As Congress lurched from one drama to the next in 2013, the topic of “sequestration” didn’t last long in national headlines. The across-the-board domestic spending cuts were once deemed “dumb” by both political parties and predicted to do real damage to the national economy. But because that damage could be interpreted as a nip here and a tuck there, the public’s attention waned soon after the cuts took effect last spring.
That doesn’t mean the harm was insubstantial. In many cases, it’s just more complex. For the Puget Sound region’s sprawling biomedical community, sequestration has been the equivalent of a boxer’s kidney punch — knocking the air out of the industry temporarily and potentially creating lasting damage.
Job losses, decreased opportunities and the scrapping of promising projects are only immediate effects. Among leaders in the field, there’s consensus that these budget cuts could kneecap one of the state’s fastest-growing industries. If left as is, the harm will only grow more apparent with time.
Of all the sectors affected by sequestration, scientific research was among the worst hit. The National Institutes of Health (NIH) is the largest underwriter of biomedical research in the world, funding roughly a quarter of such work in the United States. Last year, Washington state received more than $900 million in NIH grants, the lion’s share going to Puget Sound companies and research institutions. According to Chris Rivera, president of the Washington Biotechnology and Biomedical Association (WBBA), only Boston receives more NIH funding than Seattle among metropolitan areas, due to the presence there of Harvard University.
This year, the NIH will be forced to spend $1.6 billion less under sequestration and $16 billion less during the next 10 years. According to NIH data, allocations to Washington state will be slashed by $151 million during the 2013 fiscal year.
“People look at these cuts and say, ‘Oh, it’s only about 20 percent,’” says Rivera. “Well, life sciences contribute about $11 billion to our state GDP and $7 billion in individual income. Take 20 percent off that and tell me that’s not a huge impact.”
Rivera notes that the WBBA mentors startups, the vast majority of which are founded on research from an institution funded by the NIH. “These startups employ a lot of people,” he explains. “Take 20 percent off the number of those startups we see going forward.”
The biomedical industry has been one of the state economy’s brightest lights for years. As overall employment in Washington sank during the recession, employment in the life sciences grew 10 percent between 2008 and 2011. During the past year, the University of Washington — the largest recipient of NIH funding in the state — doubled the amount of research it was spinning into commercial prospects relative to the year before.
Against this rosy backdrop, many in the industry say it’s difficult to explain the threat sequestration poses to the region’s economy. Research and development is one of the few areas of public spending that can generate direct economic growth. NIH funds the sort of risky research needed to create multimillion-dollar discoveries and breakthrough treatments. Private business, which is increasingly risk averse, typically joins the process only when research has progressed sufficiently to be developed commercially.
“The benefit of those discoveries usually plays out close to where they happened,” says John Slattery, vice dean at the University of Washington Medical School. “That’s why you have biotech industries growing up around universities, like here in the Puget Sound. People in the area might not feel this loss right away because it’s really a lost opportunity. It’s like not buying a bunch of lottery tickets.”
Lisa Cohen, director of the Washington Global Health Alliance, calls the sequestration cuts “so tremendously thoughtless and ineffective, it defies explanation.”
“Researchers working on promising cures can’t simply put their work on hold while sequestration is battled over for months or years,” Cohen says. “This type of budget slashing is not only thoughtless, but potentially dangerous where health is concerned.”
Jonathan Himmelfarb, director of the Kidney Research Institute at the UW, says his organization receives about 90 percent of its funding through NIH grants. NIH cuts will slow down the institute’s work and “reduce its scope and ambition,” he says, including research on improved treatments for diabetes and a host of other kidney-related diseases.
“In a million ways,” Himmelfarb notes, “this constrains what we can accomplish for the public good.”
The loss of potentially lucrative research isn’t the only serious damage the sequestration cuts could cause. Perhaps even more important is the potential “brain drain” regionally.
The UW was founded in 1861, only a decade after the first European settlers arrived here. Research, education, and innovation have been central to the Northwest from the beginning. Slattery says this is the reason the “intellectual economy and ecology” around Puget Sound is so strong. It’s the reason the Fred Hutchinson Cancer Research Center — ranked as a top recipient of NIH funding among independent research institutions — was founded in Seattle. The Bill & Melinda Gates Foundation was inspired by the global health work already occurring in Microsoft’s backyard, Cohen argues.
However, unlike places with well-established startup communities — such as parts of California — Slattery says, “The Puget Sound [region] has not yet reached critical mass of startup-capable people. A few people leaving will have a big impact. Our area gets richer by attracting and retaining as many of those people as we can.”
If top foreign scientists decide not to come to Washington or bright young minds believe a career in biomedical research has become too unstable, the foundations of the innovation economy grow shakier. Post-doc and graduate students are among the hardest hit by the sequestration, Slattery confirms. Cohen adds that among the dozens of biotech organizations she has surveyed, most are laying people off, doing less hiring or both.
“We risk losing young, promising researchers who have trained at our most prestigious universities to be world-class scientists,” says Larry Corey, president and director of Fred Hutchinson Cancer Research Center, who notes that 70 percent of the Hutch’s funding comes from NIH. “Most of these people have spent over a decade in this training and face leaving their chosen field forever because of lack of such funding.”
That funding is not beyond saving, though a toxic Congressional environment makes it difficult. U.S. Senator Patty Murray, D-Washington, has spoken out against the NIH cuts, as has U.S. Representative Jim McDermott, D-Seattle. U.S. Representative Dave Reichert , R-Auburn, was an outspoken advocate for increased NIH funding in the past but has been relatively quiet about the sequestration cuts, perhaps because the 2014 House Republican budget proposes doubling the cuts from the 5.1 percent trimmed under the sequester to more than 10 percent.
To some on the right, such as the Heritage Foundation’s T. Elliot Gaiser and Jason Lloyd, NIH budget cuts will simply force the organization to eliminate inefficiencies, that is, do more with less. Those in the biomedical industry call this view mistaken. Slattery and others describe the NIH grant process as becoming more arduous and competitive every year.
Despite the situation, Slattery portrays the attitude at the UW and other research institutions as guardedly optimistic. For now.
“You can’t be a pessimist if you’re a research scientist. You have to be realistic, but also optimistic in some ways,” says Slattery. “You have to believe a breakthrough is possible. ... You just have to hope that people will understand how important this is and that private funding can’t fill the gaps. You hope that things will become more predictable and smarter, even if the evidence sometimes says the opposite.”