A two-year suspension of the medical device tax was signed into law late last month, to the delight of the industry and life science associations.
The passage marks a victory in an aggressive battle between the industry and legislators to repeal the tax intended to fund the Affordable Care Act. The 2.3 percent excise tax went into effect in 2013, and since has been the target of business leaders who say the tax inhibits innovation in the medical device industry.
The suspension of the tax was part of a $1.1 trillion spending bill loaded with policy changes that will impact the local life science industry.
Sara Radcliffe, the president and CEO of the California Life Sciences Association, says the passage of the spending bill was a win for the industry, but she warned that much work lies ahead to ensure the tax is permanently put to rest.
Radcliffe, 49, has been working in health-related public policy for over a decade, and says there’s much work to be done in 2016. At the California Life Sciences Association (CLSA), Radcliffe leads the 750-member industry group that advocates for industry-friendly policy at the national, state, and local level. Here in San Diego, CLSA consistently reminds policymakers of the strengths of the life science sector, and connects members and academic institutions to spur product development.
Before CLSA, Radcliffe served as the executive vice president for health at the Biotechnology Industry Organization (BIO), the world’s largest biotechnology industry group. Before that, she worked as senior director of biologics and biotechnology at Pharmaceutical Research and Manufacturers of America (PhRMA).
Radcliffe answered questions for the San Diego Business Journal about the recent policy changes passed last month, as well as concerns for the industry looking forward. Here are some excerpts:
Why was suspending — and eventually eliminating — the medical device tax a top focus for life science industry groups? How was it impacting business?
Suspending the tax was a huge win for patients and medical innovation. As you may know, that tax was diverting about $30 billion from research and development and job creation nationwide (according to a report published by AdvaMed). Here in California we have about 1,600 medical device companies affected by that tax, and 7,000 medical device-related jobs here in San Diego. So it was really an extraordinary win that the tax was delayed for two years. That being said, we will be working very hard to make sure it’s repealed so that it doesn’t continue to be a burden on innovation.
The medical device tax was intended to help pay for changes implemented through the ACA. Have legislators proposed a new way to come up with the $24 billion the tax was meant to bring in? What are your thoughts on the problem?
Actually, the money from the tax, which was part of the ACA, was going into general revenues. It was not going directly into subsidies and it was not going directly into the implementation of the Affordable Care Act. We don’t see that it has a direct impact into the implementation of the ACA.
National Institutes of Health (NIH) funding has not kept up with inflation in recent years, but Congress just approved a federal spending bill that will boost NIH funding by $2 billion. Will San Diego’s life science and research sectors see a direct impact from this increase in funding?
It’s a huge win for California and for San Diego specifically. The bill contains $32 billion for NIH, which is a significant rise from past funding levels. In fact, funding was flat or dropping for over a decade.
That NIH funding is really the spark that fuels the whole research and development timeline from discovery through development to market. So we certainly hope and expect that the new NIH funding will create new jobs and lead to new products.
There’s been a lot of talk recently about drug pricing legislation after the Turing Pharmaceuticals price hike (and subsequent media firestorm). Coming from the industry’s perspective, what’s one thing you wish the public knew about this controversial topic?
We understand that there’s a lot of concern among the public about some products being too expensive and being of questionable value. I think we, as an industry, are extremely supportive of the move towards the value-based assessment of products. But we want everyone to know that that is a long, complicated and difficult process to get those products to market. Hence, the investment in those products and reimbursement for them has to be high to make sure that the products are available.
I think we all wish the public would focus on the fact that patients need to be at the forefront of innovation, and Turing Pharmaceuticals was not representative of our membership up and down the state. Our membership is committed first and foremost to creating products that are helpful to the world. They want to be in that business for a long time, and make it a sustainable enterprise. And we don’t think that was the direction that Turing was heading.
There’s been a lot of talk about President Obama’s Precision Medicine Initiative. Why is the Precision Medicine Initiative important to San Diego’s life science scene?
Precision Medicine is really important to the future of the health care sector. It leverages, advances the analysis of big data sets to help us all understand how to identify the causes of disease, prevent disease and create new treatments. So it is the direction that health care is going, and San Diego is really at the center of that with companies doing extraordinary work with genomics and diagnostic tests, for example. California as a whole is at the center of precision medicine because of our extraordinary strength in both health and IT, and we’re really well-positioned to deliver on the promise of precision medicine in health care.
Looking forward, what do you expect will be the hot policy topics in life sciences for 2016?
Full repeal of the medical device tax, for one. Intellectual property will also be a top priority. There’s patent reform at the federal level, and it’s very important that legislation in that area balances the limitation on abuse of patent control practices, while at the same time supporting a well-functioning patent system going forward. NIH funding and STEM education is always a concern for us, as well.