via NYTimes, By BARRY MEIER and JANET ROBERTS

One afternoon last spring, a little-known congressman from Minnesota made an impassioned plea before a House oversight committee.

Rein in the Food and Drug Administration’s uncertain approval process for new medical devices, urged the Minnesota congressman, Erik Paulsen, or Minnesota and other states stand to lose up to 400,000 jobs because of lost investment in the device industry.

Over the following month, Mr. Paulsen’s campaign committee took in $74,000 from people with a stake in device regulation, much of it from executives affiliated with venture capital funds and their spouses. Now Mr. Paulsen, a two-term Republican, is a sponsor of a bill that would make it easier to bring new medical products to market.

As Congress considers reauthorizing a law that sets the fees for medical device makers, venture capitalists are emerging as a rich and influential ally of device companies eager to remove what they say are regulatory roadblocks in the approval process. The push has alarmed patient advocates and some doctors, who have been calling on the F.D.A. to intensify its oversight of devices, particularly in light of some all-metal artificial hips that are failing prematurely at an unusually high rate.

“They have this unwritten assumption that every new device is innovative,” Dr. Rita Redberg, who is the editor of the Archives of Internal Medicine, said, referring to the venture capital funds. But some devices, she said, “are killing people or causing significant harm.”



People associated with funds that underwrite companies developing new devices and other health products have made more than $3.3 million in political donations to Republicans, Democrats and political action committees over the past five years, according to an analysis of federal contributions by The New York Times.

Though such people donate for many reasons, about 20 percent of the money from the 182 donors identified by The Times went directly to candidates and political action committees supporting a streamlining of F.D.A. policy or other issues of importance to medical products producers. The total contributions from such donors could be much higher; The Times limited its analysis to individuals affiliated with venture capital funds that have joined two lobbying associations.

Investment funds and business groups have also increased their lobbying in Washington and have generated a stream of reports arguing that regulations are crippling innovation and driving away investment.

Simply put, the industry’s champions argue that the F.D.A. suffers from high personnel turnover, an unwieldy bureaucracy and a regimen that forces start-up device companies to run new and costly tests constantly, often duplicating past efforts.

“This is about survival,” said Michael Carusi, a general manager at an investment fund in Palo Alto, Calif., Advanced Technology Ventures, who contributed $1,000 to Mr. Paulsen. “We are deeply concerned about the future.”

Medical devices encompass a wide array of products, such as heart defibrillators, artificial joints and diagnostic equipment.

Lobbying to smooth the approval process has intensified over the last year as Congress prepares to reauthorize the law that requires device producers to pay fees to the F.D.A., fees that are used to pay the agency’s operating costs. Lawmakers have an opportunity to alter the agency’s regulatory procedures for the first time since the law last came up for renewal in 2007.

An industry lobbying group, the National Venture Capital Association, has intensified its focus on device regulation. In 2010, the association, which lobbies on many issues, spent more than $2.5 million, according to data from the nonpartisan Center for Responsive Politics. About $350,000 of that was related to devices, drugs and health care, a figure that is expected to increase to $450,000 this year, said an association spokeswoman, Emily Mendell.

While it is not unusual for businesses to point to regulation as a barrier to economic and job growth, medical device investors have found a particularly receptive audience on Capitol Hill in recent months. In October alone, 10 bills have been introduced by Republicans in the House to speed up the F.D.A. device approval process; in the Senate, similar legislation has been introduced by Amy Klobuchar, a Democrat of Minnesota.

Since February, four House panels have held hearings on the impact of F.D.A. procedures on device approval. At those sessions, 19 of the 26 listed witnesses were investors, entrepreneurs, industry consultants, trade group officials or patients who said that agency delays in approving a device had harmed them or a loved one. The list included no patients injured by a flawed device; one hearing in the Senate had a more varied witness list. Two weeks ago, four Democratic congressmen wrote to their Republican counterparts about the imbalance in the House testimony and suggested the hearings had failed to address potential dangers “if medical devices are not appropriately regulated.”

The letter, signed by Henry A. Waxman of California, Diana DeGette of Colorado, John Dingell of Michigan and Frank Pallone of New Jersey, also urged that hearings be held on the metal hip problem and similar issues.

Venture fund executives like Mr. Carusi and lawmakers like Mr. Paulsen insist that they are equally concerned about safety. However, in their view, a big part of the problem at the F.D.A. is philosophical; top officials, these critics say, have overreacted to recent episodes involving flawed products and become risk-averse. As a result, devices are available first in Europe, they say.

“The key is to strike the right balance,” said Dr. Josh Makower, a device developer and a consultant to New Enterprise Associates, a venture fund in Palo Alto.

F.D.A. officials said they have recently tried to address investors’ concerns by announcing programs to encourage innovation and reduce regulatory burdens. Still, the head of the agency’s device division, Dr. Jeffrey E. Shuren, said that executives like Dr. Makower seemed more interested in politicizing the issue than resolving it through discussion.

“The dialogue has become more political and adversarial,” Dr. Shuren said.

Some medical experts have also questioned recent studies about the negative impact of regulations, calling the reviews flawed in methodology.

William Vodra, a lawyer in Washington who has worked closely with medical device producers, said that investors had legitimate concerns about regulatory speed. That is because the approval of a new device can begin a process in which a start-up company is acquired by a larger manufacturer and early investors profit by cashing out.

But such investors may be less interested in what happens to that device after it reaches the market because they have already moved on, said Mr. Vodra, who served on an Institute of Medicine panel that recently concluded the F.D.A. failed to properly assess the safety and effectiveness of many new devices.

Mr. Paulsen, the Minnesota congressman, did not respond to requests for an interview. But a spokesman, Tom Erickson, said that the lawmaker’s testimony this spring was unrelated to any campaign donations and reflected his long-held view that the F.D.A. was undermining an industry crucial to Minnesota.

“He gave his testimony because he feels these jobs are being threatened by an inconsistent and unpredictable F.D.A.,” Mr. Erickson said. Mr. Paulsen, along with Democrats and Republicans from states that are home to device makers, has also sought to repeal a tax on sales imposed on the industry under the health care overhaul law.

Dr. Makower, the venture fund consultant, has donated $5,000 to Mr. Paulsen, records show.

“I think that he understands this issue,” said Dr. Makower.

August 30, 2011 from WAMU

The Walter Reed Army Medical Center has a storied past. It has been the country’s leading Army hospital for more than 100 years, sitting on a complex that includes a Civil War battlefield. There was a time when 16,000 patients a year sought treatment for wounds of war or illness.

By the end of August, all of the patients and doctors will have left, moved to Bethesda and Fort Belvoir as the Army consolidates its bases. But as one era closes, another opens: Washington, D.C., may be left with nearly 70 acres of prime real estate.

Neighborhood Businesses Face Change
Just after the midday rush at Ledo’s Pizza on Georgia Avenue in Northwest D.C., Tim and Kelly Shuy sit down at a table.

“We get a lot of military families, people who are visiting, folks who are in the hospital. We get a lot of contractors,” Kelly says.

Their pizzeria is across the street from the sprawling Walter Reed campus. Lush with trees and a hilly landscape, the campus includes several iconic 100-year-old buildings with red tile roofs where patients, their families and staff were able to wander and just look out on the rest of the neighborhood from a distance.

Many in the neighborhood call the medical center a fortress. But for the Shuys, it was a mainstay. Doctors and patients alike have supported their business for years.

“Some of them come in uniforms. We have patients who come in who haven’t been out of Walter Reed,” Kelly says. “I’ve had dozens of people tell me this is their first meal out of the hospital.”

But those days are just about over.

“We’ve been saying goodbye to people for a long time. We say goodbye to people every day,” Kelly Shuy said. “But it’s horrible — we’ve had tears over saying goodbye to people who are regulars.”

Of course the Shuys are losing more than just familiar faces.

“As far as the business goes, obviously it’s a huge hit for us,” Kelly says. As Walter Reed closes down, it leaves behind questions. What is going to take its place? There is no shortage of opinion among interested residents:

“We are looking for quality space for our students,” says Christine Encinas.

“We’d like to use part of it to develop affordable family housing,” says Troy Swanda.

“We’d like to see a bit of parkland right along here,” says Ellen McBarnett. “Many of the neighbors have been talking about dog-walk parks or places for children to play.”

City Eyes Retail Development
And that’s just the beginning. The State Department will take a chunk of Walter Reed’s 113 acres, possibly for embassies. But that leaves almost 70 acres for D.C. In a city where a quarter of the land is owned by the federal government, demand for land is high.

“This is a uniquely vocal community, let me just put it that way,” says Victor Hoskins, deputy mayor of Planning and Economic Development. He co-chairs the committee that is going to figure out just what the District of Columbia is going to do with all of this land.

“Actually, the interest we’ve gotten from a number of retailers already has been, really, quite astounding. What’s going to happen is when that fence comes down [and] we develop the retail along there, it will become a place to go,” Hoskins says. “And there’s a chance now to revive a Main Street, which is Georgia Avenue, which has for years been suffering from decay.”

D.C.’s government has a major interest, as well. For 100 years, this property has been federal and untaxable. The city estimates it could get $20 million a year in tax revenue. And the people who worked at Walter Reed mostly drove in and drove out, not spending as much in the neighborhood as destination consumers might. Plus, if retail takes off, it might supply local jobs. Of course, that’s assuming the city gets it right.



This satellite image shows how the Walter Reed Campus will be divided between the District of Columbia (purple) and the State Department (yellow). The District’s 67-acre portion includes both the old and new hospital buildings.

Coming Up With A Plan
Faith Wheeler is a neighborhood representative who lives near Walter Reed. Standing about a mile away from the hospital, she points to a block where new development didn’t work out so well.

“Well, I don’t want to see all those for-lease signs; look at that,” she says. “If that happened on Georgia Avenue’s Walter Reed campus, it would be awful, horrible. According to textbook ideas, this is the place where retail ought to be booming. It’s not.”
This is what Wheeler does not want to see: a street that’s a commuter corridor, lined by sterile and vacant office buildings. One thing she does want is some sort of tribute to the place’s history. And that is likely; many of the historic building facades will be kept. But Wheeler’s voice is one of many.

Public Meetings, And Many Rules
“It’s kind of the new realities of urban planning in the 21st century,” says Lisa Benton-Short, a professor of geography at George Washington University who has written about previous base closings. She says the Walter Reed campus will take awhile to sort out.

“I think for much of the 20th century, planners were quite top-down in their planning,” she says. “They told us what we needed in our spaces. Sometimes they were right, and sometimes they weren’t. In the last 25 years or so, the planning profession has really changed. And one of the most important ways it’s changed is to bring in public participation and planning.”

That means public workshops, public forums and many public meetings. Benton-Short says it will be messy. And the military has its rules, as well.

There will have to be services for the homeless, there will have to be organizations that serve the community, such as schools. And there’s an entire bureaucratic process that will probably take two years before a deal is finalized, let alone anything getting built. The U.S. Department of Housing and Urban Development will have to approve the plan, and there will have to be an environmental impact assessment, as well.

“We’re talking 10 years, 15 years before these visions are actually transformed into reality,” Benton-Short says.

That only heightens the fear of area businesses who will have to wait that long. There’s also radioactive waste from X-ray machines and cancer treatments that needs cleaning up. And there’s asbestos to be removed. That’s all possible — but it will take time. It’s also one reason that the amount D.C. will have to pay the Army for the land hasn’t been nailed down yet. But when all is said and done, one thing everyone agrees on is that the site holds real potential.

A Positive Legacy
“This is something that I hope will be a positive,” says Ethelbert Dawson, 77, who attended Walter Reed’s official closing ceremony last month. He lives around the corner, and for 25 years, he worked at Walter Reed as a research chemist.

“When I was here, I never thought that this day would ever come. We used to call it Walter Wonderful, because that’s what it was.”

He says he can’t really predict what this new space will mean for Washington, D.C.

“But for Walter Reed and all of the positiveness that hospital has given this community,” Dawson says, “I don’t know if they can ever reduplicate that.”

All eyes are on this space, to see whether the disappearance of a 100-year-old place of healing will usher in an urban rebirth — or leave a scar.

We have presented the following chart to clients on multiple occasions to demonstrate the shifting prominence of different sectors in the US economy (in terms of employment) over time.

Key Takeaways:
From our perspective, one of the most significant trends visible here is the decline of manufacturing relative to other industries. Since 1970, total manufacturing employment has fallen from nearly 18 million to just over 11 million jobs. At the same time, health services, along with professional and business services, have emerged from relatively small employment sectors to major drivers.

While the chart does tell a story about the relative influence of each sector in terms of employment, the employment numbers are not contextualized in terms of total U.S. population. In particular, questions about the steady increase in government employment prompted us to revisit the visual in order to adjust for the growth of the size of the U.S. economy overall to create a more nuanced view of how each sector has been represented in the U.S. economy over time.


Key Takeaways:
The above chart provides greater context for the employment changes of these same industries by comparing their share of all jobs in the U.S. In this picture, the decline in manufacturing employment is even steeper, dropping from 26% of all jobs to just 9%. Moreover, the rise in government employment from the previous chart is seen more clearly as a function of the overall growth of the nation’s economy. In other words, government’s share of employment has remained relatively constant over the last 40 years.


Key Takeaways:
Like the first chart, the gradual yet steady decline of manufacturing since the 1970s is evident. Professional and business services and health services also show an upward trajectory, increasing their relative shares of the nation’s total gross domestic product (GDP).

The most striking difference in this data set from the previous employment charts is financial activities. If employment was the only indicator used to judge this sector’s importance, the viewer may determine that financial activities is not a major force in the overall economy. On the contrary, financial activities has dramatically increased its share of total GDP and now comprises the single largest share of economic activity in the U.S.

Drug companies aren’t the only ones making money inventing new medicines for the market. A man in Massachusetts has brought three drugs to market almost on his own. His process is the same as the big drug makers, but he farms out each aspect of the process to independent labs and specialists. When the drug starts to succeed in trials, he sells it to one of the big companies.

Transcript:
Copyright © 2011 National Public Radio®. For personal, noncommercial use only. See Terms of Use. For other uses, prior permission required.

RENEE MONTAGNE, host:

And in a tough economy like this one, rather than fighting for a job, some people are simply starting their own companies. A pharmaceutical business might not sound like an easy one to set up, but there is a growing number of one-person drug-making companies cropping up across the country.

From member station WBUR in Boston, Curt Nickisch has the story of one man who’s already developed three prescription drugs on his own.

CURT NICKISCH: This is not what you picture when you hear corner office. Dennis Goldberg runs a drug company out of one corner of his living room.

Mr. DENNIS GOLDBERG (President and CEO, neXus therapeutics Inc.): It’s very different from the hermetically-sealed office buildings where, you know, you can’t open the windows. Here I can open the windows and get the fresh air coming through and it’s nice.

NICKISCH: Goldberg’s home nudges a cranberry bog. Each morning someone picks up his giant schnauzer so he can work in quiet for a few hours. The drug he’s testing is a cholesterol drug, for people for whom statins such as Lipitor don’t work. But Goldberg says he doesn’t need fancy corporate headquarters to develop another blockbuster.

Mr. GOLDBERG: Do we really need to build another big company? We need more drugs. So we’re just focusing on the drug part.

NICKISCH: Goldberg, backed by a few investors, is taking a drug that was discovered at a university in Alabama through the first round of human testing. To do this, you need scientists, you need laboratories, you need lawyers. So normally, Goldberg says, you build a building, outfit it with labs, and hire expensive people to fill it.

Mr. GOLDBERG: Normally you get this into a big company and you get all the bells and whistles and you’re spending all this stuff on overhead. You can spend easily 60, 80 million.

NICKISCH: But Goldberg’s only spending $6 million, and he’s not building anything. He’s the only full-time employee. So how does he do it? Well, he’s contracting out each step in the drug’s development process to someone else.

NICKISCH: At Charles River Laboratories outside Boston, a worker is tending to a six-foot-long plastic bubble. Inside, a medical experiment is being run on mice. This isolation chamber is just one of hundreds in this warehouse.

CEO Jim Foster says his company runs experiments for people like Dennis Goldberg.

Mr. JIM FOSTER (CEO, Charles River Laboratories): And they’re basically renting a bubble or a whole row of bubbles, or we hope a whole building of bubbles. But they don’t have to own the bubbles themselves. They don’t have to own the building, and they don’t have to employee the employees. We do that for them.

NICKISCH: So when Dennis Goldberg, the one-person drug company, is getting his drug researched at one of these contractors like Charles River Laboratories, he sits at home and works on other stuff. He files paperwork with the FDA. He negotiates with a manufacturer to make more of the drug, which he’ll need later on. He starts lining up medical clinics to do the human trials. So he doesn’t have to have all those folks on staff. He just cuts them a check.

That’s how Elizabeth Higgins got paid recently by someone like Dennis Goldberg. She’s the CEO of a contract research lab called GlycoSolutions.

Dr. ELIZABETH HIGGINS (CEO, GlycoSolutions): And we received the check in the mail a personal check from his Charles Schwab account. He’s paying for it out of his own money.

NICKISCH: Now, obviously this isn’t one of those work-from-home schemes you see advertised in the Penny Saver. Dennis Goldberg and most of the people doing this are former drug company executives. They’ve been through this whole process before. And you can’t do this just anywhere either. Most of these virtual companies are cropping up around Boston, where there’s a big pharmaceutical industry.

Mr. MIKE WEBB (Virtual Office 4 U): From top-flight intellectual property attorneys, project managers, labs, facilities – it’s all here available, really at a moment’s notice.

NICKISCH: Mike Webb is a former corporate drug executive who’s now providing services to a growing number of these virtual companies.

Mr. WEBB: We’re bringing people together at the right time at the right place. And then eventually we’re passing them on to much bigger companies that get them to the patients.

NICKISCH: Those much bigger companies happen to be desperate right now. Many are watching the patents on their best-selling drugs run out, and they need to bring new ones to market.

As a one-person drug company, Dennis Goldberg says he can not only bring a promising drug through the process cheaper, he says he can do it faster.

Mr. GOLDBERG: If it works, great. And if not, you know, the company just goes away.

NICKISCH: Well, Goldberg also loses the $6 million he and investors put into the cholesterol drug. But for the chance to develop a drug that will be sold to people around the world, that’s a risk he’s willing to take.

For NPR News, I’m Curt Nickisch in Boston.

The impressive expansion of the nation’s healthcare sector has proven resistant to economic downturns. Over the last two business cycles, healthcare employment has grown by more than 30 percent nationally. Total nonfarm employment, on the other hand, has increased by just 3 percent. This resilience is almost certain to continue. Optimistic growth prospects are well supported by demographic trends. As a result, the sector has caught the eye of many communities seeking to strengthen their economies. The challenge for economic development organizations is how to maximize the economic benefit of this sector.


While healthcare may not be seen as a traditional target for economic development, the sector offers many of the benefits of a “primary industry:” it often draws in outside dollars, it has linkages across a wide supply chain, and it offers a number of opportunities for high-wage, skilled jobs. In addition, access to healthcare has become an essential element of a region’s infrastructure. For these reasons, targeting healthcare can be an effective way to strengthen and expand a regional economy. The following framework provides a starting point for communities that want to consider this strategy.

1. Assess the sector. Economic development organizations typically have an incomplete picture of who is involved in providing medical services. They may have the CEO of the regional hospital on their board, but they may not know what services are (and are not) provided or how a hospital relates to clinics and physicians outside the system. More importantly, they may not have a full understanding of the supply chain on which the hospital relies. Assessing the sector and creating a complete cluster and network map is the starting point for crafting a healthcare strategy.

2. Engage relevant stakeholders. The next step involves understanding your local sector’s growth prospects. This requires direct communication with relevant stakeholders – regional healthcare providers, higher education institutions, and the local development community. Regional healthcare providers can provide information about their expansion plans and workforce needs. Higher education partners can provide insight into corresponding training programs, key research initiatives, and expansion plans. Beyond that, engaging the development community on the benefits of anchoring developments with healthcare and medical assets can lay a strategic foundation.

3. Identify the opportunity. With a complete picture of the healthcare sector and a deep understanding of its growth prospects, the community is ready to identify possible “catalyst” projects. These projects should include more than one strategic anchor that will help the project reach critical mass. Projects should be evaluated based on their potential job creation, tax revenue generation, capital costs to the community, and other tangible and intangible benefits. The project with the highest potential should be prioritized for investment.

4. Establish a framework. The tools needed to promote the opportunity must be put in place, starting with a clear vision and attainable goals for the project. Then, a framework must be established through the community’s regulatory environment and resource allocation to advance the opportunity. This will involve planning tools such as zoning and overlay districts. Adequate funding sources, including grants, bonds, and tax increment reinvestment zones, also need to be identified to finance needed infrastructure. Innovative incentives programs that support the recruitment of key tenants should also be part of the mix.

5. Implement. Ultimately, success depends on a shared vision. Keeping stakeholders fully engaged from inception to implementation will require an integrated approach – one that also involves business recruitment, marketing, entrepreneurship, and workforce development. A concerted effort can yield tangible and widespread benefits.

How it’s working in Round Rock, Texas
Round Rock is one of a growing number of examples of how the healthcare sector can be harnessed for economic development. Using a large tract donated by a local landowner, the City of Round Rock, in collaboration with the Round Rock Chamber of Commerce, higher education institutions, and regional healthcare providers, has formed a nascent, yet robust, healthcare cluster.

The basis of Round Rock’s approach was the creation of a medical education campus. The campus links medical education programs (offered by Texas A&M Health Science Center, Texas State University School of Nursing, and Austin Community College) with regional healthcare providers (Seton Medical Center Williamson, St. David’s Round Rock Medical Center, Scott & White University Medical Center, and Lonestar Circle of Care). The campus functions as an anchor for Avery Centre, a commercial node of the Avery Farms master-planned development. Employees, patients, visitors, and students connected with the medical education campus enhance the commercial and retail value of the development.

The project is textbook economic development – it generates high-paying professional jobs, enhances Round Rock’s workforce training, creates a magnet for talent, boosts commercial tax rolls, supports retail development, serves as an asset to attract bioscience companies (a target industry) and provides a valuable community service. What more could a single project strive for?

By Jon Roberts and Caroline Alexander, TIP Strategies
published by IEDC May 9, 2011 in ED Now (member login required)

from the EMSI blog:

In the workforce world, the all-too-common refrain is, “My region has lots of unemployed people AND lots of employers saying they can’t find qualified workers.” Much of this speaks to the fact that certain industries are shedding workers and the skills and knowledge these workers have don’t transfer very well to occupations with more demand. So essentially the US faces a big “skills mismatch” between the unemployed and employers.

It’s quite a mess to untangle.

It also points to the importance of not overtraining for occupations — especially in this tight labor market. A good way to avoid this is to look at the difference, or gap, between who is being trained and who is needed. In the infographic below we selected some typically hot jobs and then matched up openings for each vs. the number of people being trained to move into them.*

The results are interesting.

This data should certainly be evaluated on a regional, statewide basis as well by regional institutions, from high schools all the way up to graduate schools.