Is there a role for the policymaker in the life science sector?


Editor’s Note: This blog post is part of our 5 Points of Health Care™ series, a Cambia Grove original framework designed to better understand the health care system by breaking the system into five distinct sectors: Patient, Payer, Policymaker, Provider and Purchaser. This blog post is authored by Julia Terlinchamp, Director of Life Science & Global Health Development, Washington State Department of Commerce. Julia shared additional insights during the the 5 Points of Health Care Policymaker Panel on April 3. Watch the recording of that event here

Joseph Schumpeter, a 20th century economist, argued that the driving force behind capitalism is innovation for certain sectors of the economy. Specifically, he said that innovation is the critical measure of economic change. Today his theories are especially applicable to the life science sector in Washington State (defined here as health IT, digital health and global health). We are lucky to live in a region of the world lauded for its talented workforce, world-class research and development institutions and collaboration among forward-thinking industries. With so much momentum from the non-profit and private sector, we need to ask what role government can and has the capacity to play.

Over the past decade, a cultural shift has occurred where both the health care industry and policymakers strive to reduce costs and improve the efficacy of the system, creating new opportunities for entrepreneurs within the sector. Even though a recent report by Life Science Washington showed a 13 percent job growth from 2014-2017, the sector still lags behind other top biotech clusters in the nation. The Seattle area ranks No. 7 despite being home to giants such as Fred Hutch, Allen Institute, PATH and Juno Therapeutics. 

In their 2017 “Future at Risk” report for the Washington Life Science and Global Health Advisory Council, TEConomy argues more state support will bolster the sector, particularly when compared to our competitor states. A number of tax credits expired and the state legislature voted in 2015 to eliminate the Life Science Discovery Fund and Global Health Fund. As the political landscape shifted, so has attention to critical issues facing our state like funding basic education, addressing the opioid crisis, mental health, homelessness and orca recovery. 

There have been broad initiatives to support the sector, such as strengthening its workforce pipeline. In 2017, the Governor created Career Connect Washington to address workforce shortages in high growth sectors, including the life sciences. Addressing the need for a skilled workforce in this high demand field was a top recommendation from a recent TEConomy Report. The state has also recently invested millions of dollars into STEM curriculum and infrastructure in both our k-12 system and higher education. Other bills currently moving through the legislature could have a positive impact on the sector, including greater access to broadband (good for telemedicine and wearable devices), granting blockchain legal status equivalent to e-signatures, additional funding for career connected learning, and millions in capital funding for STEM buildings. 

Direct support for innovation proves more challenging, given that the timeframe for return on investment in the life science sector is typically longer than others. Ensuring sustainable funding in a state budget set every two years isn’t easy. The state’s role is to show creativity in how we can best support the sector with what resources are available, especially to small businesses and start-ups. 

For example, the Washington Department of Commerce is creating a Revolving Loan Fund (RLF), to be managed by an external organization, that will support small life science businesses through early-stage development. Entrepreneurs face a highly competitive landscape and great financial risk as they develop their businesses. Loans provided by the new fund could be used by local entrepreneurs to stabilize their firms as they grow, such as hiring additional employees or paying a consultant for grant writing assistance. If and when the business generates enough revenue, money paid back to the fund is loaned again to help other small businesses in the future. For now, the RLF is a pilot program, but the need for such assistance is certain. Nurturing innovators in the formative stages is critical for the long term vitality of Washington’s life science sector. 

Schumpeter’s theory suggests that through innovation, existing systems and processes like those within healthcare, are challenged. Entrepreneurs and policy makers share a common interest in disrupting the current system to make way for innovation. That is why it is so critical for entrepreneurs to educate policy makers and advocate to state leaders about the significance of the work they are doing and how they can best support the sector.

About Julia Terlinchamp

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Before joining the Department of Commerce, Julia worked as Gov. Inslee's Northwest Regional Representative, serving Snohomish, Skagit, Whatcom, Island and San Juan counties. While working for the Governor, she focused on stakeholder engagement and coalition building. Prior to that position, she worked as a Congressional Liaison to Rep. Suzan DelBene (WA-1) in her district office. Julia also worked in Washington, DC within the political arena both on and off the hill.

Julia has a Masters of Public Administration with a concentration in Public and Economic Policy from London School of Economics and Political Science and graduated with Honors from Pitzer College with a B.A. in International Studies. She was a Fulbright Scholar to Bulgaria where she focused on the sociopolitical implications of Bulgaria's nuclear energy sector while they prepared for EU accession.