Health Care Reform Update
On Saturday, Nov. 7, the House of Representatives concluded its debate of the House version of the health care reform bill, approving HR 3962 with a 220-215 vote in favor (216 votes were needed for approval). Thirty-nine Democrats voted no and only one Republican, Representative Joseph Cao of Louisiana, supported the final House bill, which consisted of a blending of three House committee versions.
The final hours of the debate included a Republican alternative health care reform bill. The GOP bill would have spent substantially less than the plan which ultimately secured House approval, relying mostly on incentives and mandates to use variations of the current health insurance system. The amendment was rejected on a party line vote, 176-258. One Republican, Representative Timothy Johnson (R-Ill.), opposed the GOP legislation.
A second amendment was offered by Rep. Bart Stupak (D-MI) banning use of federal tax subsidies to buy an insurance plan that covers abortions. This amendment passed 240-194 and is expected to be a major factor that will impact the final passage of a bill. Sources say the Stupak amendment may be removed by the Senate, but if it is stripped, Congressman Stupak asserts he has the votes to defeat the Health Care Reform Bill in the conference committee.
As for the next step, the US Senate is waiting for the Congressional Budget Office (CBO) cost estimate of its current version of the Health Care Reform bill, a blending of the Senate Finance Committee bill (Baucus, et al) and earlier Senate Health, Education, Labor and Pensions Committee (HELP) bill (Kennedy, et al). The Congressional Budget Office score of the Senate’s healthcare bill is expected to be released Tuesday, November 17, 2009. The fate of the Senate bill is uncertain, but once a price tag is assigned, the US Senate will consider passing a separate final version of the legislation. Procedurally, sixty votes are needed to simply bring a matter before the Senate for consideration, and sixty votes are also required for passage in the Senate. If the measure passes the Senate, a conference committee will be convened to resolve differences in the two measures and to develop a final bill.
As this debate continues, some areas of great concern will continue to merit close monitoring and constant vigilance. The two bills will likely have different versions of a medical device tax, treatment of follow-on biologics, and comparative effectiveness and will have to be reconciled in the conference committee.
MED TECH TAX: One area of great concern is the medical device tax contained in both the House and Senate Finance Committee bills. Current law does not impose an annual sector fee on companies that manufacture or import medical devices for sale in the United States; however the approved House proposal imposes a $20 billion tax on the medical device industry over the next six years. Even more concerning is the Senate Finance Committee proposal that would impose a $40 billion non deductible fee based on market share determined by domestic sales. This tax is expected to yield $40 billion over the next 10 years and takes effect in 2010.
California is the birthplace of the life science industry, and home to one of our nation’s largest medical device cluster, which employs over 112,000 medical technology workers. Click here to see a chart, provided by Scott Huennekens of Volcano Corporation, that outlines some San Diego based companies Med Tech tax exposure to the Senate Proposal.
BIOCOM will continue working with partners at MDMA, CHI, AdvaMed, SoCalBio and BayBio to push for further negotiation on the medical device tax language currently being considered as part of broader health reform legislation. The California delegation has displayed remarkable unity in supporting our efforts, but the battle isn't over.
Click here to take action on the Medical Device Tax Issue (http://biocom.org/public_policy/legislative_monitoring/)
Follow-on Biologics and Data Exclusivity: Legislation in both the House and Senate HELP bill propose to create an approval pathway, and provide 12 years of non-patent data exclusivity to ensure continued medical innovation. The House bill provides an additional 6 months of exclusivity for the use of products for the pediatric population. One area of concern related to follow-on biologics is the issue of interchangeability that has been included in the House bill. The approved language states that a follow-on biologic or a biosimilar shall be determined as interchangeable with an innovator product if the product produces the same clinical result as the referenced product, and the risk of alternating or switching, between the use of the biolocial product and the reference product, is not greater than the risk of using the innovator product. This is concerning because the bill doesn’t outline specific standards that must be met to establish an interchangeable biosimilar, but instead directs the Food and Drug Administration to set such standards.
Click here to take action on Follow-on Biologics (http://biocom.org/public_policy/legislative_monitoring/ )
Comparative Effectiveness: Legislation in both the House and Senate propose to establish guidelines for comparative effectiveness research. The House establishes a Center for Comparative effectiveness research that would be administered by 16 members and 3 agency directors. No more than 3 members may be representatives of the life sciences manufacturing industry. The Senate bill proposes to establish a non-profit Patient-Centered Outcomes Research Institute that would be governed by 15 appointed stakeholder board members who would be responsible for identifying research priorities and conducting research that compares the clinical effectiveness of medical treatments. No more than 3 members may be representatives of the life sciences manufacturing industry.
Click here for to view Kaiser's Health Care Reform side-by-side comparison.
BIOCOM Supports Water Conservation and Ensures R&D Companies Receive Exemption
Last week, the State Legislature passed and the Governor signed a comprehensive water bill package that includes mandatory conservation targets and an $11 billion bond package. BIOCOM was pleased to play a unique role in the negotiations, and came away with a significant victory for the industry. The water bond supports the building of water infrastructure, as well as the repair of the Bay Delta, where approximately 2/3 of Southern California’s water flows through. It also fuds repairs of other environmentally sensitive areas.
Another aspect of the package is a water conservation, which is where BIOCOM played a role. The bill requires each California water agency to get to a 20 percent average water use reduction by 2020. While business is expected to reduce discretionary water use significantly, it is generally agreed that water allocations should take into account and exempt water used for core business functions, such as that used directly in manufacturing, so as not to constrict the California economy. This water is known as “process water.” In our industry, it is the water used in experiments, and the water used to clean equipment.
While ultimately all who voted for the water package deserve praise, Senators Christine Kehoe, Denise Ducheny and Assemblyman Nathan Fletcher all deserve special mention. They went to their party leadership and made BIOCOM’s concerns a priority to be addressed before a final package was brought to the Legislature. Their support enabled BIOCOM to negotiate the amendments protecting the industry.
BIOCOM’s biggest concerns centered on the fact that companies in the research and development stage without an identifiable product were not covered in the exemption definitions, nor were non-profit research institutions. Fortunately, BIOCOM has been extensively involved in this issue on the local level, so we had a definition which a variety of stakeholders had agreed to at the City of San Diego. We were able to use this as the basis for state language, and with the help and support of the San Diego County Water Authority, exemption language was created that covers process water for companies whose primary business is research and development, as well as non-profit research institutions. Neither of these categories would have been covered by the bill as originally drafted, but BIOCOM was successful in revising the bill so that these vital parts of the California economy are protected.
State Legislative Update 2009
The 2009 California Legislative Regular Session has drawn to a close, and in other years that would mean the Legislature’s business would be done until January. But this is far from a typical year. The Legislature has convened twice in the past nine months to address budget deficits that were larger than some states’ total budgets.
Despite these challenges, and to some degree because of the lack of funding to implement new state programs, BIOCOM had a very successful year in the legislative arena. BIOCOM’s Legislative and Public Policy Committees identified four bills as priorities; of these, three were opposition bills: one was defeated in committee and may be revisited next year, one was not taken up when it was clear the author did not have the votes for passage, and one was amended and BIOCOM therefore removed its opposition. Furthermore, no bills BIOCOM opposed in this legislative session made it to the Governor’s desk this year.
BIOCOM was also a party to a wide coalition which scored one of BIOCOM’s most significant legislative victories ever, the signing of ABx3 15, a bill which allows companies to choose to have their corporate income tax based on a single sales apportionment factor. This is an issue BIOCOM has been actively engaged in for several years, and will eliminate the tax penalty companies who choose to have large workforces in California have had to pay.
This all said, the Legislature is likely to reconvene, possibly as early as the second week in October, for special legislative sessions on water, education, possibly taxation, and a variety of other subjects. Keep an eye out in the BIOCOMMUNIQUE for updates on what is happening in these areas.
You can find a summary of the bills BIOCOM took a position on in the 2009 state legislative session by clicking here.
BIOCOM Public Policy Section Provides Regular Updates on Health Reform Progress
The health reform debate is proceeding at a dizzying pace. In an effort to keep our members informed of the very latest developments, BIOCOM has set up a section on its website which will have news articles that help update you on the status of health reform efforts or bring a new insight into the discussions for our members. The health reform section can be found here:
http://www.biocom.org/public_policy/Health%20Care%20Reform/
If you have questions or suggestions for articles to be included that you have come across, please contact Madeleine Baudoin, BIOCOM Associate Director of Public Policy, at mbaudoin@biocom.org.
National and Regional Life Science Leaders Hold Town Hall to Discuss Health Care Reform Efforts
More than 254 biotechnology therapies and many more medical devices help treat some of society’s most debilitating diseases. For the life sciences industry to continue to create new therapies, health care reform legislation must ensure continued support for scientific research and investment in innovation, said BIO President Jim Greenwood and BIOCOM President and CEO Joe Panetta.
The two industry leaders hosted a town hall meeting for BIOCOM members on Oct. 1, to discuss their organizations’ efforts to educate legislators and the public about the vital role biotechnology plays in all of our lives.
“Health care reform is inevitable and I expect some sort of reform package to be approved this year,” Greenwood told the San Diego life science executives who attended the meeting in BIOCOM’s headquarters.
Panetta has made monthly trips to Washington, D.C. this year, brining local life science executives with him to meet with legislators and their staffs to discuss the industry and the issues it faces in trying to bring new therapies to market. Among the proposed reforms that could negatively impact the industry is a tax on medical devices, Panetta said.
Proposals for creating a regulatory pathway that would allow biosimilar products to be produced needs to include at least 12 years of data exclusivity for the makers of innovative therapies, Panetta said. The exclusivity period is important to ensure the continuation of private investment that underwrites the commercialization of new products. And it is important in maintaining the rigorous process that tests products for safety and efficacy before they are made available to the public. So far this data exclusivity concern seems to have been understood by legislators. Both the House and Senate bills coming out of committee have included at least 12 years data exclusivity, Panetta said.
Panetta urged local executives to accompany him on one of his lobbying trips to the nation’s capital. BIOCOM will arrange the meetings during the trip, the executives just have to make the trip east, he said. It is effective for these people to hear directly from life sciences CEOs about how what happens in Washington impacts them every day in running a company, he said.
Greenwood outlined the national organization’s lobbying efforts, including actions all life science industry workers can get involved in at home. Everyone who works in the life science industry needs to be aware of the impact proposed health care reform measures could have on their job and their future, he said. And everyone should get involved and add to the industry’s voice on Capitol Hill.
“We need to energize our base and broaden our coalition,” said Greenwood, who has been organizing town hall meetings around the country to speak to the life science community.
In an effort to explain the complicated industry and business model to the general public, BIOCOM has taken a multi-pronged approach. It has sponsored free boot camps for journalists, to help them better understand the basics of the science including recombinant DNA. The boot camps also address the business model and provide an overview of the time, investment, risk and regulatory hurdles that are part of the drug development process. One such boot camp sponsored and organized by both BIO and BIOCOM, was held earlier this year at the University of California at Irvine and was attended by local, regional and national journalists from San Diego to Los Angeles.
The industry should take advantage of social media to strengthen its efforts by forming online “meet up” groups in which life science professionals can discuss the issues and discuss ways in which they can share their views with our elected officials on both the state and national levels. Greenwood urged life science professionals to visit BIO online at www.Iambiotech.org, and to spread positive stories about the industry and highlight partnerships through BIO and BIOCOM venues created on Linkedin, facebook and twitter.
For a copy of Greenwood or Panetta’s presentation, contact Terri Somers, BIOCOM’s Director of Communications.