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How to satiate Washington's $11 billion biotech industry

The burgeoning industry gave Gov. Jay Inslee a list of things to work on this week.
A helix-inspired pedestrian bridge between Seattle's Elliott Avenue and Prospect Street.

A helix-inspired pedestrian bridge between Seattle's Elliott Avenue and Prospect Street. Photo: Flickr user greenplasticamy

The state's biotech industry wants lawmakers to extend a pair of industry tax breaks and to regulate "biosimilar" drugs.

That's what roughly 20 leaders of the Washington Biotechnology and Biomedical Association (WBBA) told Gov. Jay Inslee Tuesday in Seattle. Washington has roughly 570 life sciences, biopharmaceutical, medical device and related research companies and institutions, directly employing more than 34,000 people, and supporting an additional 58,000 jobs.Those firms contribute almost $11 billion to the state's economy. While other state industries suffered during the recession, Washington's biotech firms grew.

"People in labs are working. They don't have hard hats on, but they're working," Inslee said.

The association's representatives asked Inslee to help preserve a state tax exemption on reach and development expenses and to extend a tax deferral on the purchase and manufacture of biotech devices. Both are scheduled to expire in the next few years.

"We want to make sure we're competitive and remain competitive, and this is one of the few tools we have," said Chris Rivera, president of the WBBA.

Currently, "biosimilar" drugs, or copies of drugs grown from living cells, are not regulated in Washington. The problem is that a biosimilar drug is not an exact copy because the original cell operation is not used. That means that while the formulas and test results for a biologic drug can receive Federal Drug Administration approval, there is no guarantee that the biosimilar copy would have the exact same results in a patient. Washington's current regulations only cover generic drugs, which are exact chemical copies of original brandname drugs.The FDA has recently established protocol for testing and approving biosimilar drugs.

"It's all about patient safety and patient awareness," said Donna Morgan Murray, president of ZymoGenetics Inc.

The WBBA also asked Inslee to appoint a state Life Sciences Director within the governor's office, which Inslee said he would try to do. In fact, that and keeping the R&D tax credit intact were among his campaign promises.

Stabilizing state funding of the Life Sciences Discovery Fund was another of the WBBA requests. In 2005, then-Gov.Chris Gregoire and the Legislature established a program to spend $350 million — supposedly $35 million a year from 2008 though 2017 — to bolster life sciences research and turn that research into jobs. The money comes from an annual lawsuit settlement from tobacco companies to numerous states, including Washington.

The fund finances projects that cover a broad spectrum of health-related undertakings: brain, breast cancer, blood and diabetes research; developing technologies for human cell therapies; creating gluten-free wheat; improving surgery safety in at least three-quarters of the state's hospitals; helping rural communities deal with mental health and substance abuse issues; developing "smart home" technology for the elderly and providing gene sequencing equipment for researchers.

The actual tobacco payments and allocations for research from the Life Sciences Discovery Fund have been close to the projections — about $33 million each in fiscal 2008 and fiscal 2009 — but the Legislature has been dipping into Washington's tobacco settlement revenues to pay for other programs, sending less than $15 million to life sciences research in 2010.

The fund received $9 million to $10 million between 2011-2013, plus $4 million from other state appropriations, said the fund's executive director John DeRosier. He expects the fund to receive up to $19 million from the state in 2013-2015.

Meanwhile, Brian Bonlender, director of the Washington Department of Commerce, said the state is also exploring using a federal investors visa program to funnel more money to Washington's biotech industry.

Currently, the program feds allow foreigners to obtain a permanent visa — but not citizenship — if they provide $1 million in investment capital to new businesses, troubled businesses or regional funds to tackle bigger investments.That threshold is lowered to $500,000 if the investment targets specific financially troubled fields and geographic areas.

Washington commercial department experts are discussing how to participate in that federal program, including goram exploring whether the state, a public-private partnership or a regional fund should control the nuts-and-bolts of where this money goes and how it is controlled in Washington,said James Palmer, economic development manager for the agency. No deadline has been set yet for the commerce department to pick which path it wants to follow.


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Comments:

Posted Thu, Jul 25, 3:53 p.m. Inappropriate

No, We do not need to subsidize bio-tech corporations. We do not need corporations involved in our state government either. The giveaways to wealthy interests needs to end. If the State gives money/resources to a corporation, then the State needs to receive commensurate equity/ownership of the corporation. Public-private partnerships should be prohibited by law, as they never benefit the Public.

Bio-tech, and tech workers make too much money to be subsidized. Why should an individual making 30,000 dollars a year subsidize people making 100,000 a year? Or control group members who make millions per year?

The visa program for foreign investors is (I think) the EB-5 visa program. This program is abused and has turned into nothing but a way for wealthy foreign nationals to jump the immigration line, and receive permanent residency.

The EB-5 program needs to end. We do not need a bunch of wealthy foreign nationals moving to the United States. Why should some guy from China, who made his money using slave prison labor, and putting melamine in infant formula, get permanent residency in the United States? Why should some guy who made his money selling body parts of executed prisoners ("Executions on demand! We blood type and make sure the executed prisoner is fully compatible with you! We have livers, kidneys, hearts, etc.! So, place your order. We execute on demand to ensure your new body part will be the freshest possible!)get permanent residency in the United States. Wealthy foreign nationals are, for the most part, the worst type of human beings in existence. The EB-5 visa program needs to end, along with any other program which gives wealthy foreign nationals permanent residency by purchase.

Corporations need to learn to pay their own way. It is not surprising Inslee wishes to embed some bio-tech operative in State Government (a "Life Sciences Director), as Inslee had the Microsoft operative, Brad Smith, as leader of his Transition Team.

The demands by the bio-tech industry should be denied. They won't, the crony Inslee will make sure the wealthy interests receive more free subsidy; and then turn around and demand a raise in the gas tax. The subsidy to corporations benefits only the corporation. Washington State hands out 100 billion (with a "B") dollars a year in "tax preferences" (see, JLARC Reports at wa gov website), and has been for awhile. Most of the corporations, which receive State subsidy, also receive subsidy from local government, and the Federal Government. Most of these corporations also are involved in tax avoidance.

Here is the thing; If the subsidy creates a good economy for all Citizens; they why don't we have a good economy for all Citizens? Why is poverty increasing every day?

The subsidy, tax preferences, and the tolerance of tax avoidance, harms the economy for Citizens. They need to end.

jhande

Posted Sat, Jul 27, 11:22 a.m. Inappropriate

The author of this piece seems to favor the Governor's plan to offer benefits to selected promising industries. If I remember correctly this same author also reported favorably on closing "loopholes" in Washington's tax structure when the Legislature was in session. So what makes Governor Inslee's favored list different from the "loopholes"? is it a question of timeliness? does a strategic tax device degenerate into a "loophole" after a decade or so? what has Governor Inslee ever done to indicate his foresight in economic matters?

kieth

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