Federal Policy Priorities
Federal Policy Priorities
Pennsylvania is a global leader in researching and developing new therapies, devices and diagnostics that help patients live longer, healthier lives. This innovation is due in part to the policy and regulatory ecosystem we enjoy in the United States.
Life Sciences PA works with its Federal Policy Committee and national partners to develop a set of policy issues and recommendations that will support and enhance the country’s life sciences ecosystem, and that maintain Pennsylvania’s leadership in life sciences innovation.
These policy priorities are revisited quarterly and adjustments to their level of priority are made as warranted.
Education on the Value of Innovation
Successfully healing patients or providing them enhanced quality of life is the passion behind life sciences innovation. However, the process by which new medicines and technologies are created is time- and resource-intensive. Studies have shown it takes more than 10 years and $2 billion to move an innovative new drug through the research-and-development and clinical trial process to approval.
This process is fraught with failure as fewer than 12 percent of medicines entering clinical trials are ultimately approved by the U.S. Food and Drug Administration. This failure is one of the reasons biopharmaceutical companies need to recoup some of those costs through products that make it to the market. Recouping those dollars allows companies to pursue further basic, translational, clinical and manufacturing research needed to turn basic science into a safe, usable and effective therapy for patients.
In fact, the biopharmaceutical industry regularly invests more of its revenues in R&D than any other industry. As a recent Congressional Budget Office report highlights, for many years the number averaged 18-20 percent, but in recent years that number has exceeded 25 percent.
Life Sciences PA works to ensure the Pennsylvania Congressional Delegation, comprised of two senators and seventeen members of the House of Representatives, understands this process and that patient access to groundbreaking therapies and cures through appropriate reimbursement in our market-based system are responsible for the United States’ leadership in biopharmaceutical innovation.
Supporting Policies to Improve Public Health
As we emerge from the global pandemic it is important to remind legislators of the critical role life sciences organizations had in developing and manufacturing diagnostics, therapeutics, and vaccines to combat COVID-19. Our member entities worked collaboratively and tirelessly to address the pandemic, and that work continues today as our members research and development medicines and technologies for future pandemics and public health crises.
Life Sciences PA supports policies, like the PASTEUR Act and the timely reauthorization of the Pandemic and All Hazards Preparedness Act (PAHPA), that ensure our members and the country are prepared for future public health threats, such as the development of novel antibiotics to combat antimicrobial resistance (AMR). Specifically, we support robust funding of the Biomedical Advanced Research and Development Authority (BARDA), the Strategic National Stockpile (SNS) and other relevant departments at the Office of the Assistant Secretary for Preparedness and Response (ASPR) to accelerate the discovery and production of biomedical countermeasures and technologies.
Improving Patient Access
Patients provide critical testimony on the effect of policy and regulations in their treatment and quality of life. Remaining focused on the voice of the patient is at the core of all innovation in the life sciences. Especially as medicines have become more personalized, the role of the patients in researching and developing new medicines has become increasingly important. Life Sciences PA works with our more than 50 patient advocacy group members to amplify the voice of the ultimate beneficiary of our member company research and development.
Some of the policies that impact patient access include:
Preserving Medicare Part D
Medicare Part D was created as part of the Medicare Modernization Act of 2003 and is an optional program to help Medicare beneficiaries pay for self-administered prescription medicines. In 2018 approximately 43 million (72 percent) of the 60 million Medicare beneficiaries utilized a Medicare Part D plan. The success of Medicare Part D, which continues to cost less than Congressional Budget Office projections and enjoys an almost 90% satisfactory rating among beneficiaries, is due largely to the private-sector competition and robust negotiation the program utilizes. Additionally, it has ensured largely unfettered access to groundbreaking therapies and cures for beneficiaries facing debilitating and deadly diseases.
The Inflation Reduction Act (IRA) passed in August 2022. While this legislation was expansive it includes several significant prescription drug-related provisions. Among those new provisions are a drug negotiation program in Medicare, inflation rebates in Medicare Parts B and D, and a redesign of the Medicare Part D benefit with a new patient out-of-pocket cap of $2,000.
Life Sciences PA supports policies, like the out-of-pocket cap, that reduce costs for patients at the pharmacy counter. However, the establishment of a negotiation program in Medicare Part D, which amounts to little more than government price controls, will significantly inhibit investment in the research and development of new medicines. A University of Chicago report estimates that drug price controls, like those contained in the IRA could lead to as many as 342 fewer new drug approvals in the next 16 years. Life Sciences PA will work with the Pennsylvania congressional delegation to mitigate the effects of drug pricing provisions in the IRA.
Protecting Medicare Part B
Medicare Parts A and B, sometimes referred to as “original Medicare,” provide coverage for beneficiaries in the hospital/inpatient setting and outpatient services, respectively. Medicare Part B covers physician-administered prescription medicines, such as vaccinations, and injectable and infused drugs/biologics.
Life Sciences PA is opposed to proposals that disrupt access to biopharmaceuticals for patients in Medicare, such as indexing medicines to price controls determined by foreign governments or inflation rebate penalties – like those contained in the IRA. The former, though not currently a threat, simply imports prices from foreign countries where strict government-controlled prices limit patient access to the breakthrough medicines available to Americans. Additionally, policies like this can adversely affect patients in rural areas where cutting reimbursements to community providers could shift patients to more expensive, and farther-away care settings such as hospitals.
Insurance Benefit Design and Access Restrictions
It’s important that when discussing patient access, we also highlight the drug pricing supply chain in the United States. While much attention is focused on the cost of prescription medicines, which account for approximately 10-14% of nationwide health care costs – a number that’s remained consistent for decades – the real issue is the out-of-pocket costs borne by patients.
The cost of medicines is the cause of much debate by the public and elected officials and determining who pays for what medicines and at what cost is an important discussion to have. Life Sciences PA believes all parts of our complex drug pricing system have a role to play in this debate. This includes pharmacy benefit managers (PBMs), health insurance companies, pharmacies, healthcare providers, distributors and manufacturers. It is incumbent upon all of us to ensure all parts of the prescription drug supply chain are acting in good faith and working to keep costs at an accessible level, especially those out-of-pocket costs borne by the patient.
Life Sciences PA is committed to educating legislators on how insurance benefit design and various actors in the drug pricing supply chain can affect the out-of-pockets costs patients pay at the pharmacy. As noted above, the drug pricing, payment and distribution system is complex and includes many stakeholders. Life Sciences PA believes all stakeholders must be included in any and all discussions around lowering the overall cost of prescription medicines.
Additionally, Life Sciences PA has significant concerns about insurance policies, such as step therapy (sometimes referred to as “fail first”) prior authorization, and co-pay accumulator policies that can delay or deny patient access to new medicines.
Importation of Prescription Drugs
Life Sciences PA is opposed to proposals that allow for the importation of prescription medicines. Though a common idea to lower the price of prescription drugs, policies that promote this idea could severely undermine the safe, closed drug-supply chain we enjoy in the United States. Several past FDA commissioners, from both Democratic and Republican administrations, have warned of the potential consequences of allowing drug importation, and the Congressional Budget Office has found that importation will do almost nothing to actually lower drug costs. Finally, former FBI Director and federal judge, Louis Freeh, released the findings of an investigation (with a more recent addendum) that note the ways drug importation would affect public health, safety and law enforcement.
Robust Research Funding
Life Sciences PA is a strong supporter of robust research funding that is the foundation for innovation in the life sciences. As home to two of the top-five recipients of National Institutes of Health (NIH) funding – the University of Pennsylvania and the University of Pittsburgh – Pennsylvania is a U.S. leader in basic research to advance human health. In 2022 Pennsylvania research institutions, and small companies, received more than $2 billion in NIH funding. This critical funding provides our ecosystem with funding for research that private investors would find far too risky, and it is the launching point for the science that has led to many new therapies, cures, and technologies.
Additionally, Life Sciences PA supports the permanent reauthorization of the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs, created in 1982 and 1992, respectively. While not life sciences-specific, these two programs fund domestic small businesses engaging in research and development on the path to technology commercialization. In 2021, the SBIR program funded more than $30 million in life sciences research in Pennsylvania. This funding has helped many of our small member companies grow and thrive.
Third, the Biden Administration and Congress funded a new Advanced Research Projects Agency – Health (ARPA-H) with $2.5 billion. The mission of ARPA-H is to accelerate better health outcomes by supporting the development of high-impact solutions to society’s most challenging health problems. The 2022 omnibus spending package established that ARPA-H will have no fewer than three sites across the country, and the agency recently released its site selection strategy. We believe Pennsylvania, with our robust and diverse life sciences ecosystem, is well-positioned to attract a “customer experience” hub.
Life Sciences PA has been and will continue to work closely with regional and state partners to develop a consortium and white paper/submission that will highlight why the Commonwealth is a strong candidate to serve as an ARPA-H hub.
Medical Devices
With more than 330 medical device and diagnostic companies, Pennsylvania is home to a significant number of entities working on developing new technologies to help patients live longer, healthier lives. As innovators and manufacturers, these companies benefit from policies that incentivize both of those endeavors.
Life Sciences PA has focused its efforts on support for a coverage pathway that would align reimbursement from the Center for Medicare and Medicaid Services with approval for a “breakthrough device.” This regulatory change, known as Transitional Coverage for Emerging Technologies (TCET), will provide patients access to innovative medical technologies and ensure medical technology companies, many of whom are pre-revenue, have a market through which to disburse their technology – a key component to generate continued investment in their research and development of innovate medical technologies. Unless reimbursement through Medicare or a commercial insurer is in place, medical providers will not purchase and use the new medical device, which could prevent patient access to lifesaving technology. Without reimbursement, a “breakthrough” device, and the company manufacturing it, could face future research and commercialization delays after having already spent many years and millions of dollars developing their medical technology.
Life Sciences PA supports CMS’ progress on the TCET regulations, and the Ensuring Patient Access to Critical Breakthrough Products Act – H.R. 1691. This act would ensure FDA-approved breakthrough technologies are covered by CMS for several years during which time CMS would be required to make a permanent coverage determination. We are pleased this bill has enjoyed broad, bi-partisan support from the PA congressional delegation in the past and will work to ensure that support is maintained in the 118th Congress.
Intellectual Property
Strong intellectual property protections are the foundation for innovation in the life sciences. The U.S. patent system, though now ranked 12th worldwide by the U.S. Chamber of Commerce, maintains important protections for companies researching and developing new medicines and technologies. These protections are especially important for the many small life sciences companies that call Pennsylvania home, and for the technology transfer offices that many of our academic institutions operate to move inventions from the lab to widely available treatments and cures for patients.
For these reasons, Life Sciences PA opposes measures such as compulsory licensing and march-in rights that undermine innovative companies and the substantial research and development resources needed to bring treatments to patients. Specifically, Life Sciences PA opposes the Administration’s support for Trade-Related Aspects of Intellectual Property Rights (TRIPS) waiver filed with the World Trade Organization (WTO). Strong and predictable IP systems helped accelerate the translational research occurring at academic research institutions to the private sector and changes to those protections could upend U.S. innovation in the life sciences.
Orphan Drug Act and Tax Credit
A rare disease is defined as one that affects fewer than 200,000 people. The process of taking a rare disease medicine from research through development and approval for patients has many unique challenges. With small patient populations, the development of medicines for rare diseases is significantly more difficult, costly, and risky than typical drug research and development.
In response to these challenges Congress passed the Orphan Drug Act in 1983 to promote investment in the development of rare diseases. This act provides companies and researchers incentives, such as seven years of exclusivity and a 25% tax credit for qualified clinical testing expenses. In 1983 only 38 drugs had been approved for rare diseases. Since the passage of the Orphan Drug Act more than 650 therapies have been approved for rare diseases.
Life Sciences PA supports the Orphan Drug Act and opposes changes to it, such as the halving of the tax credit from 50% to 25% in 2017, limiting the number of indications for which companies can utilize the credit, and other modifications that would divert investment away from rare disease research.
R&D Tax Amortization
The 2017 Tax Cuts and Jobs Act (TCJA) modified Section 174 of the US tax code, so starting in 2022, businesses could no longer deduct research and experimentation expenses in the same taxable year. Currently, businesses must amortize such deductions over five years for domestic expenditures or over 15 years for foreign expenditures.
This mandatory amortization diverts much-needed funds away from small R&D-intensive companies, potentially jeopardizing the development of the future treatments and negatively impacting the local economies where these companies are established.
Life Sciences PA supports S. 866 to restore the expensing of R&D expenditures to ensure the development of future treatments and cures.
If you have any questions on the Federal Advocacy Priorities, please contact Lara Flynn (lflynn@lifesciencespa.org) LSPA’s Senior Director of Federal Policy & Public Affairs.
