Indirect Cost Rate Applicable to Clinical Trials

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As an exception to recovery of our federally-negotiated Facilities and Administrative (F&A or “indirect”) cost applicable to research at UC Davis, effective February 2006 “Clinical Trials”, as defined below, are subject to 32% indirect costs. This rate applies to the Total Direct Cost, and no budgeted item is excluded from the application of indirect. This rate applies regardless of whether a Clinical Trial is based on a sponsor-initiated, or an investigator-Initiated protocol.

Definition of “Clinical Trial”, for the purpose of application of 32% F&A: The controlled, clinical testing in human subjects of investigational new drugs, devices, treatments, or diagnostics, or comparisons of approved drugs, devices, treatments, or diagnostics, to assess their safety, efficacy, benefits, costs, adverse reactions, and/or outcomes, fully funded by one or more for-profit corporate entity. UCOP has concluded that for application of indirect cost rate, there is no distinction between sponsor-initiated, versus investigator-initiated Clinical Trials. Both types of Clinical Trials as defined here are subject to same indirect cost rate, applied to total direct cost.

Studies that are not fully funded by one or more for-profit corporate entity, but otherwise meet the above definition of “Clinical Trial” do not qualify for application of 32% indirect cost rate, and will be assessed the federally-negotiated indirect cost rate applicable to “Other Sponsored Projects”.

These studies are most often conducted in conjunction with obtaining new drug or device approval from the U.S. Food and Drug Administration, under Phase I, II, III, or IV, although they can be designed with the sole purpose of collecting and analyzing data about approved drugs or devices in order to contribute to medical knowledge about the treatment of a disease or medical condition.  In all cases, the study must include the prospective enrollment of human subjects and the controlled testing of a drug, device, or diagnostic under an approved protocol. Retrospective chart reviews, analysis of existing medical data and records, laboratory research, animal studies, and federally funded projects are not categorized as clinical trials for purposes of applying the approved clinical trial indirect cost rate.

University of California Office of the President (UCOP) has determined that testing of dietary, exercise, or other behavioral interventions, including, but not limited to meditation, are not considered as “Clinical Trials” for the purpose of application of reduced F&A cost explained above. Therefore, such research continues to be subject to the applicable federally-negotiated indirect cost rate. The only reason that “treatment” was included in the above definition of “Clinical Trial”, along with the terms “new drugs, devices, or diagnostics”, was to cover studies of approved drugs or devices administered in a new manner that might not be subject to requirements for an IND, IDE, or NDA .

Similarly, while study of agricultural commodities, development of new commodities, and testing of the nutritional value of the commodities (along with research on foods such as chocolate or the benefits of wine, for example) are valuable contributions to health, such projects are not within the above definition of “Clinical Trial” for the purpose of application of the reduced indirect cost rate. However, UCOP has concluded that in the event that in the future some commodities, such as dietary supplements, become subject to the FDA regulations regarding controlled testing to gain marketing approval under the FDA regulations applicable to drugs, then at that time testing of these regulated commodities would become eligible for classification under the above definition of “Clinical Trial” for the purpose of application of the reduced indirect cost rate provided here.


The F&A rate applicable to sponsor-initiated Clinical Trials at UC Davis was set at 22% in 1996, when our federally-negotiated F&A rate for organized research was 44.5%. As the F&A costs associated with conducting research at UC Davis have increased substantially since 1996, the federal government has gradually increased our F&A recovery from 44.5% in 1996 to the current F&A rate of 60% through 06/30/2025, and will increase to 61% on 7/1/2024. UC Davis F&A Rates.

Previous application of the 26% indirect to Clinical Trials had not kept up with the above increase in the F&A rate for research at UC Davis, necessitated by the increased costs associated with the “facilities and administration” of these projects.  Therefore, leadership of the campus has approved that, effective January 1, 2021, F&A rate applicable to clinical trials be increased to 32% of total direct costs.