final electronic version - c.ymcdn.com · BIO requests the Committee provide $25 million for...
27
Legislative Day Biotechnology Industry Organization April 8-9, 2014
Transcript of final electronic version - c.ymcdn.com · BIO requests the Committee provide $25 million for...
Legislative DayBiotechnology Industry Organization
April 8-9, 2014
TABLE OF CONTENTS
HEALTH:
Funding for a Sound, Science-Based Food & Drug Administration (FDA)
Promotes Biomedical Innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Support for the National Institutes of Health (NIH) is Critical
to the Advancement of Biomedical Discovery & Innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Oppose Additional Cuts To Physicians Who Administer Medicare Part B Drugs . . . . . . . . . . . . . . . . . . . . . .6
Changing the Incentives Structure of the Part D Program Can Have a
Significant Negative Impact on Patients. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Renewed Funding for the Project BioShield Special Reserve Fund (SRF),
Biomedical Advanced Research and Development Authority (BARDA)
and Pandemic Influenza Efforts is Critical to National Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
The Independent Payment Advisory Board (IPAB) is Bad Medicine for Patient Care,
Deficit Reduction, and Containing Medicare Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
INTELLECTUAL PROPERTY:
Strengthen the U.S. Patent System, But Don’t Weaken U.S. Innovation and Economic Growth . . . . . . 14
TAX & CAPITAL MARKETS:
Tax
Start-up Jobs and Innovation Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 382 NOL Reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Promoting Innovation through the Tax Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Capital Markets
Fostering Innovation Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Small Cap Liquidity Reform Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Small Company Disclosure Simplification Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
FOOD AND AGRICULTURE:
Support a Federal GMO Food Labeling Solution that Informs Consumers,
Eliminates Confusion, and Advances Food Safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
INDUSTRIAL AND ENVIRONMENTAL:
Preserve the Renewable Fuel Standard and Restore Support
for Industrial Biotechnology in the Tax Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
HEALTH
2 HEALTH
HEALTH
Funding for a Sound,
Science-Based Food &
Drug Administration
(FDA) Promotes
Biomedical Innovation
BACKGROUND:
A strong and well-funded Food and Drug Administration (FDA) is vital to the economic
and public health of the United States and plays an essential role in helping to speed
biomedical innovations to patients. In fact, nearly 25 cents of every consumer dollar
spent in the United States -$1 trillion- is on a product regulated by the FDA: from food
to biopharmaceuticals, from cosmetics to medical devices.
Entrepreneurial biotechnology companies seeking to bring novel therapies to patients
over the course of a decade or more rely on timely, consistent, and sound regulatory
decisions. A sound base of appropriated funding allows FDA to keep pace with rapidly
advancements in biomedical science and to expeditiously evaluate the benefits and
potential risks of innovative modern medicines.
DISCUSSION POINTS:
Human Drugs and Biologics Program: Biotechnology companies are currently
developing a new generation of targeted, precision therapies that leverage
advances in genomics and molecular biology to treat serious diseases. For
patients anxiously awaiting these new treatment options, it is imperative that FDA
oversees the development and approval of safe and effective therapies efficiently
and without impediment.
Diseases such as cancers, diabetes, Alzheimer’s, and Parkinson’s will be significant
drivers of entitlement spending as the Baby Boomer generation reaches
retirement age. Agency support for innovators and modern regulatory approaches
promote the development of treatments to reduce the burden of these diseases
on society will have a profound impact on the nation’s fiscal health. BIO also
supports adequate funding for FDA’s Advancing Regulatory Science Initiative,
which builds upon existing FDA programs to transform the way medical products
are developed, evaluated, and manufactured.
BIO supports a $100 million increase in FY15 for medical product development,
including drugs, biologics, and medical devices.
BIO POSITION:
For Fiscal Year (FY) 2015, BIO requests that Congress appropriate
at least $2.8 billion (not including user fees) to the FDA as part of
the Agriculture, Rural Development, FDA, and Related Agencies
Appropriations Act.
2014 BIO FLY-IN 3
HEALTH
Medical Countermeasures Initiative (MCMi): FDA’s Medical Countermeasures
Initiative (MCMi) was launched in August 2010 in response to the Department
of Health and Human Services’ comprehensive review of the Public Health
Emergency Medical Countermeasures Enterprise. The MCMi aims to (1) enhance
the MCM review process; (2) advance regulatory science for MCM development
and evaluation; and (3) optimize the legal, regulatory, and policy framework for an
effective public health response.
BIO requests the Committee provide $25 million for FDA’s MCMi. Adequate
funding in 2015 is critical to sustaining the MCMi and allows FDA to increase the
number of medical product reviewers, maintain a modest workforce development
program, modernize the MCMi infrastructure, and support an intramural MCM
regulatory science program.
Sequestration of Industry User Fees: In FY13, more than $80 million of industry
user fees paid to the FDA to support FDA review programs were inappropriately
sequestered and made unavailable to the Agency. BIO was encouraged that the
Consolidated Appropriations Act of 2014 averted sequestration in the near term
and that subsequent FDA appropriations restored the industry user fees that
had been previously sequestered in FY13. However, user fees are still in danger
of being negatively impacted by sequestration in the future. Because of this, BIO
strongly supports the passage of the FDA Safety Over Sequestration (SOS) Act of
2013 (H.R. 2725), which would clarify that private sector user fees paid to FDA are
exempt from sequestration.
Implementation of the Drug Quality and Security Act of 2013: BIO also
supports additional funding for FDA oversight of pharmacy compounding and
implementation of the supply chain traceability provisions of the Drug Quality
and Security Act of 2013.
4 HEALTH
HEALTH
Support for the
National Institutes of
Health (NIH) is Critical
to the Advancement of
Biomedical Discovery &
Innovation
BACKGROUND:
The tradition of public investment in NIH has helped establish the United States
as a global leader in medical research and innovation. This commitment has
laid the foundation for the development of many breakthroughs in drugs and
therapies that have extended and improved the lives of countless patients
and their families in the United States. This investment also serves to drive
the innovation pipeline that is critical to ensuring that the medical research
and biopharmaceutical industry, which provides high-paying jobs and makes
significant contributions to the U.S. economy, continues to grow in the
United States.
The NIH is the nation’s premier research agency for the study of human health
conditions, diagnostics, and treatments. The United States has historically been
the foremost leader in the world for biomedical research and development.
Breakthroughs in biomedicine and health over the past 50 years are largely
due to the research and development that occurs within the biotechnology and
pharmaceutical industries as well as the publicly funded biomedical research
enterprise centered at the NIH. However, recent cuts and flat funding levels are
creating an environment where the United States is no longer able to meet the
need or support the ability of the scientific community to continue to develop the
next generation of lifesaving medical research.
Since the doubling of the NIH budget between 1998 and 2003, funding levels for
NIH have consistently remained flat and faced cuts as a result of sequestration.
Even with recent funding provided to NIH to help mitigate the impact of
sequestration, current funding levels still have not kept pace with inflation,
resulting in more than a 20% decline in purchasing power. At a time when global
completion has intensified from China and the European Union, the United States
should not abdicate its competitive edge.
In addition to NIH’s role of supporting medical research, it also provides critical
early-stage funding opportunities through the Small Business Innovation
Research (SBIR) and Small Business Technology Transfer (STTR) programs to
small U.S. biotechnology companies developing innovative medicines. Further,
NIH’s Cures Acceleration Network (CAN) offers collaboration and funding
opportunities for public-private partnerships to advance the development of
high-need cures and reduce significant barriers between research and clinical
trials. Finally, the goal of NIH’s new National Center for Advancing Translational
Sciences (NCATS) is to facilitate medical innovation and enable partnerships
between government and industry to transform the translational science process
in order to better enable industry to develop and deliver treatments and cures to
patients faster.
BIO POSITION:
For Fiscal Year (FY) 2015, BIO supports a budget of at least $32
billion for NIH and opposes any cuts to the current NIH budget.
2014 BIO FLY-IN 5
HEALTH
DISCUSSION POINTS:
Sufficient NIH funding is necessary to capitalize on new and
unprecedented scientific opportunities in an era of genomic health
and personalized medicine.
Research conducted and supported by NIH has led to advances in genomics,
proteomics, and new biomedical technologies and tools that have the potential
to bring us into an era of personalized, predictive, and preemptive medicine.
Funding the NIH at $32 billion would provide the minimum level of funding
needed to reflect the rising costs associated with biomedical research
and help mitigate the impacts of sequestration. Today only one in six grant
applications will be supported, the lowest rate in NIH history. We must prevent
further erosion of the United States’ capacity to research and develop the next
generation of medical breakthroughs.
Biomedical research is the key to improving the quality of life for patients
and their families.
America’s healthcare expenditures have been rising steadily for years and are
predicted to become unsustainable over the next few decades. Advancing
medical science has and can provide medical solutions that decrease
hospitalizations, help patients live a higher quality of life, and prolong the ability
to live independently.
Maintaining a strong, publicly funded NIH is important to America’s
scientific competiveness.
As a result of our historic public commitment to biomedical research, America
has always been the global leader in biomedical technology. However, as global
competition increases and U.S. funding decreases, this position of leadership
is not guaranteed. In an era where we are working to build and support 21st
century jobs, we must support funding opportunities for the next generation
of doctors and scientists that are the backbone and future of America’s life
sciences industry.
6 HEALTH
HEALTH
Oppose Additional
Cuts to Physicians Who
Administer Medicare
Part B Drugs
BACKGROUND:
Medicare Part B coverage of drugs provides an invaluable route of access for patients
facing grievous illnesses such as multiple sclerosis, cancer, and rheumatoid arthritis.
Part B provides an important pathway for patients to access a narrowly defined,
limited number of provider-administered products (e.g., those that are injected or
infused under the direction of a physician).
Medicare Part B drug reimbursement is based on a market-based reimbursement
mechanism that reflects the actual prices paid by physicians and has driven down
Medicare costs.1 Each product’s ASP reflects the discounts and rebates that are
privately negotiated in the commercial market, allowing the Medicare program
to benefit from market-based contracting. Payment for these drugs represents
approximately 2.4% of total Medicare spending.2
BIO POSITION
BIO urges Congress to protect beneficiary access to important drug
and biologic therapies by ensuring that physicians are appropriately
reimbursed for these lifesaving therapies. BIO opposes congressional
actions that would result in further reimbursement cuts to Medicare Part
B products through changes to the ASP system. The patients served under
Part B are often the sickest and, therefore, most vulnerable. Disrupting how
the care of these patients is delivered and paid for would disproportionately
impact the sickest patients fighting devastating diseases.
DISCUSSION POINTS:
Congress should not look to cut Part B and Average Sales Price (ASP). ASP
is a market driven system that works well. There is no reason to jeopardize access
for patients facing grievous illnesses, especially since the Medicare Payment
Advisory Commission (MedPAC) and others have found that physicians already
have problems obtaining some products at or below the current ASP+6% rate.3
Under sequestration, the reimbursement rate for Part B drugs is already
reduced to the effective rate of ASP+4.3%. Imposing additional cuts on top of
that would further imperil patient access to Part B therapies.
ASP is working. Reimbursement for the prices of drugs has decreased while at
the same time physicians are being more appropriately compensated for their
work to acquire, store and administer these drugs. The non-partisan advisory
group MedPAC confirmed that “as intended by the policy, payment rates for drugs
were reduced to levels closer to provider purchase prices and payment rates for
drug administration increased.”4
1 Medicare Payment Advisory Commission, A Data Book: Health Care Spending and the
Medicare Program (Washington: MedPAC, June, 2012). Available at: http://www.medpac.
gov/documents/Jun12DataBookEntireReport.pdf
2 MedPAC, A Data Book: Health Care Spending and the Medicare Program (Washington:
MedPAC June 2013). p.5, 161. Available at: http://medpac.gov/documents/
Jun13DataBookEntireReport.pdf
3 MedPAC 2012 Data Book at p.180.
4 Medicare Payment Advisory Commission, Report to Congress: Impact of Changes in
Medicare Payments for Part B Drugs (Washington: MedPAC, January, 2007).
Available at: http://www.medpac.gov/documents/jan07_partb_mandated_report.pdf
2014 BIO FLY-IN 7
HEALTH
MedPAC also reports that “there are some drugs [physicians] cannot
purchase at the payment rate,” meaning that the Medicare reimbursement
rate, even with the additional 6%, is less than acquisition cost. MedPAC
also notes that, for most physicians, the difference between ASP+6% and their
acquisition costs for drugs is “slim.”5
A product’s acquisition cost is just one aspect of the overall costs incurred
by a physician. The +6% was added to the ASP reimbursement formula for
several important reasons, such as covering the cost of (1) shipping fees, (2)
supplies used in handling and preparing the products for administration, (3)
overhead costs for storing complex products and managing inventory, (4) staff
time to negotiate prices for and order the products, (5) staff time for clinical
monitoring and education of patients, (6) bad debt and pursuing beneficiary
co-payments, and (7) state taxes on the drugs.6
To protect small physician practices and doctors in rural areas that have
less purchasing power, Congress set the reimbursement rate for most
Part B drugs at ASP+6%. ASP is—by definition—an averaging system. It is also
often the case that providers in small practices with low patient volumes and/
or those in rural localities pay higher than the average. To minimize the likelihood
that providers would be reimbursed below their acquisition cost, Congress added
an additional reimbursement of 6% above ASP. Without the 6% above ASP,
many of these small rural providers could be put at risk, causing serious
disruptions for extremely ill Medicare beneficiaries while producing only
minimal savings for the federal government.
A study in the Journal of Clinical Oncology also found that “many practices pay
prices above ASP+6% reimbursement for key products” and concluded that
the “economic strain combined with inadequate reimbursement limits patient
access to care when practices are forced to turn away patients or go out
of business.”7
Another recent study by Douglas Holtz-Eakin and Han Zhong found that
“proposals to alter Medicare Part B drug reimbursement place a successful
program and the patients it supports at risk, and thus, are neither sound nor
sustainable reform policies that support overall debt reduction.”8
That Holtz-Eakin/Zhong study also found that, for instance, reducing
reimbursement from ASP+6% to ASP+3% would “threaten Medicare
beneficiaries’ access to care,” and that the current reimbursement formula
“constrain[s] costs in an efficient market-driven manner that allows both small
providers in rural areas and large practices to provide ongoing care to
Medicare beneficiaries.”9
5 Id.
6 Id.
7 Journal of Clinical Oncology, 2008 ASCO Annual Meeting Proceedings (Post-Meeting
Edition). Vol. 26, No 15S (May 20 Supplement), 2008: 20500. (Abstract). Available at: http://
meeting.ascopubs.org/cgi/content/abstract/26/15_suppl/20500?sid=43160dd9-d2c6-
4535-aedd-2e86c7790554
8 Douglas Holtz-Eakin & Han Zhong. “Medicare Part B Drug Reimbursement: Why Change
A Market-Driven System That Works Well at Controlling Costs?” American Action Forum,
October 2011. Available at: http://americanactionforum.org/sites/default/files/OHC_PartB_
Drug_Reimb_Reduction_10-26-2011.pdf
9 Id.
8 HEALTH
HEALTH
Changing the
Incentives Structure
of the Part D Program
Can Have a Significant
Negative Impact
on Patients
BACKGROUND:
Policy proposals have suggested imposing a price control in the form of the Medicaid
drug rebate on prescription drugs in Medicare Part D based solely on potential
savings and without regard to the impact on patients’ access to needed therapies
and sustaining incentives for future innovation. Another series of policy proposals
has focused on changing, or even repealing, the non-interference provision of the
Medicare Modernization Act (MMA), which prohibits the federal government from
interfering with negotiations between drug manufacturers, pharmacies, and plan
sponsors under Medicare Part D. Moving forward with either of these changes to
the successful Part D program would harm innovation and put patient access to
innovative medical therapies at risk.
BIO DISCUSSION POINTS:
Private Competition Is Producing Savings and Preserving Patient Choice
Under the Medicare Part D Benefit.
Due to robust private competition, Medicare Part D is working well to generate
lower costs for seniors and provide broader choice for enrollees. According to
CMS, average premiums in 2014 for Part D enrollees are projected to remain
stable for the fourth year in a row at $31 per month.1 According to CBO, total
Medicare Part D costs are 43% below initial estimates of the program costs.2
Under Part D, beneficiaries are saving money on their prescriptions, and those
in need of the most help are receiving it. In 2010, 90% of Medicare beneficiaries
had comprehensive drug coverage.3 Healthy competition has helped to
keep costs low while also preserving patient choice: in 2014, there are 1,169
prescription drug plans (PDPs) available nationwide (up 13% from 2013) with an
average of 35 PDPs available in each region.4
As a result of the Patient Protection and Affordable Care Act (PPACA), seniors
who reach the coverage gap in 2014 will receive a 52.5% discount on brand-
name drugs, thereby significantly increasing access to life-saving medicines.
Medicare Part D enrollees are extremely satisfied with the program. According
to a 2012 survey, 90% of beneficiaries are satisfied with the program and 95%
say they have greater peace of mind as a result of Part D coverage.5
Government “Negotiations” Equate to Price Controls Which May Reduce
Access to Innovative Therapies.
Deviating from the strict provisions against government interference with
private negotiations will not generate significant savings. According to the
CBO, “modifying the noninterference provision would have a negligible effect
1 HHS Press Release dated July 30, 2013. “Medicare drug premiums remain table four years
in a row.” Available at: http://www.hhs.gov/news/press/2013pres/07/20130730c.html.
2 Analyses of data from CBO Medicare Part D Baselines for 2004-2011.
3 Medicare Payment Advisory Commission. Report to Congress: Medicare Payment Policy.
March 2011. Available at: http://www.medpac.gov/documents/mar11_entirereport.pdf
4 Kaiser Family Foundation. 2013. Medicare Part D: A First Look at Plan Offerings in 2014.
Available at: http://kff.org/medicare/issue-brief/medicare-part-d-a-first-look-at-plan-
offerings-in-2014/.
5 KRC Survey for Medicare Today.”Seniors’ Opinions About Medicare Rx: Seventh Year
Update.” September 2012. Available at: http://www.medicaretoday.org/MT2012/KRC%20
Survey%20of%20Seniors%20for%20Medicare%20Today%2010%2002%202012.pdf
2014 BIO FLY-IN 9
HEALTH
on federal spending”.6 Any potential small savings realized will be offset by
increased costs in other areas, in the form of increased health insurance costs,
less pharmaceutical research and development, fewer new drugs and biologics,
and lower quality of life for Americans.
In order to be effective and achieve any savings as a price “negotiator,” the
government would have to decide which therapies to make available to
Medicare beneficiaries, and the conditions under which they would be covered.7
In effect, limiting access to needed therapies.
Introducing Medicaid-like price controls, in the form of rebates, into the Part
D program would raise costs and decrease patient choice: according to a
former CBO analyst and a former Centers for Medicare and Medicare (CMS)
Chief Actuary, imposing rebates in Part D would undermine how the program
functions, potentially leading to higher premiums, reduced choices, higher
copays, and more restrictive formularies.8
The Veterans Administration (VA) formulary is a good example of reduced
access due to price controls. Nearly 40% of Medicare eligible veterans enrolled
in the VA Health System are enrolled in Medicare prescription drug plans,9
which can be attributed to the VA’s limited formulary. Of the 281 Part D covered
drugs, 183 (65%) are included in the VA formulary, compared to 273 (97%) in
the Federal Employees Health Benefit Program (FEHBP) formulary, 278 (99%)
in the highest enrollment Part D plan formulary, and 280 (100%) in the second
highest enrollment Part D plan formulary.10
Striking the Non-Interference Provision Could Harm the Small
Biotech Industry.
Small biotech companies depend largely on investor capital to fund initial
research and development for innovative therapies. Due to a slow-growing
economy and an increasingly uncertain regulatory and reimbursement
environment, the amount of innovation capital—capital raised by non-mature
commercial leaders--has remained flat from 2009-2012, averaging more than
$4 billion less than the average raised between 2004 and 2007.11
Given the current precarious situation that small biotech companies face today,
repealing the non-interference provision would stifle investment even further,
and limit patient access to innovative medical therapies.
6 Congressional Budget Office, S. 3, Medicare Prescription Drug Price Negotiation Act of
2007, cost estimate, April 16, 2007. Available at: http://www.cbo.gov/sites/default/files/
cbofiles/ftpdocs/79xx/doc7993/draftlegislationonmedicare.pdf.
7 Enthoven, Alan and Kyna Fong. “Medicare: Negotiated Drug Prices May Not Lower Costs,”
National Center for Policy Analysis, Brief Analysis No.575. December 18, 2006. Available at:
http://www.ncpa.org/pdfs/ba575.pdf
8 Joseph Antos and Guy King. “Tampering with Part D Will Not Solve Our Debt Crisis,”
American Enterprise Institute Health Studies Working Paper, June 2011. Available at:
http://www.aei.org/files/2011/06/29/Updates-Antos-King-Working-Paper.pdf
9 HHS Press Release dated June 14, 2006. “Over 38 Million People with Medicare Now
Receiving Prescription Drug Coverage.” Available at: http://archive.hhs.gov/news/
press/2006pres/20060614.html
10 The Lewin Group. “Comparison of VA National Formulary and Formularies of the
Highest Enrollment Plans in Medicare Part D and the Federal Employee Health Benefit
Program.” Completed December 10, 2008. Available at: http://www.lewin.com/content/
publications/3987.pdf
11 Ernst and Young. Beyond Borders Matters of Evidence: Global Biotechnology Report 2013.
p. 39. Available at: http://www.ey.com/Publication/vwLUAssets/Beyond_borders/$FILE/
Beyond_borders.pdf.
Changing the
Incentives Structure
of the Part D Program
Can Have a Significant
Negative Impact
on Patients
CONTINUED
10 HEALTH
HEALTH
Renewed Funding for
the Project BioShield
Special Reserve Fund
(SRF), Biomedical
Advanced Research
and Development
Authority (BARDA) and
Pandemic Influenza
E#orts is Critical to
National Security
BACKGROUND:
After the 2001 terrorist attacks, the US government began a dedicated effort to
develop and stockpile drugs and vaccines needed to protect the American people
from chemical, biological, radiological, and nuclear (CBRN) threats. In 2004,
Congress passed the Project BioShield Act which created the Special Reserve Fund
(SRF). Two years later the Pandemic and All-Hazards Preparedness Act (PAHPA) was
passed, authorizing the creation of many critical programs, such as the Biomedical
Advanced Research and Development Authority (BARDA) and the Assistant
Secretary for Preparedness and Response (ASPR). PAHPA was reauthorized in
March 2013.
ASPR and BARDA are charged with the prioritization and development, through
partnerships with industry, of vaccines, treatments, and diagnostics for CBRN
and pandemic influenza threats for use during a man-made, natural, or accidental
medical emergency.
Since that time the government has strategically invested in a diverse set of products
to treat, diagnose or prevent a range of pathogens and toxins identified as significant
threats, including smallpox and anthrax. The funding for these vital national security
products comes, in large part, from the Project BioShield Special Reserve Fund (SRF).
The SRF successfully created a “guaranteed market” to incentivize
biopharmaceutical companies to develop and produce civilian medical
countermeasures (MCMs) for which there is no commercial market.
The SRF was funded through an appropriation of $5.6 billion over 10 years, which
expired at the end of Fiscal Year (FY) 2013. New funding must be appropriated
at a level consistent with past appropriations for Project BioShield and the level
authorized in the Pandemic and All-Hazards Preparedness Reauthorization Act
(PAHPRA) of 2013 (P.L. 113-5) to support procurement priorities identified by the U.S.
government. BARDA, which oversees advanced development efforts, also requires an
annual appropriation to support its advanced development pipeline, which currently
includes approximately 80 candidate MCMs.
Past appropriations for multi-agency pandemic influenza response have been
previously funded through supplemental measures. With these funds having been
depleted, without continued robust funding, some companies may not have sufficient
time to respond to pandemic influenza threats due, in part, to delays in federal funding
commitments to the manufacturing of seasonal influenza products and pandemic flu
threats such as H7N9.
BIO’S POSITION:
BIO requests that Congress appropriate $2.8 billion for the SRF over
5 years (FY 2014-18) for the procurement of MCMs, including $630
million in FY15. Additionally, for FY 2015, BIO encourages Congress
to appropriate $415 million to BARDA for advanced development
activities, $543 million for the Strategic National Stockpile (SNS), and
$300 million for pandemic influenza preparedness.
2014 BIO FLY-IN 11
HEALTH
DISCUSSION POINTS:
Project BioShield has improved our nation’s ability to protect against
security threats: The U.S. Department of Homeland Security has identified 13
CBRN agents as material threats to our nation. Since its enactment, BioShield
has spurred the development of, and procured, more than 50 million doses of
vaccines and drugs against anthrax, smallpox, botulinum toxin, and radiological
threats. Approximately 80 other candidate MCMs are in the BARDA advanced
development pipeline, including broad-spectrum antimicrobials, rapid diagnostics,
and next-generation products.
Project BioShield has led to significant investments in physical capital and
scientific jobs around the country: Procurement and advanced development
activities to date have led to a growing consortium of CBRN MCM producers that
includes approximately 47 participating companies. BARDA’s three new Centers
for Innovation in Advanced Development and Manufacturing (ADMs) will create
new skilled jobs and facilitate domestic MCM manufacturing capacity. Over the
past decade, the U.S. has become a global leader in civilian biodefense. To sustain
this leadership, HHS must reassert its commitment to this unique public/private
partnership through adequate funding.
Project BioShield has facilitated investments in novel technologies
that will help solve both preparedness and public health problems: The
accomplishments of Project BioShield go beyond the quantities of CBRN MCMs
stockpiled or the number of advanced development contracts awarded. The
program has fueled innovation in vaccine development, diagnostics, and medical
devices. Many companies are currently researching and developing products or
platforms that could function as both MCMs and commercial products, such as
broad-spectrum antibiotics.
Funding to support the Department of Health and Human Services’
(HHS’) efforts to prepare for and respond to a pandemic influenza
outbreak by developing vaccines, antivirals, and rapid diagnostic tests
is also critical: These activities were previously funded using unobligated
supplemental pandemic influenza balances. The $115 million obligated in the FY
2014 appropriations omnibus reflects the minimum amount needed for pandemic
influenza MCM development and acquisition by the Assistant Secretary for
Preparedness and Response (ASPR) and BARDA. Past appropriations for multi-
agency H5N1 and H1N1 preparedness and response activities, including MCM
development and acquisition, were as high as $6.23 billion in FY 2006 and $8.23
billion in FY 2009.
Without the certainty of a guaranteed MCM market, companies may
be forced to redirect their priorities to other markets: The SRF is the
cornerstone of the Project BioShield Act and it successfully created a guaranteed
market for MCMs. Without adequate funding for the SRF, companies will face
tremendous uncertainty related to the timing, size, and/or speed of funding,
making it even more difficult to attract private investor funding and operate.
Renewed Funding for
the Project BioShield
Special Reserve Fund
(SRF), Biomedical
Advanced Research
and Development
Authority (BARDA) and
Pandemic Influenza
E#orts is Critical to
National Security
CONTINUED
12 HEALTH
HEALTH
The Independent
Payment Advisory
Board (IPAB) is Bad
Medicine for Patient
Care, Deficit Reduction,
and Containing
Medicare Costs
BACKGROUND:
The IPAB was created under PPACA as a way to control Medicare spending. This
board, consisting of 15 bureaucrats appointed by the President, has been given the
power to make cost-cutting decisions pertaining to Medicare that will affect patients’
quality of care, with almost no oversight and no means for challenging its decisions.
If Medicare costs increase faster than the targeted growth rate—a rate that will be
developed by April 2014 taking into account future year projections—IPAB is required
to submit program changes to Congress to reduce Medicare’s spending. Preventing
an IPAB recommendation from becoming law is no simple task: the Senate must
either outright reject it via three-fifths majority vote, or Congress must propose its
own plan to achieve the same amount of savings. Furthermore, the changes IPAB
makes to Medicare cannot be overruled by the Administration or a court of law. If
Congress fails to repeal IPAB, the law precludes it from ever altering IPAB or
its proposals.1
BIO POSITION:BIO continues to support full repeal of the IPAB, which is the 15-member
panel established by the Patient Protection and Affordable Care Act
(PPACA) charged with recommending and enforcing spending cuts in
Medicare. BIO is concerned that leaving reimbursement decisions solely
in the hands of one insular, autocratic council that relies on potentially
outdated information and utilizes a process that limits stakeholder
participation and input will have a negative impact on patient access
to care.
Congress must act quickly. If IPAB is not repealed prior to
implementation, which could begin as early as 2015, it will threaten the
doctor-patient relationship, disadvantage already medically underserved
populations, and overall patient access to life-saving therapies.
DISCUSSION POINTS:
IPAB provides limited opportunity for stakeholder input and does not
establish a transparent process for the review of its recommendations.
Though recommendations from IPAB would be implemented through the
regulatory process, there are no clear opportunities for valuable stakeholder
input during the process through which IPAB forms its recommendations in the
first place. Further, there are no proper safeguards to ensure that the IPAB council
would be truly “independent.” In fact, it is unlikely that IPAB will be entirely devoid of
external influences, especially if it is required to coordinate with Agencies prior to
the release of recommendations in order to meet quick statutory deadlines.
IPAB will upset the doctor-patient relationship. For patients, especially
seniors, finding the right doctor is imperative. Unfortunately, IPAB is likely to
drastically cut reimbursements to physicians, causing many to leave the Medicare
program. Many doctors are already turning away Medicare patients due to under-
1 Ebeler et al. “The Independent Payment Advisory Board: A New Approach to Controlling
Medicare Spending.” The Kaiser Family Foundation Program on Medicare Policy, April 2011.
Available at: http://www.kff.org/medicare/upload/8150.pdf.
2014 BIO FLY-IN 13
HEALTH
reimbursement.2 Furthermore, patients will have no ability to appeal any decision
made by IPAB. Doctors—the experts in patient care—also will be unable to appeal
IPAB’s decisions. Patients will be left at the mercy of 15 unelected bureaucrats.
IPAB will create problems for medically underserved populations. Medicare
plays a key role in reducing health care disparities in underserved populations.
For example, compared with the general population, some populations are more
likely to be uninsured and prone to chronic diseases such as diabetes. Because of
these types of factors, underserved populations are heavily reliant on Medicare.3
If the Medicare program is weakened, these groups will fall even farther behind the
general population in terms of health outcomes.
IPAB will further reduce health care jobs and funding for medical research.
Inadequate or inaccurate reimbursements will stifle health care stakeholders’
ability to develop medical breakthroughs that have dramatically reduced deaths
in this country and throughout the world. However, getting a drug or biologic to
market can cost a billion dollars or more. If IPAB lowers reimbursement rates for
needed therapies or to providers in the Medicare drug benefit, biopharmaceutical
researchers will find themselves with fewer resources to discover and develop new
innovative treatments.4 Additionally, if providers are not reimbursed adequately for
services and products, they will be forced to reduce expenses in their workforce.
IPAB is statutorily required to cut costs, not to balance quality of services
and the need to spur innovation. Congress has been implementing growth-
containment measures in Medicare since the program’s inception and has
repeatedly made the decision to focus not just on cost, but also on the quality of
care patients receive as well as protecting jobs and innovation in the health care
field. IPAB rejects this precedent by handing Medicare decision-making authority
over to 15 unaccountable bureaucrats.
There is effectively zero Congressional or judicial oversight of IPAB. To
prevent an IPAB recommendation from becoming law, the Senate must either
outright reject it via three-fifths majority vote, or Congress must propose its own
plan to achieve the same amount of savings. Both possibilities are politically
unlikely, particularly as the law requires Congress to act within an extremely short
time period. And even if Congress were to achieve this, the President could still
veto its decision.
There is no guarantee that IPAB’s recommendations will reduce overall
costs, and could increase costs outside of Medicare. In later years when few
“low-hanging fruit” options for spending cuts remain, IPAB’s cuts could lead to
short-term fixes, instead of long-term solutions that substantively bend the cost
curve.5 Further, providers may be forced to raise prices in the private insurance
market to compensate for the inadequate Medicare reimbursement, paying for
federal ‘savings’ by shifting more costs onto Americans.
2 Testimony of Scott Gottlieb, MD, to House Ways & Means Health Subcommittee, March 6,
2012. Available at: http://waysandmeans.house.gov/uploadedfiles/gottlieb_test_hl_3.6.pdf.
3 The Commonwealth Fund. “Racial and Ethnic Disparities in U.S. Health Care: A Chart
Book.” March 2008. Available at: http://www.commonwealthfund.org/usr_doc/mead_
racialethnicdisparities_chartbook_1111.pdf.
4 Testimony of Scott Gottlieb, MD, to House Ways & Means Health Subcommittee, March 6,
2012. Available at: http://waysandmeans.house.gov/uploadedfiles/gottlieb_test_hl_3.6.pdf.
5 Joss, Timothy and J.D. Stoltzfus. “The Independent Payment Advisory Board.” N Engl J Med
2010; 363:103-105. Available at: http://www.nejm.org/doi/full/10.1056/NEJMp1005402.
The Independent
Payment Advisory
Board (IPAB) is Bad
Medicine for Patient
Care, Deficit Reduction,
and Containing
Medicare Costs
CONTINUED
INTELLECTUAL PROPERTY
14 INTELLECTUAL PROPERTY
INTELLECTUAL PROPERTY
Strengthen the U.S.
Patent System,
But Don’t Weaken
U.S. Innovation and
Economic Growth
Intellectual property is the lifeblood of the biotechnology industry. Strong patents, and
an efficient, predictable, and objective patent system, are critical to ensuring a steady
stream of capital to biotechnology companies developing innovative biotechnologies
that are helping to feed, fuel, and heal our planet. This quintessentially-American
industry leads the world in innovation, providing the United States with a global
competitive advantage and spurring economic growth and the creation of high-paying
jobs here at home.
Investments in biotechnology products are not only expensive; they are risky. In
the biopharmaceutical space, for every successful product that gets approved
by the FDA, thousands of candidates are designed, screened, and rejected after
significant investments have been made. The chances that a biopharmaceutical
medicine will advance from the laboratory bench to the hospital bedside are
approximately one in 5,000.1
Because such risks and costs cannot usually be borne by any one entity alone,
biotech product development depends heavily on licensing, partnering, and access to
capital. Patents allow biotech inventions of great societal value to be passed or shared
among parties best suited to unlock their potential at any given stage of development
and commercialization – each contributing their part, each sharing the risk of failure,
each increasing the odds that a product eventually reaches patients.
BIO’S POSITION:
BIO urges Congress to proceed thoughtfully and deliberately on pending
patent litigation reform legislation. Any legislation in this complex are
must not impede the vast majority of patent owners from trying to
enforce their legitimate patents in a legitimate way. The injection of
additional systemic uncertainty by making the enforceability of patents
against infringers less clear can negatively affect which new cures and
treatments may be available a decade from now. We urge focus on those
reforms that would clearly target abusive behavior without undermining
the ability of small, investment-intensive businesses to be able to
protect and enforce their key assets – their patents – in a timely and
efficient manner.
1 Secretary of Health and Human Services Tommy G. Thompson, Remarks at the
Milken Institute’s Global Conference (Apr. 26, 2004). Available at: www.hhs.gov/news/
speech/2004/040426.html
2014 BIO FLY-IN 15
INTELLECTUAL PROPERTY
Certain targeted reforms included in Chairman Leahy’s Patent Transparency and
Improvement Act S. 1720 – likely will help small businesses by protecting them against
bad faith patent enforcement and other unscrupulous patent assertion activities
that only raise the cost of doing business, and thus the cost to consumers. BIO
affirmatively supports provisions in S. 1720 that would harmonize the standards for
claim construction in the PTO’s post-issuance administrative review processes with
those utilized by the federal courts. This change is critical to prevent gaming of the
two systems by infringers and to ensure fairness to patent owners.
Despite their well-intentioned efforts to curb abuses, other proponents of patent
litigation reform are rushing ahead with sweeping ideas to remake the patent litigation
system in fundamental and untested ways, without sufficient consideration of the
impact of those changes. Instead of limited reforms, they support far-reaching general
litigation reforms, such as:
mandatory stays of discovery pending patent claim construction
mandatory stays of actions against a broadly defined class of “customers”
that could allow product manufacturers to deflect patent lawsuits towards
their suppliers;
new impleader authority under which additional parties could be joined to the
litigation as unwilling co-plaintiffs to pay the other side’s costs under a new “losers
pay” approach;
new requirements under which initial complaints in patent lawsuits would be
required to set forth vastly increased amounts of detailed information or be
deemed insufficient;
“requester pays” proposals providing for upfront payment of the costs of
electronic and other “non-core” discovery to the producing party;
provisions for singling out patents on software-implemented technologies for
particularly unfavorable treatment by subjecting them to harsh administrative
invalidation proceedings in the PTO.
Many of these provisions represent stark departures from the normal civil litigation
rules that apply to other commercial litigation under the U.S. system. In their current
form these litigation reform provisions will almost uniformly work against patentees
of all stripes. In an effort to erect barriers against patent-asserting entities, these
provisions would systematically raise the cost and risk of patent enforcement for all
patentees, with disproportionately greater negative impact on smaller, poorly-funded
patent holders.
CONCLUSION:
The United States leads the world in biotechnology innovation and product
development due in large part to the strength and predictability of the U.S. patent
system. BIO urges Congress to focus on those reforms that would clearly target
abusive behavior without undermining the ability of small, investment-intensive
businesses to be able to protect and enforce their key assets – their patents – in a
timely and efficient manner.
16 TAX & CAPITAL MARKETS
TAX & CAPITAL MARKETS
TAX
Start-up Jobs and
Innovation Act
BACKGROUND:
The Start-up Jobs and Innovation Act (S. 1658) would allow small, R&D-focused
companies to partner with their investors on research projects. These collaborations,
called R&D Partnership Structures, would allow the investors to recognize the tax
losses and credits generated by the R&D in a project. The bill would encourage early-
stage investment in innovative research.
The early growth of the biotech industry was fueled in part by the ability of growing
companies to use R&D Limited Partnerships, in which individual investors would
finance R&D projects and then utilize the operating losses and tax credits generated
during the research process. These structures gave investors a tax incentive to
support biotech research at its earliest stages. During the late 1980s, the ability to
pass losses and credits through to investors was eliminated, but the Start-up Jobs
and Innovation Act would make a targeted change to the passive activity loss (PAL)
rules to incentivize vital research.
BIO POSITION:
BIO strongly supports enactment of S. 1658, the Start-up Jobs and
Innovation Act. The R&D Partnership Structures allowed by the
legislation will lead to long-term investment strategies, which are critical
to the success of innovative research. The Start-up Jobs and Innovation
Act also includes important reforms to the capital gains treatment of
small business stock, business expensing for growing companies, and
rules governing small firm accounting methods.
DISCUSSION POINTS:
The R&D Partnership Structures proposal in the Start-up Jobs and Innovation Act
would stimulate $10.3 billion in investment per year and create 156,000 jobs.
Many small innovative companies do not yet have product revenue because
they are still conducting research, so they depend on private investment to fund
their work. The Start-up Jobs and Innovation Act reforms partnership rules to
encourage the long-term, patient investment required for innovative businesses to
be successful.
Only emerging companies dedicated to R&D would be eligible for these
partnerships, so investors would be incentivized to invest at an earlier stage, when
the capital is most needed.
2014 BIO FLY-IN 17
TAX & CAPITAL MARKETS
The Start-up Jobs and Innovation Act would also allow investors in emerging
companies to benefit from a decreased capital gains tax rate under Section
1202. Currently, only investors in companies with aggregated gross assets below
$50 million are eligible for this provision, but this legislation would increase the
gross assets limit to $150 million, incentivizing investment in a wider pool of
growing innovators.
Policies designed to stimulate private investment in cutting-edge R&D will speed
the development process and create high-quality research jobs. Emerging
pre-revenue innovators are vital to supporting America’s 21st century economy.
Start-up Jobs and
Innovation Act
CONTINUED
Section 382 NOL
Reform
BACKGROUND:
Innovative companies often have a long, capital-intensive development period,
meaning that they can undergo a decade of research and development without any
product revenue prior to commercialization. During this time period, companies
generate significant losses, which can be used to offset future gains if the company
becomes profitable. However, Section 382 restricts the usage of net operating losses
(NOLs) by companies that have undergone an “ownership change.” The law was
enacted to prevent NOL trafficking, but small biotech companies are caught in its
scope – their reliance on outside financing and deals triggers the ownership change
restrictions and their NOLs are rendered useless.
BIO POSITION:
BIO supports reform of Section 382 to exempt NOLs generated by
qualifying R&D conducted by a small business from Section 382. This
change would allow small companies the freedom to raise capital for
innovative research without fear of losing their valuable NOLs.
DISCUSSION POINTS:
Reform of Section 382 would increase investment by a total of $5.5 billion per year,
resulting in 85,000 additional jobs at emerging companies.
Only small, R&D-intensive companies would be eligible for the reforms to Section
382. The value of their research-related NOLs would be preserved following an
“ownership change.”
This proposal would help R&D-intensive start-ups that are raising capital or
involved in M&A transactions to preserve the value of the tax deductions created
by their R&D investments. Currently, new rounds of investment and M&A deals can
trigger legal limits on the use of their NOLs.
The ability of a small business to maintain its NOLs makes it more attractive to
investors and purchasers looking to take its research to the next level.
18 TAX & CAPITAL MARKETS
TAX & CAPITAL MARKETS
Promoting Innovation
through the Tax Code
BACKGROUND:
BIO believes it is vital for the United States to have a tax code that allows it to
be competitive on the global stage. Currently, the U.S. corporate tax rate is the
highest among countries in the OECD. High tax rates can impede growth, and this is
particularly true in the biotechnology industry, where it can take more than a decade
and cost more than $1 billion to develop a single breakthrough technology.
BIO supports efforts to streamline the tax code in order to facilitate lower rates and
international competitiveness. Additionally, Congress has the opportunity to take
new steps to inspire innovative research, development, and commercialization. Many
biotech companies operate without product revenue to fund their scientific progress,
and Congress should bear in mind the needs of these pre-revenue innovators, which
depend almost entirely on external capital to fund the typical decade-long, billion-
dollar biotech development program.
BIO POSITION:
BIO supports a U.S. tax code that recognizes innovation as a crucial
part of the 21st century American economy and helps the United States
compete more effectively in the global economy. BIO supports changes
to the tax code to lower corporate tax rates while moving to a territorial
system of taxation and maintaining vital provisions like the Orphan Drug
Tax Credit and the R&D Tax Credit.
Congress should promote the world-leading U.S. innovation ecosystem
by incentivizing companies, individuals, and funds to invest in
pre-revenue companies and support their cutting-edge research.
DISCUSSION POINTS:
The high U.S. corporate tax rate has led many multinational corporations to
locate their operations overseas. Other countries lead the world in incentives for
innovation and have less burdensome tax systems.
Moving to a territorial system is a critical step towards creating a competitive
tax code. Freeing up over one trillion dollars that is currently trapped overseas
due to the inefficiencies of the U.S. tax code will boost economic growth and
capital investment.
BIO supports maintaining the R&D Tax Credit, while at the same time
strengthening it by increasing the Alternative Simplified Credit (ASC) rate and
making it permanent. Constant uncertainty about whether the R&D credit will be
extended makes tax planning extremely difficult for companies preparing their
development program.
BIO supports maintaining the Orphan Drug Tax Credit. By reducing the costs of
developing drugs for smaller patient populations, the Orphan Drug Tax Credit has
allowed companies to develop hundreds of new therapies that would otherwise not
have been commercially feasible.
BIO supports targeted tax incentives to spur research by and investment in small,
pre-revenue innovators. Incentives in the current tax code do not reduce current
operating or capital costs for emerging companies.
2014 BIO FLY-IN 19
TAX & CAPITAL MARKETS
Fostering
Innovation Act
BACKGROUND:
Under current SEC rules, public companies are grouped by size to determine their
compliance requirements. The smallest group, called non-accelerated filers, is
capped at companies with a public float of $75 million; these small businesses are
subjected to a reduced regulatory burden. However, many biotech companies
exceed the $75 million cap because of the high costs of groundbreaking R&D and
are therefore forced to pay for an expensive compliance regime, including the costly
burden imposed by Sarbanes-Oxley (SOX) Section 404(b), despite their simple
corporate structure and lack of product revenue.
The Fostering Innovation Act (H.R. 2629) will amend the filing status classifications in
SEC Rule 12b-2 to allow companies with a public float below $250 million or revenues
below $100 million to qualify as non-accelerated filers. This change will reduce their
regulatory burden and, for growing biotech innovators, allow them to spend valuable
innovation capital on breakthrough research.
BIO POSITION:
BIO supports enactment of H.R. 2629, the Fostering Innovation Act. This
bill will institute a commonsense regulatory burden for small companies
and stop the damaging diversion of capital from science to compliance.
DISCUSSION POINTS:
Groundbreaking research can be delayed when government compliance burdens
siphon off innovation capital. Early-stage biotech innovators operate almost
entirely without product revenue, so costly regulations like SOX Section 404(b)
force companies to spend dollars on reporting rather than research.
The current filing status definitions at the SEC are outdated and do not reflect
the reality of many small public biotechs. The Fostering Innovation Act will group
companies with common characteristics together, giving the SEC more accurate
filing classifications and providing important regulatory relief to startups working
on cutting-edge scientific breakthroughs.
CAPITAL MARKETS
20 TAX & CAPITAL MARKETS
TAX & CAPITAL MARKETS
Small Cap Liquidity
Reform Act
BACKGROUND:
Under current SEC rules, all securities on the public market are priced in $0.01
increments. This minimum trading increment is known as the “tick size.” The switch
to the standard tick size of a penny was enacted in 2000 in order to boost trading in
large company stocks, but many smaller issuers have experienced the
opposite effect.
The current one-size-fits-all tick size does not reflect the realities of the market for
smaller companies and subjects these smaller issuers to the same trading framework
as large, multinational companies with exponentially higher trading volumes and
market caps. The JOBS Act has been successful in stimulating IPO activity for
biotech small businesses, but these growing innovators face a daily struggle to
maintain liquidity once on the public market.
The Small Cap Liquidity Reform Act (H.R. 3448) will institute a five-year pilot program
that will allow small issuers to choose a larger tick size (either $0.05 or $0.10) in order
to spur trading activity in their stock. Companies with annual revenues of less than
$750 million would be eligible for the pilot program.
BIO POSITION:
BIO supports enactment of H.R. 3448, the Small Cap Liquidity Reform
Act. This bill passed the House of Representatives overwhelmingly in
February 2014. A tick size pilot program will grant flexibility to growing
companies and increase the liquidity and capital availability necessary
for emerging biotechs to be successful on the public market.
DISCUSSION POINTS:
More than 70 emerging biotechs have gone public using provisions in the JOBS
Act. Once on the public market, these companies depend on strong liquidity
to help raise the capital necessary to fund the decade-long, billion-dollar
development timeline intrinsic to groundbreaking R&D.
The Small Cap Liquidity Reform Act takes into account the unique nature of
the trading environment that small companies face as well as the high capital
burden of biotech R&D. Tick size flexibility will increase the effectiveness of the
public market as a capital formation tool and speed the development of cures
and treatments.
2014 BIO FLY-IN 21
TAX & CAPITAL MARKETS
Small Company
Disclosure
Simplification Act
BACKGROUND:
Public companies are required to provide their financial statements in an interactive
data format using eXtensible Business Reporting Language (XBRL). XBRL “tags”
certain data points in issuers’ reports and exports them in a standardized format.
XBRL is reported in a unique computing language – one that requires specific
expertise outside the bounds of traditional financial or accounting training.
Companies need experts in the XBRL language to properly file the appropriate reports,
so small issuers turn to external contractors to complete their XBRL filings. The cost
of an external XBRL contractor is significant for an emerging company, reducing the
capital available for more vital functions like research and development. Furthermore,
XBRL has yet to prove an effective, reliable tool for investors or regulators.
The Small Company Disclosure Simplification Act (H.R. 4164) will build on the success
of the JOBS Act by providing an XBRL exemption for emerging growth companies.
It will also institute a temporary exemption for small businesses with low annual
revenues while requiring the SEC to make recommendations on how to improve the
compliance mechanism.
BIO POSITION:
BIO supports enactment of H.R. 4164, the Small Company Disclosure
Simplification Act. A targeted XBRL exemption for emerging innovators
would free growing companies from a costly regulatory burden that
does more harm than good.
DISCUSSION POINTS:
Without product revenue, biotech companies on the public market are forced to
ask investors to pay for XBRL reporting rather than scientific research. The cost
burden of this requirement, and therefore the amount of capital diverted from
R&D, is significant.
The information included in an XBRL report is often not indicative of the health
of a smaller issuer. Because XBRL reporting does not provide much insight for
potential investors in small companies, the high cost of compliance far outweighs
its benefits.
22 FOOD AND AGRICULTURE
FOOD AND AGRICULTURE
FOOD AND AGRICULTURE
FOOD AND AGRICULTURE
BIO’S POSITION:
BIO stands strongly behind the health and safety of GMO food
ingredients but understands consumers have questions. We support
greater public education about GMOs and endorse a federal GMO
labeling solution that addresses consumers’ questions about food
safety, provides consistency regarding the GMO labeling of food, and
moves the country beyond state-by-state labeling challenges. We ask
Congress to engage in the conversation about GMOs by:
Encouraging citizens with questions about GMOs to contact
www.GMOanswers.com
Supporting the Coalition for Safe Affordable Food’s federal
GMO labeling solution, www.cfsaf.org
BACKGROUND:
GMO food labeling has become a national discussion, requiring a national solution
that leverages our federal authority on labeling and food safety, the U.S. Food and
Drug Administration (FDA).
A farm-to-fork coalition – the Coalition for Safe Affordable Food – has joined together
to propose a federal solution designed to:
1. Advance food safety: Address the questions that consumers have about the
safety of GMO food by requiring the FDA to conduct a safety review of all new
GMO traits before they are introduced into commerce and make clear that FDA
would mandate the labeling of any GMO food that presented a safety or health
risk, or was compositionally different than its non GMO food counterpart.
2. Inform consumers: Help consumers make sense of GMO labeling claims
and their choices in the marketplace by asking the FDA to establish federal
standards for companies that want to voluntarily label their product for the
absence-of or presence-of GMO food ingredients.
3. Provide consistency: Improve food labels using the term “natural” by
requiring FDA to define the term for its use on food and beverage products,
thus creating a consistent legal framework that will guide food labels and inform
consumer choice.
Support a Federal
GMO Food Labeling
Solution that Informs
Consumers, Eliminates
Confusion, and
Advances Food Safety.
2014 BIO FLY-IN 23
FOOD AND AGRICULTURE
4. Eliminate confusion: Address the confusion and uncertainty created by a
50-state patchwork of GMO safety and labeling laws, while affirming the FDA is
the nation’s authority on food safety and labeling matters.
This approach to a federal solution will help provide consumers with the tools they
need to make informed decisions. It will also address consumers’ safety questions by
establishing FDA standards for the safety and labeling of food and beverage products
made with GMOs.
By informing and providing consistency for consumers and strengthening the
role of FDA, we can move beyond state-by-state food labeling challenges that are
needlessly undermining consumer confidence in the safety of the US food supply and
threatening to harm state economies and businesses.
Congress has voted twice in the past two years to support a federal approach to GMO
food labeling, voting in 2012 and 2013 overwhelmingly in the Senate against a Sanders
amendment to the farm bill that would have allowed states to create a patchwork of
GMO food labeling laws.
The federal solution proposed by the Coalition for Safe Affordable Food is
our preferred approach to mandatory GMO labeling legislation, and it has the
support of a vast cross-section of American agriculture. We hope it will be given
serious consideration.
As noted above, we stand strongly behind the health and safety of GMO food
ingredients but also are committed to a transparent dialogue with consumers. Last
year, the biotechnology industry launched the “GMO Answers” initiative to create
a public conversation about GMOs and to provide consumers with information to
enable them to make up their own minds about GMOs with facts in hand. We are
engaging a community of independent third party experts—health care providers,
nutritionists, dieticians, academicians and farmers, among others—to answer
any question about GMOs, e.g., on safety, health and nutrition, labeling, impact on
environment and on society, the science behind GMOs, federal government oversight,
and many, many more.
Since launching “GMO Answers” in July 2013, more than 150,000 people have visited
www.GMOAnswers.com, asking over 660 questions. We encourage the public to
ask their questions about biotechnology via this interactive, easy-to-use website.
There is much misinformation out there that is intended to scare consumers about
GMO food ingredients. As a member of this coalition, we are committed to promoting
policy that addresses their questions. The Coalition for Safe Affordable Food’s
proposed federal solution and “GMO Answers” do just that.
Support a Federal
GMO Food Labeling
Solution that Informs
Consumers, Eliminates
Confusion, and
Advances Food Safety.
CONTINUED
24 INDUSTRIAL AND ENVIRONMENTAL
INDUSTRIAL AND ENVIRONMENTAL
INDUSTRIAL AND ENVIRONMENTAL
INDUSTRIAL AND ENVIRONMENTAL
BIO POSITION:
BIO supports preserving the Renewable Fuel Standard, or RFS.
It provides the policy foundation for private investment in the
advanced biofuels industry and must remain in place. We oppose
any legislative attempts to weaken or eliminate the RFS.
BIO asks that Congress restore important advanced biofuels
tax credits, which expired December 31st, and move quickly
to establish stable, long-term tax policy that supports not just
biofuels, but innovative renewable chemicals and biobased
products.
BIO thanks Congress for passing a farm bill that provides reliable,
mandatory funding for rural energy programs and creates new
opportunities for renewable chemicals manufacturing and
promising new purpose-grown energy crops.
BACKGROUND:
To grow America’s 21st Century bio-based economy, BIO supports stable government
policies that drive private sector investment and commercial scale production within
the U.S. industrial biotechnology sector. BIO members use biotechnology to produce
better performing and higher yielding feedstocks and to convert those feedstocks
into advanced biofuels, renewable chemicals and biobased products. Economic
data suggest that these applications of biotechnology create high quality jobs, ignite
domestic manufacturing of renewable materials, and improve energy security.
DISCUSSION POINTS:
RFS: The RFS is working as intended and must be maintained. By establishing a
market for emerging advanced and cellulosic biofuels, the RFS provides the policy
foundation for private investment in these technologies. Thanks to the RFS, more
than 50 advanced biofuels companies have collectively invested more than $5.9
billion in private capital to get the industry off the ground. 2014 marks a watershed
year, with the first two cellulosic biorefineries now online (INEOS Bio in Florida and
KiOR in Mississippi), and three more scheduled to begin operation this year (Abengoa
Bioenergy in Kansas, and POET-DSM and DuPont in Iowa). Now is not the time to
jeopardize these and future investments in America’s economy and energy security.
Preserve the
Renewable Fuel
Standard and Restore
Support for Industrial
Biotechnology in the
Tax Code
Tax: The December 31st expiration of tax credits for advanced biofuels has, for the
second year in a row, left advanced biofuel developers in limbo as Congress debates
whether to extend these important provisions retroactively. Congress should extend
expired advanced biofuel tax incentives without delay to provide a solid footing for
energy tax reform, and move as quickly as possible to establish stable, long-term
tax policy that supports not just biofuels, but innovative renewable chemicals and
biobased products. Senator Baucus’ energy tax reform proposal is a good start, but
must be expanded to include renewable chemicals.
Farm Bill: The recently enacted farm bill includes vital mandatory funding and key
policy improvements that will spur further growth in the industrial biotechnology
sector, including language that opens biorefinery loan guarantees to producers of
renewable chemicals and biobased products, maintains incentives for farmers who
choose to grow purpose-grown energy crops and prioritizes research and devel-
opment on crop insurance programs for those crops, and continues an important
federal procurement program for biobased products. We thank Congress for its
bipartisan work on the farm bill.
INDUSTRIAL AND ENVIRONMENTAL2014 BIO FLY-IN 25
1201 Maryland Avenue, SW
Suite 900
Washington, DC 20024
www.bio.org
