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NIH, HHS Prepare as Government Shutdown Looms

NEW YORK (GenomeWeb News) – With the two houses of the US Congress failing to reach a budget deal and inching the federal government closer to a likely shutdown, agencies are scrambling to prepare and notifying employees of furloughs.

Such a shutdown could have a significantly negative effect on the medical and life sciences industries, biomedical research advocates have cautioned, as research and planning is put on hold. It also would result in the majority of staff at agencies such as the National Institutes of Health and the Department of Health and Human Services being furloughed until a budget for Fiscal Year 2014 is put into place.

If the two houses of the US Congress fail to agree on a plan to fund the federal government by midnight tonight, the end of fiscal year 2013, much of the activities of the government will shut down until a deal is reached.

The US Senate and House of Representatives have passed and then volleyed variations on a short-term bill to keep government funded at a flat level back and forth over the past week, but as of today it appears that a shutdown is likely to happen.

Over the weekend the House passed a continuing resolution to keep the government running until mid-November, but the plan defers the implementation of the Patient Protection and Affordable Care Act for a year and repeals a tax on medical devices that provides funding for the healthcare law.

The majority leadership in the Senate has demanded that any CR plan must be free of any rider bills, like the delay of the healthcare law or the medical device tax repeal.

"To be absolutely clear, the Senate will reject both the one-year delay of the Affordable Care Act and the repeal of the medical device tax," Senate Majority Leader Harry Reid (D – Nev.) said today.

Soon after the Senate convened this afternoon, it voted to strip out the ACA and medical device tax language and sent the bill back to the House.

Neither the House proposal nor the Senate plan, which funds the government through mid-December, would provide any increase in research spending to agencies like the NIH, the National Science Foundation, or others, nor would it free them from the cuts caused by the sequestration.

Even if a short-term deal is reached tonight to keep the government funded, it is likely to keep funding for NIH, NSF, and other agencies at the same level as the rest of the year.

As GenomeWeb Daily News reported the last time that a government shutdown loomed and was averted in a last-minute deal, in 2011, a shutdown would force the agencies operating under HHS to close up most of their operations and furlough most staff members.

This means that many of the operations at NIH, the US Food and Drug Administration, and the Centers for Disease Control and Prevention, would be shuttered and put on hold.

Most staff members working under HHS would not come to work, but some would remain to ensure certain operations continue, particularly those that fall under the "safety of life" category, the protection and care of patient facilities, lab animals, computers, and management of experiments that cannot be interrupted.

NIH said today that it has notified its employees who will be furloughed, which is expected to be around 73 percent of its staff, if the government shuts down. The institutes will cease all its activities related to reviewing and awarding grants, but it will continue to operate its Payment Management System, so that grantees with existing grants can continue to draw funds. The Grants.gov system will still be up and able to receive and store applications, but applications will not be processed until the shutdown is over.

Although the current patients and outpatients at the NIH Clinical Center would continue receiving care during the shutdown, the center would not be able to accept new patients or enroll any patients in any of the more than 1,430 studies or nearly 500 clinical trials it is conducting.

HHS said today that across its agencies roughly 40,500 staff members would be furloughed in a shut-down, equaling around 52 percent of its staff.

Groups that advocate on behalf of biomedical research funding have said that a government shutdown, and even the threat of such an event or even short-term continuing resolutions, all have a disruptive impact on research and create an uncertain environment for science.

"Life science research cannot be easily stopped and restarted like water from a faucet," United for Medical Research said on Friday.

"Consequences of a shutdown range from the inability to start laboratory studies that require consistent attention, thus delaying critical work, to the dashed hope of new patients, unable to be admitted to the [NIH] Clinical Center, to resources wasted on preparing for a shutdown," UMR said.

"Businesses and universities do not make decisions in 45-day or even one-year increments. Investment decisions are made strategically based on long-term outlooks. And Congress' inability to articulate a clear strategy for either funding biomedical research or even an overall spending plan has stagnated enterprise investment decisions," UMR added.

Although the repeal of the medical device tax in the House would ordinarily be welcome news to the medical devices industry, its attachment to a short-term funding bill that the Senate majority has said must be free of other agenda items means it is almost certainly not going to remain at this time.

The tax, which took effect in 2013, levies a 2.3 percent excise tax on the sale and use of medical devices. It is expected to raise an estimated $30 billion over the next 10 years to help offset some of the costs of the ACA.

Medical technology trade association AdvaMed has fought against the tax, which takes a slice based on sales, not profits, saying that it kills jobs and raises healthcare costs. In fighting the tax, AdvaMed has said that it will lead to the loss of around 43,000 jobs. Repealing the tax, the group has argued, will boost US competitiveness and the pace of innovation of new medical devices.

It is unclear at this point how long a government shutdown might last, if it happens, before one side of Congress decides to give in and sign a funding plan, Jennifer Zeitzer, legislative director for the Federation of American Societies for Experimental Biology, told GenomeWeb Daily News late last week.

However short or long it lasts, Zeitzer said, the Republican majority in the House are likely to use the upcoming debt ceiling deadline, which is expected to arrive on Oct. 15, as another lever to create a battle with the Senate and the Obama Administration over federal spending and the budget.

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