Boston Medical Center quietly transfers ownership in infectious-disease lab to Boston University

in In The News
November 20th, 2012

Boston Business Journal

November 13, 2013

by Craig Douglas

 

Boston Medical Center and Boston University are carrying out an agreement that has enabled the hospital to sell its ownership stake in a controversial infectious-disease laboratory in the city’s South End.

The two organizations first partnered to develop the National Emerging Infectious Diseases Laboratory in 2003 after theNational Institutes of Health committed $141 million in grants to support the project. Boston Medical Center and BU each committed nearly $30 million to the development phase of the project. In return they were each awarded 50 percent ownership stakes in the disease laboratory as well as equal rights to any operating revenue or royalties generated by the facility’s research.

The laboratory’s construction was completed in 2009. But it has failed to operate at full capacity in the interim due to opposition among neighborhood groups concerned about the research center’s plans to work with some of the deadliest microbes and viruses in the world.

Boston Medical Center sought an exit from the project in May 2010 and formally “withdrew from further participation” in the disease laboratory a year later, according to recent financial filings. The hospital’s exit plan required Boston University to repay BMC its initial $29.1 million investment in the laboratory over a five-year span.

BMC’s ownership stake in the laboratory was valued at $97.2 million at the time it notified Boston University of its desire to liquidate its ownership stake, according to financial filings.

The value of Boston University’s outstanding IOU to BMC was $23.3 million as of June 30.

BMC spokeswoman Gina DiGravio said the hospital made the decision to exit the infectious disease laboratory as part of an overall review of its “long-range financial investments and how best to continue to support the hospitals’ core mission.”

The total cost of the laboratory was $199.5 million, with NIH having reimbursed the university, which managed the project, a total of $140.6 million, according to Boston University’s fiscal 2012 annual report. However, much of that funding has been off limits until the laboratory, which has been mired in litigation and general opposition from community groups, is fully operational.

For example, the university’s most-recent annual report indicated that 60 percent of the lab was “placed into service” for the first time this year, with research officially commencing in April. The university said the opening resulted in a corresponding share of NIH funding, some $86.5 million, to be transferred from the university’s temporarily restricted net asset accounts to unrestricted net assets, according to financial filings.

It is unclear whether the NEIDL will ever pursue its founding mission. Presently, the lab’s research involves so-called BioSafety Level 2 agents that pose moderate potential hazards to personnel and the environment. In contrast, the center was founded to enhance research and understanding of BioSafety Level 4 agents, essentially the most dangerous infectious diseases known to man and among the most potent ingredients that could be used in a potential bio-terrorism attack.