Stimulus impact on biotech

Everyone across America seems to be talking about the impact of the stimulus. States, cities, interest groups and citizens across the country are wondering: what does this mean for me??

Unsurprisingly, here at IAmBiotech, we’re wondering what it means for the biotechnology industry. Here are some interesting analyses we’ve come across as we’ve dug deeper into this issue:

NPR did a great piece about the stimulus as a precursor to broader healthcare reform in the Obama era. One of the key issues they highlighted was the $1.1 billion included in the package for comparative effectiveness studies. At first glance it’s not a particularly controversial issue: who would argue against research to determine whether drugs work better than surgery or other types of treatments? But the issue is more complicated than it first appears. This backgrounder from BIO does a good job laying out the issues at hand. The heart of the argument is essentially this: the availability of accurate, scientific evidence to inform clinical decision-making by patients and their doctors is a good thing. But there are major concerns over whether that information will be used by insurance companies strictly to contain costs, limiting treatment options for patients and getting in the way of decisions that should be left to individual patients and their physicians. Furthermore, it’s important to consider genetic research that shows drugs work differently for different people.

Our friend Mariano at Avelient BioPharm Blog had an interesting post about whether the biotech industry deserves – or even WANTS – a bailout.

Alastair Wood – former assistant vice chancellor for clinical research and associate dean of Vanderbilt Medical School and author or co-author of more than 300 scientific papers – also took on the issue in an Op-Ed in the Washington Times last Sunday. Dr Wood argued that the stimulus was far too focused on a “bricks, mortar and asphalt” view of infrastructure development, when it should have been focused on growing industries including biotechnology, medical research and the academic medical centers:

Biotechnology, science- and health-related industries are responsible for a large and increasing amount of economic activity in the United States. The research support provided by the National Institutes of Health (NIH) to academic medical centers (AMCs) supports $50 billion in economic activity in the states, or $2 for every one NIH dollar invested – a proven economic stimulus with an average associated wage of $52,000 in 2007.

The biotechnology industries and AMCs produce discoveries that grow industries of world wide reach and influence. The country’s future will depend not so much on “shovels” but on education, research and the discovery and innovation that comes from prepared minds…

What should be done? We need to recognize that “infrastructure” today is not what it was in the Depression of the 1930s. Today the country’s future depends on high technology and its underpinning research and discovery. Immediate, substantial increases are required to support our college and graduate student education and for our university and academic medical center research programs.

The budgets of NIH and NSF require immediate large increases so a generation of U.S. innovators is not lost. In addition, we should make substantial low-interest loans available to promising biotechnology companies to ensure that this critical and successful sector of our economy does not vanish because of a credit crisis produced by subprime mortgage losses.

Of course, since that Op-Ed ran on Sunday, we’ve seen some of Dr. Wood’s recommendations come to pass. Indeed, the Conference Committee (where the House and Senate hashed through differences in their versions of the bill) allotted for more money for NIH and NSF than many had anticipated.

The final NIH budget, for example, contains $10.4 billion; the House version of the package allotted them just $3.9 billion. The National Science Foundation will receive $3 billion dollars, up from $1.2 billion in the Senate version.

Altogether, research and development accounts for $21.5 billion — up from $13.2 billion in the House and $17.8 billion in the Senate.

And, of course, biotech encompasses more than just healthcare, so we were interested to see what else was included in the plan.

For the biofuels side of the industry, there’s $400 million to start up ARPA-E (Advanced Research Projects Agency – Energy), which was authorized in the America COMPETES Act of 2007 but never appropriated until now. ARPA-E is housed in the Department of Energy, and it’s intended to inspire risky energy and climate related research.

There’s another $1.6 billion included for the DOE Office of Science for a mix of extramural basic research and DOE laboratory research in addition to infrastructure upgrades. Combined with the regular appropriation, this could bring the DOE OS to a budget of $6 billion for FY09.

Also for DOE, the package includes $2.5 billion for energy efficiency and renewable research, development, demonstration, and deployment projects. $800 million is set aside specifically for biomass

If you really want to get into the weeds and look through a detailed breakdown of all the science-related spending in the stimulus, check out this analysis from the American Association for the Advancement of Science

And last, but definitely not least: Agriculture. The stimulus includes an increase of $26.4 billion for USDA in the next couple of years. A big chunk of the funding is to be spent on a temporary increase in public nutrition benefits, which should increase demand for agricultural products. The rest of the funding includes:

–$290 million for a watershed and flood prevention program, half to buy easements.

–$176 million for repairs of agricultural research facilities.

–$50 million to upgrade the Farm Service Agency computer system.

–$50 million for rehabilitation of flood control infrastructure.

–$24 million for high-priority maintenance, repair and modernization of USDA facilities.