Updating the Erosion of the Purchase Power of the Modular NIH R01

December 16, 2020

I last updated this topic in mid 2018 using finalized BRDPI inflation adjustment numbers from 2016 and projections out to 2018. The latest numbers get us finalized values to 2019 and projections beyond that. There have been some minor changes from the last set of projections so it’s worth doing another update.

Biomedical Research and Development Price Index adjustments to the NIH R01 Modular limit ($250,000 per year direct costs). Red bars indicate the constant 2001 dollar valuation and black bars indicate the current-year dollars needed to match the limit in 2001.

As you can see, the unrelenting march of inflation means that the spending power of the $250K NIH modular budget limit is now projected to be $138,678 for Fiscal Year 2021. This translates to 55.5% of the value in 2001. Looking at this another way, it takes $442,457 in 2021 dollars to equal the spending power of $250,000 in 2001.

So when you start demanding changes in the Modular limit at NIH, the proper value to lobby for is $450,000 per year in direct costs.

This is also critical for scientists who are getting their start now to understand when receiving career advice on grant strategy from colleagues and mentors who were in mid career in 2001. Their concepts of what you should be able to accomplish with “one R01 NIH grant” were established under far different conditions. It is unlikely that they have fully adjusted their thinking. They may need to be educated on these specific numbers.

Of course, the NIH is fully aware of this situation and has rejected multiple internal proposals to adjust the modular limit in the past. I’ve seen slide decks. As you can anticipate, the reason is to keep funding as many grants as possible so as to juke the success rate stats and pump up award numbers. This is also why across-the-board 10% cuts come down in times of budget stress- cut a module off of 9 awards and you get the 10th one free.

Note that this reality means that it now takes two R01 grants to have a lab running at the production level that one R01 would cover in 2001. And as we know, the odds of getting funded for any given grant submission are worse. I really don’t want to re-calculate the cumulative probability of now at least two grants, given X number of submissions. It would be too depressing. [ok, one quick one. The probability of 1 award in 10 tries when the hit rate is 17.7% is 85.7%, as mentioned in that prior post. This drops to 55.1% for the probability of at least two awards in 10 tries. ]

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