WisBusiness: Expert sees need for reforms to keep U.S. leadership in biotech

By Brian E. Clark

For WisBusiness.com

The United States is in danger of losing its leadership position in the global biomedical industry, the chief research officer of the Milken Institute told a gathering of BioForward members in Madison, home to numerous life science companies and a thriving research centers at UW-Madison.

Ross DeVol, an economist by training, said Europe’s biomedical industry – which once led the world – is resurgent and India, China, Korea and other countries in Asia are pumping billions of dollars into universities, research parks and other developments to help companies turn scientific breakthroughs into new products and therapies.

The Milken Institute is an independent economic think tank based in Santa Monica, Calif. that publishes research and hosts conferences that apply market-based principles and financial innovations to a variety of societal issues in the U.S. and internationally.

DeVol called the creation of the U.S. biomedical industry one of the “most dramatic success stories of any American industry over the past 100 years.” But he said federal policy makers seem to be unaware that the U.S. position in that area is eroding and will continue to slip without reforms.

DeVol said many “inside the Beltway” don’t understand that the United States didn’t always dominate the bioscience industry and assume that American leadership will go forward unabated.

However, he said he and biotech leaders are working to inform congressional leaders. He said he recently met in Washington D.C. with Senate Majority Leader Harry Reid, House Majority Leader Eric Cantor, the head of the Food and Drug Administration and others to express his concerns.

“We’ve been working the hallways inside the Beltway and in state capitals, which aren’t the problem and where they usually understand it,” he said.

As recently as 1980, he said European firms dominated the bioscience industry, both in terms of market presence and their ability to create new products.

In the ’80s, however, the U.S. surged, he said.

“This was no accident,” he explained. “It was the direct result of smart federal policies, including the absence of price controls, the clarity of regulatory approvals, a thoughtful intellectual property system and the ability to attract top foreign talent to this industry in the U.S.”

DeVol said the United States can still keep its position at the top of biotech field. Currently, this country holds a commanding position in the number of patents produced, revenue, jobs, international market share, publications and R&D expenditures.

Private sector employment was 1.2 million in the U.S., while wages and output directly accounted for $96 billion and $213 billion respectively. Even more importantly, the average biotech job pays $78,000, 70 percent above the average wage in the U.S. In Wisconsin, he said, the industry employs 24,000 in the private sector, with another 4,500 at academic institutions and an average wage of $69,000.

“It is remarkable, however, what other countries are doing,” said DeVol, who recently visited Singapore’s “Biopolis” and many other places in Asia.

DeVol said it takes nearly 18 months and somewhere between $1 billion and $2 billion in the United States to bring a new drug to market because of the lengthy review process. However, before 2003 and regulatory reform, it took almost 30 months to get drugs approved.

To keep its position at the head of the bioscience and medical device pack, DeVol said this country needs to:

* Increase R&D tax incentives and make them permanent;

* Cut corporate tax rates to match the average levels among countries in the 34-member Organization for Economic Development Cooperation group;

* Extend support for emerging biomedical research fields;

* Provide adequate resources for the FDA and the National Institutes of Health to expedite regulatory reviews and clinical trials;

* Leverage existing strengths in medical devices;

* Build human capital for biomedical innovation by increasing the number of students studying science and math, and working to keep top foreign scholars in the U.S. after they finish their advance degrees; and

* Promote and expand role of universities by adopting best practices in tech transfer and commercialization.