San Diego Competing congressional priorities are clouding the path forward for an effort to kill a 2.3 percent excise tax on medical device makers, San Diego’s NuVasive and ResMed among them.
In late July, the House voted overwhelmingly for repeal. For medical device companies, the bipartisan support — 57 Democrats voted for the measure — bodes well as the initiative heads to the Senate. But there’s question over when the matter will be taken up.
The Senate’s lengthy to-do list in the coming months includes an annual defense policy bill, water infrastructure, and confirmation hearings for Supreme Court nominee Judge Brett Kavanaugh. No shortage of hefty topics that could take precedence, simply stated. Oh, and then attention will be elsewhere with campaigning before the midterm elections.
The California Life Sciences Association acknowledged this reality but expressed optimism.
“The good news is that the number of Senate Democrat and Republican co-sponsors and supporters for the bill continues to grow. The strength of the House vote (283-132) and performance of our California Congressional delegation (30-22) should also be a clear statement to the Senate that the time to act is now,” Jenny Nieto Carey, the association’s vice president of federal government relations, said in a statement.
Device companies want to deliver a final blow to the tax, after Congress in January approved a two-year suspension. Companies urged action to avoid not only the tax, but costly accounting and reporting systems.
January marked the second delay in the tax, first instituted in 2013 on artificial joints, heart stents and other devices to help fund the Affordable Care Act.
While the medical device industry seemingly has time on its side — the tax isn’t slated to resume until 2020 — there are no guarantees. In 2017, Congress failed to deliver on promises to terminate the tax.
Adding difficulty, some Democrats have expressed that loss of tax revenue from repeal should be replaced elsewhere to fund health care.
But Carey said this is the closest yet to repeal.
Local Medtech Middleweights Earn Some Wins
Speaking of the medtech industry, advances from large businesses like Dexcom garnered plenty of ink, including from this publication, in the last few months. But smaller regional players in the space have also notched wins as of late.
Last month, Ra Medical filed paperwork for an initial public offering worth up to $86.25 million. The funds will go toward commercializing its Dabra System, a laser catheter to treat a disease known to lead to amputations.
The growing company in December took up a new office, its fifth time moving since forming in 2002.
Irras Ab, which is legally headquartered in Stockholm, Sweden, but with most operations in La Jolla, in July won U.S. Food and Drug Administration approval for its flagship device. Irraflow is designed for hemorrhagic stroke, which occurs after severe trauma or brain aneurism.
And Tandem Diabetes Care continued its comeback story with strong second quarter results, posted July 31. The company reported sales of $34.1 million during the quarter, a 60 percent year-over-year increase. Operating margin improved to negative 41 percent, versus negative 89 percent during the prior second quarter.
Tandem’s stock stood at $27.56 following the quarterly results, a momentous rise from starting off the year at $2.54.
Know Guts, Know Glory
And outside of medtech, another hub is developing in San Diego: drugmakers focused on the inflammatory bowel disease ulcerative colitis.
Well, hub is a strong word, but now three companies are working on treatments for ulcerative colitis, estimated to affect more than 900,000 Americans.
One company is based here (Arena Pharmaceuticals), one was bought by Celgene (Receptos) and another recently opened an office here (Ireland-based Sublimity Therapeutics).
Recently, Sublimity set up in Solana Beach, which will be home to a dozen employees, including key executives, centered on clinical operations. San Diego’s talent pool fit the bill, according to the company.