With the U.S. focused on the Nov. 8 presidential election, a pair of political insiders recently warned members of Utah’s life science industry that its aftermath — even looking to 2018 off-year elections — could have a greater bearing on the future on that industry.
With the U.S. focused on the Nov. 8 presidential election, a pair of political insiders recently warned members of Utah’s life science industry that its aftermath — even looking to 2018 off-year elections — could have a greater bearing on the future on that industry.
Speaking at the Utah Life Science Summit, organized by industry association BioUtah, Christopher Campbell and Kevin Madden said the upcoming election could result in increased industry regulation and taxes plus a reworking of Obamacare that could harm the industry and its ability to produce innovative products.
“Everybody right now is obsessed about the Nov. 8 question: ‘What’s going to happen on Nov. 8?’” said Madden, whose experience includes serving as a senior advisor to Mitt Romney’s 2012 presidential campaign. “But the more important questions, and particularly what I think organizations like BioUtah have to ask themselves, are, ‘What’s our plan for Nov. 9?’”
Ultimately the election winner will be the most unpopular elected president in history and the Republican Party will face “a reckoning” and “a civil war” within the party, regardless of whether Donald Trump wins or loses, he said. Trump won’t go away if he loses, and if he wins, he will shape the GOP “under a banner of economic populism” that some people feel will be destructive to the party’s future agenda.
That economic populism could manifest itself in regulatory changes and a move to have more government controls on the price of drugs, which could have harsh effects on drug development at Utah companies, according to Christopher Campbell, staff director to the U.S. Senate Committee on Finance.
“We have a real challenge because you have both candidates, both Hillary [Clinton] and Donald, suggesting that the cost of drugs and cost of medicine and medical devices is significantly way too high and have promised to put together policies and enact policies that will bring down those costs. For those of us who actually know how this industry works, we cannot let that happen, obviously, so we will fight it every way we can,” Campbell told the crowd.
“But it’s a very, very, very populist message, extremely popular with the American people, that the far majority of Americans believe that you guys are making way too much money and you’re taking advantage of sick people. So it’s going to be a constant challenge and we’re going to need to work closely together to try to change that narrative, to change that dynamic, so that we can continue on with the great innovations you guys drive every single day without hampering that with government price controls.”
Campbell stressed that “it costs a lot of money to bring these therapies and drugs to market,” noting that developing and bringing to market a pharmaceutical drug costs an average of $1 billion — taking 12 years to recoup those costs — while bio innovations average $2 billion and 15 years.
Laws exist that allow for bio companies to more quickly move from the patent stage to off-patent, bringing costs down when they are off-patent. “There will be moves in Congress meant to shorten that time for patent and also then to layer on that heavy hand of government, if you will, to push down the price on drugs while they’re on-patent,” Campbell said.
“We’re fighting it. The industry is fighting it. The populist message right now will be very challenging to be able to overcome. Certainly we don’t want to overinflate or deny medicines and therapies from those who can’t afford them, as well. We think it’s a balancing act. We think that the balancing act is well set,” he said.
An audience member asked how people will be able to afford super-costly medical treatments, and Campbell replied by saying, “We’re going to grapple with that as a country” and that future innovation is at risk.
“The challenge we’re going to have to have is, if we’re not smart about it and start enacting policies today, you’re not going to be able to produce the next drug or next therapy,” he said. “And we’re just on the cusp of so many incredible innovations with personalized medicine and through bio and other therapy-creating mechanisms that we cannot allow to be killed in this effort in its infancy.”
If economic populism grows, “we’re going to forego those opportunities as a human population and, from our perspective, that’s just something we’re not able and we’re not willing to do. … I do know one thing: that if the government comes in, at least from our perspective, comes in and dictates the price that you can sell your drugs at and your therapies at, we think we’re going to see a decrease in innovation. …”
Campbell said the election also could determine the future of the medical device tax. Part of the Affordable Care Act (Obamacare), the tax is a 2.3-percent excise tax on the sale of certain medical devices by the manufacturer or importer of the device. Late last year, congressional action put in place a two-year moratorium on the tax that runs through Dec. 31, 2017. A congressional committee has estimated that the tax would produce $29 billion in new revenues over the next decade, but device developers have been critical of the tax and its potential to hurt business.
If the Senate becomes Democrat-controlled in this year’s election, there will be little interest in a further delay in implementing the tax. But things could change in 2018 when the off-year election could be “calamitous” for Democrats and lead to a Republican majority, he said.
“So if we’re able to eke out even a small majority, a slim majority, in the next Congress, we’ll leverage what we have to further delay the medical device tax going into 2018. And by 2018, if the politics work out the way they should, we’ll be in a much better spot, irrespective of who the president is, to be able to leverage and be able to negotiate that,” he said.
Regarding drug pricing and other matters, Madden said advocacy organizations and industries need to be heard and get to work. He said they often make the mistake of thinking that hope is a strategy.
“Hope is not a strategy,” Madden said. “And I think what happens is that oftentimes industry believes, or organizations believe, that someone else out there is going to make the case for them or they’ll hope that the issue won’t be noticed or that it will take care of itself, and you can’t. You have to have a plan.
“The other thing that I would warn folks about is that you also can’t think that it’s going to happen just overnight. You have to take into account some long-term strategic planning as well as your short-term strategic planning toward those goals.”
Speaking about the presidential election more generally, Campbell said he is confident that a bipartisan way will be found, regardless of who is elected, to produce an economic package when the next administration begins.
“There is no question, no matter what happens in the election, whoever becomes president, they will become the most hated president we’ve seen, certainly in my lifetime,” he said. “And they will be elected with no mandate. This campaign is being run right now not on issues. Both of them are running as ‘not the other.’ If Donald Trump wins, he’s going to win because he’s not Hillary Clinton, and vice versa, which makes it really difficult for those of us working in policy to be able to put together a policy agenda, because the American people are not suggesting that that’s what’s driving the election.”
Also, the country faces many long-term issues, including being 18 years from Social Security insolvency, being 26 years from Medicare/Medicaid insolvency, and havinga prevalent belief that America’s best days are in the past, he said.
“I think we’re at a real pivot point in our country where this election is very important,” Campbell said. “The problem is, the outcome of this election is not going to be dispositive. We face a lot of challenges. …”