State Policy Priorities
As the statewide trade association for Pennsylvania’s life sciences community, Life Sciences PA is committed to ensuring the Commonwealth is the most attractive location in the United States to open and operate a life sciences organization.
Life Sciences PA works with its State Policy Committee and various stakeholders in our diverse life sciences community to develop a shared set of recommendations and strategies that will support and catalyze Pennsylvania’s life sciences ecosystem – from the lab bench to the patient’s bedside.
These State Policy Priorities are revisited monthly and adjustments to their level of priority are made as warranted.
Questions about our State Policy Priorities?
If you have any questions on the State Policy Priorities, please contact Kurt Imhof, Senior Vice President, Policy & Public Affairs.
Education on the Value of Innovation
Successfully healing patients or providing them an 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 General Assembly and the Governor’s administration understand this process and that patient access to groundbreaking therapies and cures through appropriate reimbursement in our market-based system is responsible for the Commonwealth’s leadership in life sciences innovation.
Education on the Complex Drug Pricing System
The process by which new medicines are priced is due in large part to the work outlined above; however, the cost borne by patients is the result of the complex 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 remains out-of-pocket costs which are the result of insurance benefit design.
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 actors – pharmacy benefit managers (PBMs), health insurance companies, pharmacies, healthcare providers, distributors, and manufacturers – of our complex drug pricing system have a role to play in this debate. It is incumbent upon all of us to ensure that all parts of the prescription drug supply chain are acting in good faith and working to keep costs, especially those out-of-pocket costs borne by the patient, at an accessible level.
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-pocket 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 discussions around lowering the cost of prescription medicines, and is opposed to proposals such as Prescription Drug Affordability Boards (PDAB) that focus solely on biopharmaceutical manufacturers.
Patients provide critical testimony on the effect of policy and regulations on 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 individualized, the role of the patient in researching and developing new medicines has become increasingly important. Through Rare Disease Day and in working with our more than 50 patient advocacy group members, Life Sciences PA amplifies the voice of the ultimate beneficiary of our member company research and development – patients.
The novel cures and treatments being developed by our member companies mean little if the patients they are meant to serve face barriers to accessing them. Life Sciences PA is opposed to policies that inhibit patient access to medicines and technologies such as nonmedical switching and copay accumulators that undermine the physician-patient relationship. As biomarker testing continues to advance and create new pathways to diagnoses and streamlined treatment for myriad disease states, Life Sciences PA stands in support of policies that create the most inclusive access for patients.
Life Sciences Pennsylvania was pleased to see SB 225 – legislation that amends the Insurance Company Law of 1921 and streamlines and standardizes the process for prior authorization of medical services in Pennsylvania – pass the House and Senate unanimously and then be signed by the Governor on November 3, 2022.
Right to Repair Legislation
Medical devices, like most complex equipment, need periodic maintenance and repair. Proper servicing of these life-saving and life-sustaining devices is vital to their safe and effective functioning and the safety of patients and device users. As part of their commitment to patient safety, original equipment manufacturers (OEMs) dedicate extensive resources to establishing comprehensive servicing programs to ensure their devices are properly maintained and continue to meet safety and effectiveness requirements determined by the Food and Drug Administration (FDA).
Legislation is being adopted in states throughout the country that would allow third-party repair services to attempt to repair these complex devices, and no longer rely on OEMs. This legislation is known as the “Right to Repair.” Giving unregulated third-party servicers unlimited access to service manuals and other proprietary OEM information would serve to put patients and device users at greater risk. Access to the latest manuals is no substitute for the extensive training, knowledge, and expertise provided by the OEM. Life Sciences PA stands firmly opposed to any Right to Repair legislation in Pennsylvania that would allow third-party servicers to interfere with medical devices.
Life Sciences PA also closely monitors legislative activity in the Pennsylvania General Assembly for bills that are largely focused on consumer digital electronic equipment but may inadvertently capture FDA-approved medical technologies in their broadly written legislative language.
Developing the Life Sciences
Pennsylvania’s life sciences ecosystem is a key driver in the Commonwealth’s economy and provides more than 100,000 direct, family-sustaining jobs to Pennsylvanians. However, the industry is largely start-up in nature. Of the more than 3,000 life sciences establishments in Pennsylvania, just over 65% of those entities are made up of ten employees are fewer. Life Sciences PA is supportive of expanding existing programs and creating new policies that play to one of the Commonwealth’s economic strengths, while also helping to catalyze the time- and resource-intensive process of researching, developing, and commercializing life sciences innovations.
Unfortunately, according to a recent report by the Brookings Institute, Pennsylvania, “the state government has seemed to lack a clear commitment to innovation and has let its core innovation programs languish.” Life Sciences PA continually works with its state and regional partners on enhancing Pennsylvania’s innovation economy, and is specifically supportive of the below programs:
Small Business Innovation Research (SBIR) Matching Grants
Innovative research and the development of groundbreaking medicine, therapeutics, and diagnostics is a top priority for life science companies throughout Pennsylvania. These innovations require an abundance of resources, which is why support at both the federal and state levels is important. Many of these companies rely on SBIR (Small Business Innovation Research) funds as a critical component to moving their work forward. Because these federal funds are critical to innovation many states have created a matching program to provide additional, dedicated funds to further diffuse these costs. It is our goal at LSPA to bring a state matching program to SBIR funding to further support our life sciences ecosystem in Pennsylvania. Pennsylvania already has the existing infrastructure in the Life Sciences Greenhouses and the Ben Franklin Technology Partners to administer a state-level process and distribute state funds to the federal SBIR grant recipients who have already been identified by the National Institutes of Health (NIH).
Pennsylvania’s Life Sciences Greenhouses
The Life Sciences Greenhouses capture the innovation potential of the life sciences industry and nurture that potential with critical early-stage funding and sector-specific business expertise. With locations in Pittsburgh, Harrisburg, and Philadelphia, citizens from every part of Pennsylvania benefit directly as new companies are formed, jobs are created, additional capital is attracted to the Commonwealth, and life-saving technologies reach patients. Life Sciences PA is supportive of the Governor’s 2023 – 2024 proposed budget to fund the Life Science Greenhouses at their annual level of $3 million.
R&D Tax Credits
The Research and Development Tax Credit Program is vital for innovation as this program rewards increased research and development year over year. A business can apply for a ten percent credit equal to its increase in the three-year average of its research and development expenditures with qualified small businesses eligible for a twenty percent credit. An especially important part of this program is that these tax credits are tradeable for those companies not yet commercial and in the life sciences industry, because the path to commercialization can last more than a decade, the tax credit may be just enough for a firm to make it to the next milestone and continue important product development. Life Sciences PA was pleased the R&D Tax Credit Program was expanded to $60 million in 2022 and is supportive of increasing the cap on the program to $100 million annually, especially considering it is annually oversubscribed in applications by approximately $100 million. We also support repealing the sunset provision that would negate, in 2025, the recent $5 million increase to the program. Life Sciences PA is supportive of the Governor’s 2023 – 2024 proposed budget that full funds the R&D Tax Credit program.
Keystone Innovation Program
The Keystone Innovation Zones (KIZ) are a great option for start-up life sciences firms to establish an office location as they provide tax credits against the company’s tax liability with unused credits available for up to five years. KIZs are in strategic locations statewide. Life Sciences PA is supportive of the Governor’s 2023 – 2024 proposed budget to fund the Keystone Innovation Program at its annual level of $15 million.
Ben Franklin Technology Partners
The Ben Franklin Technology Partners (BFTP) is one of the nation’s longest-running technology-based economic development programs. Started in 1983 and positioned strategically throughout the state with regional headquarters in the Lehigh Valley, Philadelphia, Pittsburgh and State College, BFTP has provided funding to early-stage and established companies – including life sciences companies – as well as business and technical expertise and access to a network of innovative, expert resources. Life Sciences PA was pleased Ben Franklin Technology Partners received a $2.5 million increase in the 2022 – 2023 budget and is supportive of the Governor’s 2023 – 2024 proposed budget to maintain funding for the Ben Franklin Technology Partners at $17 million dollars.
Other Support Economic Development Programs:
The Pennsylvania First (PA First) Program is a discretionary cash grant awarded to promote job creation and capital investment in the Commonwealth. Though industry is agnostic, this program offers support for projects with substantial economic impact for the Commonwealth as a whole, or for the locality/region in which a business will locate or expand. Life Sciences PA is supportive of the $12 million included for PA First in 2023 – 2024 proposed budget.
Dispersed by the Department of Health, the CURE Program awards grants to Pennsylvania-based
organizations for biomedical research, clinical investigations, and health services research. Studies funded by the grants aim to improve the delivery of health care, promote health, prevent disease and injury, and translate research advances to community health care practice. Life Sciences PA is supportive of increasing the percentage of annual Tobacco Settlement payments for health research grants.
Strengthening the Commonwealth
The Commonwealth of Pennsylvania is a destination for Americans to start and grow businesses, raise families, attend secondary schools, and obtain post-graduate degrees, among many other reasons. Keeping the Commonwealth healthy and strong for its residents is as important as innovating and finding new treatments and cures. Beyond simply providing new treatments and cures to patients, Life Sciences Pennsylvania and its member companies are committed to building upon those strengths while bolstering and diversifying the life sciences workforce:
Creating Jobs and Growing the Economy
Pennsylvania’s Life Sciences industry is the backbone of the Commonwealth’s economy. From 2015 to 2020, direct Life Sciences industry employment in Pennsylvania grew to 102,000 direct jobs, which is a 51% increase over a five-year period. Additionally, the industry was responsible for another 230,000 jobs through business purchases and household expenditures. All told, the industry generated a total state economic output of $105.6 billion – comprised of a direct economic impact of $61.9 billion and an indirect economic impact of $43.7 billion.
One caveat to these strong numbers that were outlined above is that of the Commonwealth’s more than 3,000 life sciences establishments, more than half of those are comprised of fewer than 10 employees. These companies require specific investments in the life sciences and innovation (listed above) but also require broad economic incentives to grow and thrive. Life Sciences PA is supportive of:
Association Health Plans
Starting and running a life sciences company comes with a number of significant costs for our member companies. These costs can be a defining factor for startups in the life sciences as to whether they flourish or collapse. One of the largest expenses for these small companies is health insurance. In fact, health insurance costs are the second highest expense after employee salaries. Offering competitive benefits packages is a key factor in both attracting and retaining top talent. Unfortunately, however, small companies are often left with few and expensive options for insurance coverage. One thing that could drastically improve these options, however, is the adoption of an Association Health Plan (AHP). Association Health Plans are a type of group medical insurance for employers that allows smaller companies to access the health insurance savings associated with large group medical coverage. By adopting an Association Health Plan at Life Sciences PA, our members could improve their purchasing power by pooling all enrollees throughout the Association.
Favorable Business Tax Policy
Pennsylvania has one of the least competitive corporate tax environments in the country. In 2022, the Commonwealth ranked 44th out of 50 states in the Tax Foundation’s Corporate Tax Rank. This ranking is due to two main contributing factors; PA is one of the few states that cap the usage of net operating losses and we previously had the highest non-graduated Corporate Net Income (CNI) tax rate in the country, at 9.99 percent.
Life Sciences PA is pleased to report last year’s (2022) tax code bill included a reduction in the CNI from 9.99% to 4.99% over a period of nine years. Life Sciences PA will continue to work with other stakeholders throughout the Commonwealth to expedite the CNI reduction and make net operating losses tradable – both of which make the state a more attractive place to start, operate and grow life science companies.
Virtual Drug Manufacturing License
An important component of incentivizing business growth in the Commonwealth is streamlined permitting and licensing procedures. That is one of the reasons Life Sciences PA was pleased the Governor created a new Office of Transformation and Opportunity to help refresh, reform or initiate those processes.
One issue affecting life sciences companies, in particular, is Pennsylvania’s lack of a virtual drug manufacturing license. This oversight has led to companies not being able to distribute their products in neighboring states where such a license is required and need to embark on a roundabout journey to receive be able to do so – if at all.
Life Sciences PA is supportive of the creation of a virtual drug manufacturing license in Pennsylvania to formalize this process for companies looking to distribute their products throughout the country.
Public Health Benefits of Prevention
Though much of Life Sciences PA’s work is focused on bringing novel treatments and cures to patients, it is important to note that our Commonwealth is a robust manufacturer of vaccines and is a leader in public health and pandemic preparedness. Vaccines have virtually eradicated diseases like polio, whooping cough, and typhoid fever. Unfortunately, recent online movements – none of which are grounded in hard science – have led people to believe vaccinations are unhealthy, or have alternative health consequences, hence the recent rise in cases of mumps, measles, and other easily preventable diseases. Life Sciences Pennsylvania will continue to advocate for policies that ensure children, and adults, have access to vaccines that prevent a wide range of debilitating, and sometimes deadly, diseases. Life Sciences PA will also ensure legislators are educated on the incredible research, development, and manufacturing efforts of our members working on vaccines, diagnostics, and therapeutics to address future public health crises.
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Life Sciences Pennsylvania was founded in 1989 by a biotech scientist at Penn State University. Today it has grown to represent the entire life sciences industry – medical device companies, pharmaceutical companies, investment organizations, research institutions, and myriad service industries that support the life sciences in Pennsylvania.