled.

  • The market creator will decide when the outcome is definitively settled.

• Update 2025-02-09 (PST) (AI summary of creator comment): Total Effective Budget Focus

  • The market will now resolve based on the total effective budget, defined as the actual funding available for research after accounting for the cap.

  • The 15% indirect cap is clarified to amount to roughly a 25% reduction in the total effective budget.

  • The resolution will remain YES even if the indirect cost cap is adjusted upward (for example, to 20%), as long as the reduction in the total effective budget is reduced by more than 15%.