Life Science Compliance Update

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January 24, 2012

State of the Union, Bio Pharmaceutical Jobs and Innovation

State of Union Address
Tonight, President Obama is set to make his State of the Union Address.  Many have speculated that with the United States Supreme Court set to determine the constitutionality of the Patient Protection and Affordable Care Act (PPACA) in late March, Obama should use his Address to defend health care reform and to highlight some of the benefits that have already been achieved.  Consequently, a recent article from the National Journal discussed a few of the issues dealing with health care reform that President Obama should address. 

First, Doug Peddicord Executive Director of the Association of Clinical Research Organizations, noted that the President “should absolutely defend this accomplishment (health care reform) in his speech and use this chance to make a pitch in front of the SCOTUS.”  He said that the President should remind people that because of PPACA, “no one will be rejected for health insurance, even if they have, what the insurance industry liked to call ‘pre-existing conditions.’”   

He noted how health care reform is “making healthcare more accessible and affordable through insurance exchanges and accountable care organizations (ACOs) that ensure physicians are working together to provide patients quality care and not worrying about how many tests they should run.”  Peddicord also noted how PPACA closes the so-called ‘donut hole’ under Medicare Part D to lower the cost of prescriptions for seniors. 

Despite these important initiatives, Peddicord recognized that the ACA is not perfect.  Specfically, he asserted that, he would “work with anyone, Republican or Democrat, to make sure this landmark legislation doesn’t stifle job creation and innovation.”  In particular, he noted that Section 6002, better known as the Physician Payment Sunshine Act, deserves specific scrutiny.” 

He noted how the Sunshine Act was “not part of my original health care reform proposal and, ironically, it was slipped into the health reform bill without full and thoughtful consideration.”  He quoted the proposed regulations that were issued a few weeks ago to demonstrate the ridiculousness of the legislation:

“For example, if once during the calendar year, a sales representative from an applicable manufacturer brings $25 worth of bagels and coffee to a solo physician's office for a morning meeting, regardless of the number of individuals who partake, the per covered recipient cost is $25. Since this falls above the $10 minimum threshold for reporting a payment or other transfer of value…this meal must be reported. However, if the practice group includes five physicians, then the per-covered recipient cost is $5 (regardless of whether all five physicians actually consumed any of the food provided), so the payment would not need to be reported.” 

Based on this provision and his other analysis, Peddicord correctly recognized that the Sunshine Act “does nothing to increase access to care or improve outcomes – two things that inspired me to work so hard on health reform. Rather, it’s indicative of the government overreach that has left so many Americans frustrated. We should not – and, if I have anything to do with it, we will not – have government bureaucrats counting bagels!” 

In addition to Peddicord’s comments, John Castellani President and CEO of the Pharmaceutical Researchers and Manucatrers of America (PhRMA) offered his advice about what President Obama should speak about in his State of the Union Speech.  He maintained that Obama should talk about jobs and the economy. 

Castellani noted that, “the biopharmaceutical sector is particularly interested” in what Obama will propose to create more jobs and fix the economy, since innovative industries such as the life sciences industry are job-creators and tremendous contributors to our nation’s economic growth. 

He noted how, “innovation and economic growth go hand-in-hand.”  For this reason, it is his hope that the President also spends significant time talking about the value of innovation.  The PhRMA President said the companies “are very interested in hearing specific policy proposals on how we can ensure that America remains the world-leader in innovation, particularly medical innovation.”  

He asserted that, President Obama should use this “opportunity to propose ideas that will foster medical innovation in the long-term rather than focusing on short-term policies that do not encourage, and in some cases may detract from, future medical progress.”  Additionally, he maintained that , “at a time when our economy is still fragile, it is essential that government and industry work together to help create jobs and improve the economic outlook – and a sound innovation agenda is critical to meet these important goals.” 

Accordingly, he laid out “Four inter-connected policy pillars that he believes are important to sustain the economic and scientific eco-system, advance medical innovation and protect U.S.-based biopharmaceutical jobs are the following: 

  1. A regulatory framework to spur innovation – meaning a predictable, consistent and robust regulatory system supported by the best, experienced regulators using the latest, best science;
  2. A thriving public/private scientific ecosystem – meaning better collaboration and cooperation;
  3. A business environment that embraces biomedical progress – meaning an understanding that the science, while potentially amazing, is difficult, the investment costs high and the rewards are uncertain;
  4. A healthcare system that better recognizes the value of medicines – meaning innovative medicines contribute both to improving patient health and can help control short- and long-term healthcare costs. 

Ultimately, as we all watch the State of the Union speech tonight, hundreds of millions of Americans will begin to see and wonder how the President, almost two years later, will defend his health care reform bill and how he will ensure that Americans realize the goals and promises the landmark legislation hoped to achieve. 

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