Investors are the lifeblood of bioscience and health-care innovation.
With the need for capital increasing, new community-driven programs are emerging. Consider the Arizona Innovation Challenge, a competitive grant program from the Arizona Commerce Authority that provides $3 million annually to Arizona's innovator companies. Or look at the plan from Phoenix-based BioAccel to award funding to companies and entrepreneurs offering groundbreaking solutions to five urgent health-care problems. Across the country, programs like these are emerging to support lifesaving and life-sustaining innovations.
But these initiatives cannot succeed alone. Without sufficient private investment capital, bioscience industry growth slows or stops.
Unfortunately, investment capital is about to become more scarce in the bioscience community. As part of the new health-care law, a body known as the Independent Payment Advisory Board (IPAB) soon will inject needless uncertainty into the life science sector - thereby hampering investment.
Unless lawmakers like Arizona's Congressman Paul Gosar and Congressman Ron Barber repeal IPAB, this board will create hurdles for innovators and investors causing Arizona to miss out on a period of technological advancement and job creation.
Today, opportunities for growth are great. President Obama said in 2011, "The first step in winning the future is encouraging American innovation." Strategic investment in America's life-science industry can sustain our global leadership and support the health of our nation and economy.
In the last decade, Arizona's bioscience industry added jobs at a rate nearly four times faster than the country as a whole. This sector is directly responsible for nearly 100,000 Arizona jobs with an average salary of more than $56,000 a year.
Arizona's bioscience companies are behind some of the most exciting lifesaving advances in recent years. Tucson-based SynCardia has developed a temporary artificial heart that extends the lives of transplant patients waiting for a new organ. And in Phoenix, VisionGate has created 3-D imaging technology that can vastly improve the process of early lung cancer detection. Global Cancer Diagnostics will soon be delivering lifesaving cancer diagnostics in blood test form.
In the near future, we can expect much more from our state's biotech sector. From cancer to Alzheimer's, there are a host of challenges life-science firms are only beginning to tackle. Creativity and imagination are the first steps in the innovation process. The crucial next steps will require significant investments in time, talent and capital. Sadly, IPAB's implementation might drain all of these resources.
The policy would install a presidentially appointed panel of 15 experts to determine how best to reduce Medicare spending. IPAB's central flaw is that it rejects the market-driven design of highly successful health-care programs like Medicare Part D. If the panel makes a flawed decision, there's no opportunity for market correction or for legislative or judicial intervention. Our elected leaders are almost completely excluded from IPAB's decision-making process.
By wielding such power over Medicare, IPAB is a new risk to investors.
Medicare provides health-care coverage for 16 percent of the population - an ever-growing percentage. Any sudden shifts in program rules will have an outsized effect on the health-care market, leaving the life science subject to volatile economic change.
In short order, innovators would flee the industry, slowing a once-promising rate of medical discovery to a crawl.
I learned 30 years ago working with emerging technology leaders that ingenuity and imagination don't work without investment. Back then, innovators across a range of sectors partnered with investors to lay the groundwork for today's high-tech economy. Like computer technology, bioscience has the potential to improve our lives in extraordinary ways.
America's life science firms face unavoidable challenges that early Internet entrepreneurs couldn't have imagined - even without the new health-care law. The uncertainty created by IPAB, however, is a hurdle that lawmakers must remove.
Now is the time to encourage investment in new health-care technologies and support access to existing technologies that will improve health and ultimately reduce health-care costs. For the sake of Arizona and the nation as a whole, our leaders must repeal IPAB.
"Strategic investment in America's life-science industry can sustain our global leadership and support the health of our nation and economy."
Joan Koerber-Walker is an entrepreneur, investor, and former Fortune 500 executive. She serves as the president and CEO of the Arizona Bioindustry Association.