What are the consequences of a government shutdown on the healthcare and life science sectors?

As a small business man, I also felt like small business enterprises (SME’s) suffered the most in stressed economic times. We were also the one’s to receive the first punch to the economic gut of our livelihoods. From that perspective, I wanted to see what are the likely ramifications of a combined government shutdown and looming credit cap crisis on the healthcare, life science industries and other related sectors. So how will all of this affect start-ups, research scientists and economic growth?

First off, I would expect to see delays in the introduction of new life science product development. Technology development begins with patent protection through registration with the US Patent Office, and ends with the Food and Drug Administration (FDA) saying it is ok for human consumption or use.   If no one is there to answers emails or process claims the system goes into a holding pattern and everyone just takes a number and waits.

Equally critical is investment funding at all levels particularly the SME entrepreneurs trying to bring new technologies to the market. Any interruption in funding could kill off their companies quickly. Further, if the US were to default on its interest payment because Congress could not agree on increasing the debt ceiling than all bets are off. That scenario, will lead the world to loose total confidence in the dollar. Leading me to next point.

As we go deeper into the shutdown, the Securities and Exchange Commission (SEC) will also likely furlow personnel and move to shut down processing of filings and approvals for offering. This will damage the resurging biotechnology IPO market for devices, drug and therapeutics in mid to late stage development.may  loss moment of the past couple of quarters.

Each week that the tug-of-war on Capitol Hill continues, the National Institutes of Health will turn away about 200 patients, including children with cancer, from its clinical research center, while local clinical trials remain on hold.

“The longer time goes on, the more deleterious the impact will be on the research community and patients,” said Dr. Anne Klibanski, chief academic officer at Partners Healthcare.

Lastly, the obvious effect of a prolonged shutdown is the loss of confidence in a system that is so dependent on government funding. We are talking about a group of people that have significant up front investment in their own careers in both time and money. The impact of Sequestration on budgets followed on by this new set of crises will have ripple effect on training, research, new product development and eventually on job security. The delays caused by the shutdown could lead to budget allocations for projects getting bumped to the next cycle, potentially leaving, for example doctorate and postdoctoral researchers dependent on NIH grants out-of-pocket. “The longer funding is constricted, young scientists will look at other fields. They will wonder how they’ll feed themselves, pay for their education and living expenses. They will think about new career paths…where they can have greater control over our destinies. That can last for a long time.”

Let’s hope Congress starts talking and finds a resolution that keeps the united States moving forward.


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