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Biotech industry says cuts will stifle

Federal budgets would slash aid; Mass. groups look to restore funding

By Donovan Slack and Carolyn Y. Johnson
Globe Staff / February 19, 2011

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WASHINGTON — The Massachusetts biotech industry says an obscure provision in President Obama’s budget could deal it a “fatal blow’’ and cost the state untold numbers of jobs. A Bay State hospital says other proposed cuts would devastate its efforts to train pediatricians. And an array of research institutions fear what is coming next from a Republican budget proposal.

Now, in response to what some of them consider a misguided assault by Washington, some employers and industry groups from the Bay State are adding their voices to persuade Congress to curtail or eliminate the cuts. Much is at stake, they say, noting that the medical research, biotech, and pharmaceutical industries account for more than 46,000 jobs and $4.1 billion in salaries for Massachusetts residents.

Some Democratic lawmakers from the Bay State, including Senator John F. Kerry, have joined the fight. “Massachusetts’ life science, medical research, and innovation industry are the cornerstone of our ability to create jobs and develop the breakthrough cures of tomorrow. I can think of plenty to cut before we shortchange this area of huge promise,’’ Kerry said in a statement.

But others appear to be withholding judgment, including Republican Senator Scott Brown. A spokesman for Brown declined to comment. Brown’s role is being watched particularly closely because he replaced one of the medical community’s most stalwart champions, the late Senator Edward M. Kennedy.

As part of his budget proposal to slow deficit growth by targeting cuts to hundreds of programs, Obama this week proposed slashing funding to public health programs and children’s hospitals, including $21 million for Children’s Hospital Boston. He also introduced plans to shrink the period of market exclusivity for new biotech drugs by five years, a change he said would reduce health care costs. But companies with a significant presence in Massachusetts, such as Biogen Idec and Amgen, said that it would damage the industry’s capacity to create drugs.

House Republicans said even larger cuts are needed as part of their effort to cut the deficit, which is expected to reach $1.5 trillion this year. As part of their proposed $61 billion in sweeping cuts over the next seven months, Republicans are seeking about $3 billion from health and science research agencies.

“I know many people will not be happy with everything we’ve proposed,’’ said Hal Rogers, Republican of Kentucky, chairman of the House Appropriations Committee. “I believe these reductions are necessary to show that we are serious about returning our nation to a sustainable financial path.’’

From letter-writing to phone calls to personal meetings with lawmakers, representatives from Bay State companies and organizations are deluging Congress. Josh Greenberg, vice president of government relations for Children’s Hospital Boston, met with staff members of the New England congressional delegation on a previously planned trip to Washington.

Harvard president Drew Faust was also scheduled to be in Washington this week to meet with policy makers from both parties. The Massachusetts Public Health Association is calling on members to phone or write letters to stop budget cuts. And the Massachusetts Biotechnology Council planned to urge patient groups to call Congress.

Some Massachusetts groups stressed that they are supportive of key elements of Obama’s budget. Indeed, the president’s budget, introduced Monday, increases funding for the National Institutes of Health, National Science Foundation, and the Department of Energy’s Office of Science, which provide research grants. Massachusetts got the second-highest amount of funding from the National Institutes of Health — $2.45 billion — in 2010.

But House Republicans have outlined plans to chop $2.9 billion from those agencies below 2010 levels, causing concern throughout the Bay State research community.

“Our hospitals, we think, are the anchor for the life sciences industry. It’s no accident that Genzyme and AstraZeneca locate in Massachusetts — they want to be close to where the research activity is,’’ said John Erwin, executive director of the Conference of Boston Teaching Hospitals. “We are trying to get that message to everybody who will impact the final decision.’’

Barry Toiv, vice president for public affairs at the Association of American Universities, whose members include leading major research universities, including Harvard, Brandeis, and MIT, said that lobbying efforts to oppose the House Republican cuts will draw on individual universities and industry.

“We actually agree with those that say we need to reduce the deficit, we need to control spending. This is just not the way we do it,’’ Toiv said. “Spending cuts need to be strategic; these are harmful to long-term economic growth.’’

Coincidentally, the National Association of Children’s Hospitals had already planned a “lobby day’’ last Tuesday and Wednesday, so representatives of 50 children’s hospitals including Boston’s were on the Hill, meeting with members of Congress with an unexpectedly timely message about the need for a program that supports hospitals that train 40 percent of all pediatricians.

The president’s budget proposed eliminating the $320 million training fund, which could force the hospitals to find funding elsewhere.

“Everybody is basically just saying, ‘Tell us what you need us to do,’ ’’ Greenberg, of Children’s Boston, said of his meetings with Capitol Hill staffers this week.

Valerie Bassett, executive director of the Massachusetts Public Health Association, said that her organization would be making a push to oppose a $575 million cut — 9 percent below 2010 budget levels — to the Centers for Disease Control and Prevention in the president’s proposal, as well as public health cuts for the current year included in the House Republicans budget resolution.

She said that phone calls, letters, and other efforts would be used to oppose cuts, which include funds that are used by the state for preventive programs, including asthma and air and water monitoring.

“Massachusetts is sort of unique — in general, the delegation is supportive of public health,’’ Bassett said. “We will certainly be communicating with Senator Brown’s office in hoping he’ll choose to support the restoration of the funding for public health — we will definitely include him particularly in our outreach. We need each of their leadership.’’

One of the proposals generating the most controversy among Massachusetts institutions is an obscure budget measure that would shorten the period during which biotech companies have exclusive control over data that they used to develop drugs.

Obama’s health care overhaul said biotech companies can control the data for 12 years, effectively blocking cheaper generic competition during that time. Under the president’s proposed budget, that period would shrink to seven years, a move that the White House said would save Medicare and Medicaid $2.34 billion over 10 years by introducing generic competition faster.

But Bay State biotech industry representatives said the shortened period of exclusivity would dampen incentives to create treatments.

“It would be a fatal blow to innovation, which would be catastrophic to the biotech industry here in Massachusetts and it would be devastating to the entire patient population,’’ said Robert K. Coughlin, president of the Massachusetts Biotechnology Council.

The generic drug industry disagrees.

“There is no question that a 12-year exclusivity period would provide unwarranted monopolies for brand biopharmaceuticals, which would delay the savings that could result from early introduction for biogenerics,’’ said Bob Billings, interim executive director of the Generic Pharmaceutical Association.

But Biogen Idec, which employs 1,800 people in Massachusetts, says it takes between 12 and 15 years to discover, develop, and get a biotech drug approved by the FDA, so letting generics enter the market before then would be “highly flawed.’’

“It’s harmful on the whole value chain of innovation in Massachusetts,’’ said Biogen spokesman Tim Hunt.

Donovan Slack can be reached at dslack@globe.com