As Washington, D.C., shifts its focus from the national elections back to federal deficit reduction efforts, Congress must deal with the real threat of the impending fiscal cliff. Earlier this summer, Congress and the president finally reached a deal to raise the federal debt ceiling. But in the process of averting an imminent catastrophe, they sowed the seeds of a disaster in the future.
In effect, they created a kind of doomsday clock known as sequestration, a word for automatic, across-the-board budget cuts beginning in 2013 that would reduce federal spending by $1.2 trillion over 10 years. At the time, the thinking behind this was that since such deep cuts would be too painful actually to implement, the threat of sequestration would focus politicians’ minds on finding a compromise solution to the nation’s long-term debt problem.
While arbitrary cuts would affect many sectors of the California economy, for our state’s biomedical industry, the stakes are especially high. Medicare, according to the Office of Management and Budget, would be slashed by $11 billion. With more than 5 million Medicare beneficiaries, far more than any other state, California physicians, hospitals, clinics and, ultimately, patients would bear a disproportionate share of the burden.
The same principle applies to our state’s biomedical industry. Today, throughout California, biotechnology and pharmaceutical companies, medical device and diagnostics firms, and basic research institutions directly account for some 267,000 jobs and $20 billion in personal income. In Los Angeles County alone, the biomedical industry employs 42,383 workers —the second largest concentration of biomedical industry jobs in the state after the Bay Area.
In many ways, this industry exemplifies how America can compete globally in the 21st century, leveraging the talent and inventions from L.A.’s best universities including UCLA, USC, UC Irvine and Caltech along with private research institutes including Cedars-Sinai Medical Center and City of Hope National Medical Center. These basic research institutions support an innovation ecosystem that has built companies such as Amgen and Beckman Coulter whose products are in demand worldwide.
In fact, for the entire life sciences sector, the axe of sequestration would be devastating. The Food and Drug Administration, which is the gatekeeper for products moving from the laboratory to the clinic, would lose $318 million — more than 8 percent of its budget. The National Institutes of Health would suffer a reduction of more than $2.5 billion. In fiscal year 2011, L.A.’s 30th Congressional District received 1,007 NIH grant awards, totaling $440 million. UCLA alone brought in $357 million, ranking the university among the top three NIH grant recipients in the state. But according to a recent study from the American Association for the Advancement of Science, by 2017, the NIH would lose $11.3 billion, 7.6 percent of total research funding.
The irony is that these cuts would come at a time when the life sciences are in their most robust and productive phase ever (think Human Genome Project), producing a stream of treatments for formerly incurable diseases – HIV/AIDS, hepatitis B and C, cardiovascular disease, dozens of cancers and so on.
California’s biosciences ecosystem has evolved over two generations to become the envy of the scientific and commercial world. Its basic components – top basic science funded by the NIH, venture capital to launch biotech startups, a system of public and private insurance that rewards innovation – remain essential to its future success. Cutting core programs like Medicare, NIH and the FDA has the potential to reduce the federal deficit in the short run while seriously damaging patient care and innovation for decades to come.
“Sequestration is a blunt and indiscriminate instrument,” the OMB wrote in its report. “It is not the responsible way for our nation to achieve deficit reduction.”
In the critical months to come, Congress and the president would do well to apply Hippocrates’ preeminent principal of medicine — “First, do no harm” — to the budget and, indeed, to the body politic.
David L. Gollaher, Ph.D., is the president and chief executive of the California Healthcare Institute in La Jolla. The mission of CHI is to research, develop and advocate policies and actions that promote biomedical science, biotechnology, pharmaceutical and medical device innovation in California.
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