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Government Relations
Most biotech observers look to Wall Street for insights on the industry's prospects, but in fact, what happens in Washington and the statehouses has a profound impact on the bottom line. In 2002, BIO's Government Relations Department won a number of legislative victories, with the signing of laws to limit liability, improve biodefense and promote biotech research. Equally important, BIO's lobbying team beat back measures that would have decimated intellectual property protection and permitted reimportation of potentially dangerous counterfeit drugs. BIO also staked out positions on issues that remain in play as of early 2003, including proposals to expand Medicare drug coverage and change stock option accounting.
BIO ACTIONS
Homeland Security
Ensured liability protection in the Department of Homeland Security Act.
In the waning days of the 107th Congress, the House and Senate passed legislation to create a Department of Homeland Security. The creation of the department is the largest reorganization of the federal government in half a century and will streamline U.S. defenses against bioterrorism. BIO fought to ensure that the bill included liability protection for biotech companies to develop much-needed antiterrorism countermeasures, including vaccines and therapeutics.
Worked with Congress to pass landmark biodefense legislation.
This legislation, passed in the wake of the anthrax attacks in October 2001, authorized more than $3 billion for biodefense research, countermeasure development, vaccine and antibiotic stockpiles, and first-responder preparedness.
After aggressive lobbying from BIO, approved drugs and biologics were exempted from a set of new tracking requirements-the select agents provision-in the conference bill; the Department of Health and Human Services is setting up an exemption process for experimental products. BIO also sought and won changes to provisions governing the handling of products that are imported, processed and then exported.
Access to Care
Contested reimbursement cuts in the hospital outpatient setting.
On November 1, 2002, the Centers for Medicare and Medicaid Services (CMS) published a final rule that dictates how Medicare reimburses hospitals for using state-of-the-art biotech drugs in outpatient settings.
Unfortunately, CMS's flawed methodology created a system that skews hospital reimbursement for a number of lifesaving biotech therapies. The new rule creates a disincentive for hospitals to provide high-tech drugs to patients.
Along with other lobbying activities, BIO in 2002 held a briefing on Capitol Hill to educate congressional staff about this extremely complex Medicare issue.
Prevented damaging changes to the Hatch-Waxman Act.
In July, the Senate debated and passed S. 812, the Greater Access to Affordable Pharmaceuticals (GAAP) Act. The legislation would have upset the delicate balance achieved in the 1984 Hatch-Waxman Act governing generic drugs. However, BIO's strong grassroots campaign and lobbying effort prevented the legislation from being taken up in the House and stopped any chance of the ill-conceived bill becoming law.
The measure would have abolished patent rights for failure to meet certain deadlines, increased third-party litigation, and weakened bioequivalence rules while eliminating judicial review of some FDA actions.
In October, the Bush administration proposed new regulations to address generics issues based on the recommendations of the Federal Trade Commission.
Fought for Medicare prescription drug coverage.
Throughout June, BIO worked feverishly to help create comprehensive, market-based outpatient prescription drug coverage for Medicare beneficiaries based on BIO principles. Among other things, BIO and patient-group representatives joined President Bush at an event in Minnesota to urge Congress to pass prescription drug coverage.
On June 28, the U.S. House of Representatives passed H.R. 4954, the Medicare Modernization and Prescription Drug Act of 2002, by a vote of 221-208. H.R. 4954 would have created a Medicare outpatient prescription drug benefit universally available to all Medicare beneficiaries and provided generous coverage subsidies through a private-sector delivery system.
However, the Senate was unable to pass a similar bill. On three different attempts, the Senate voted against waiving a budget point of order to consider a Medicare outpatient prescription drug coverage amendment to S. 812.
The Republican Congress is expected to address the need for Medicare prescription drug coverage early in the 108th Congress.
Helped prevent the importation of dangerous counterfeit drugs.
Although a reimportation measure passed in the House, it was defeated in the Senate. BIO's campaign against the bill emphasized the danger posed by counterfeit drugs if reimportation were ever allowed.
Opposed Medicaid price controls.
On the Medicaid front, Sen. Debbie Stabenow (D-Mich.) offered an amendment to S. 812 that would have allowed states to extend rebates negotiated under Medicaid to those not eligible for the state-federal health program for the poor. Another amendment, by Sen. John Rockefeller (D-W.V.), sought to provide $9 billion in Medicaid funds over 18 months to help targeted states meet their budget shortfalls. However, neither of these measures was signed into law.
In response to the budget crisis, BIO developed a paper outlining viable options for states.
Stock Option Expensing
Worked with a coalition to block stock option expensing legislation.
In the wake of the corporate accounting scandals in 2002, stock option expensing legislation was proposed that would force companies to choose between accounting for stock options as a cost in earnings reports and claiming them later as a tax deduction.
BIO joined the Coalition to Preserve and Protect Stock Options, and lobbied intensely to defeat the legislation. Three times, the Senate blocked a vote on the proposal. Most importantly, votes were blocked even as both the House and Senate passed otherwise-sweeping accounting-oversight and corporate- governance legislation.
In October, the Federal Accounting Standards Board, an arm of the Securities and Exchange Commission, released an "exposure draft," which proposed methods of transition for companies that voluntarily decide to expense stock options.
Other
Pressed for rapid approval of a new FDA commissioner.
On November 14, 2002, Mark McClellan was sworn in as FDA commissioner. Throughout the year, BIO had pressed the White House to nominate and the Senate to confirm a permanent FDA head who would provide the leadership necessary to speed new drugs and biologics to the market and implement renewal of the Prescription Drug User Fee Act and other significant FDA reforms. Dr. McClellan previously served as President Bush's top health advisor on the Council of Economic Advisors. He is a former practicing internist and earned a Ph.D. in economics.
Supported passage of a farm bill with biotech-friendly provisions.
The Farm Security and Rural Investment Act of 2002 includes a number of significant biotech measures, such as increased funding for agricultural biotechnology research and risk assessment. It also establishes or enhances programs to promote trade of biotechnology-enhanced crops and improve capacity and regulatory review in developing countries. As one result of BIO's work, language was removed from the bill that would have precluded the ownership of livestock by meatpackers, thus allowing biotech companies to retain better control over their patented livestock from the farm to the market.
Supported the passage of Trade Promotion Authority.
The passage of Trade Promotion Authority was critical to the protection of intellectual property rights and the much-needed negotiating leverage to open markets for American agricultural products. The authority will allow the president to negotiate trade agreements (subject to the Senate's approval) without fear of the Senate stripping specific provisions from the agreement.
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