The Lure of ARRA Funds: Scientific Support Companies at War!

Readers of this blog are familiar with the financial pressures that the undoubling of the NIH budget during the Bush Administration placed on the research laboratories. They will also be familiar with the relative excitement which attended the ARRA stimulus package and the subsequent NIH announcements on various ways to put that money into the labs.
I don’t believe we’ve talked much about the companies, large and small, that support our science. The manufacturers and suppliers of equipment, reagents, software and other necessary resources. These companies might be diversified, they sell to the for-profit side of science as well, but they’ve been suffering too. After all, when NIH funds are hard to get, PIs were hoarding cash and not buying unnecessary stuff. Shutting down research programs. Waiting. I reckon that everything from Big Pharma to tiny biotech startup pulled back and tightened belts too.
Well, right about the time of the signing of the stimulus package, I started getting emails from various suppliers. They were here to help me apply for ARRA funds! I didn’t read the emails all that closely but some of them seemed to be practically offering to write the equipment supplement grant for me!
Today’s emailbox reveals that things are getting a bit…ugly.

Now unfortunately I only have one side of the debate but apparently Coulborn Instruments has declared WAR on Med Associates, Inc. The email from Med Associates reads, in part:

At Med Associates, we recently became aware of an electronic newsletter circulated by another behavioral instrument provider, Coulbourn Instruments. In their May 2009 issue of e-Response, Coulbourn Instruments delivered a communication which is false, misleading, and slanderous as applied to Med Associates. Coulbourn failed to identify direct targets of their accusations, so the reader is left to wonder which companies are being referred to. When we read this correspondence, we felt that some of the accusations could be construed as being directed towards our company, Med Associates.

Uh-oh. It’s going to be fun if Coulbourn has left themselves a big helping of plausible deniability.

We have taken verbatim the various points from Coulbourn’s newsletter, and following each Coulbourn Instruments claim is our response.
Under the heading of “Manufacturers Competing for Your Research Funding”…

Coulbourn Instruments claims:
“Although the Federal Stimulus package will introduce much needed dollars into the Life Science Research, some manufacturers have chosen to compete for these tax dollars not just through supplying goods and services to the research community but by setting up “research facilities” to directly compete for your research funding, in effect, double dipping.”

No! You don’t say. Companies are also seeking NIH awards? How dare they?

Coulbourn Instruments claims:
“By applying for grants and/or contracts to conduct “research” they reduce the funding available to their customers using funds towards salaries and the purchase of equipment they manufacture and already own.”

ooooooooh! The horror. Now at this point, the Med Associates newsletter gets defensive.

Med Associates responds:
Again, our companies do not actively apply for grants or contracts to conduct research. We do occasionally undertake small scale contract research studies paid for by biotech and pharmaceutical companies. These contract studies do not impact the funding available through federal research grants. Contract research represents an insignificant percentage of our business

…blah, blah. I think they are being unnecessarily apologetic here. So WHAT if companies are both selling to NIH researchers and also doing a little NIH-funded work too? I mean after all, didn’t we already discuss the fact that the stimulus bill specifically excepted itself [see this link] from the SBIR/STTR requirements?

Coulbourn Instruments claims:
“These manufacturers use the combined funding to substantially reduce the cost of the equipment to them providing them with an unfair advantage over their customers competing for the same funding. Fortunately, the majority of manufacturers of life science research instrumentation, like Coulbourn Instruments, frown upon such practices and adhere to high ethical standards for manufacturing and distributing equipment to the research markets they serve.”

Ouchies! An ethical lapse is it? That’s gotta sting….

Med Associates responds:
Med Associates does not use federal research dollars to fund its equipment. At our Science and Research facility, we do indeed have several hundreds of thousands of dollars worth of behavioral research equipment that is fully operational and in regular usage. It forms the basis of our R&D program. This equipment, which we did manufacture, represents a financial investment on our part. This investment was not funded directly by federal research dollars, but rather by the proceeds of our sales. We believe strongly in the importance of investing company profits in product R&D.

Okay, whatevs. Money is fungible. If your company has a NIH portfolio (whether contract, SBIR or research grant) which helps to develop (in any way) products that you later sell….well sure. Your company is transferring some part of the R&D cost from the end sale price back onto the Federal dime. So what? This is not an ethical lapse. So the NIH spends a little in SBIR money to a company so that they can save it in equipment charges to a few score research grants down the road. It is all taxpayer money.
Even if the NIH reduces the price of goods that for-profit research companies might buy, again, so what? We have lots of Small Business Administration programs, the SBIR program and in some senses the overall mission of the NIH to fund work that will allow private companies to springboard cures.
I’m just not sure what Coulbourn might be complaining about here. Other than a whine that Med Associates’ business strategy is a good one.