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CLSA Wire

What’s Next for the Remainder of 2018? Federal Legislative Outlook on Government Funding, Medical Device Tax and PAHPA Reauthorization

October 24, 2018
By Jenny Nieto

Both the House and Senate have adjourned until after the midterm elections. While the outcome of the elections will determine whether the Democrats win a majority in either the House or the Senate (or both), or if the Republicans maintain control of one or both chambers in the 116th Congress, both the House and Senate will return to Washington, D.C. in late November and early December (approximately 16-20 legislative days) to finish legislative work prior to the end of the year and the 115th Congress.

There remain several legislative priorities of importance to the health and life sciences sector that are likely to be addressed during this time frame: funding the federal government in fiscal year (FY) 2019, renewing our nation’s biodefense and pandemic preparedness enterprise, and (hopefully) repealing the medical device excise tax. Each of these priorities are summarized in detail below.

FY 19 Federal Government Funding

In Sept. 2018, Congress passed a “minibus” (consolidated appropriations bill) that finalized five of the twelve individual appropriations bills.  Those were signed into law by the President and included funding for the Department of Defense, and the Departments of Labor, Health and Human Services, Education and Related Agencies.  The bill also contains a continuing resolution (CR) through Dec. 7, 2018, for any appropriations bills not enacted before Oct. 1, 2018. Those remaining seven appropriations bills will need to be addressed when Congress reconvenes in November.

Notably, the enacted appropriations package included a $2 billion budget increase for the National Institutes of Health in fiscal year 2019 – this amount is consistent with the increase called for by CLSA and other allied stakeholders, and we are pleased with this outcome.

In response to the recent increase in the deficit, President Trump recently called for all federal departments to cut budgets by 5% budget in FY 20.  With several departments’ funding for the current fiscal year still undetermined, this request could make negotiations in the lame duck session even more difficult than expected.  Regardless of the election outcomes, funding all federal departments and agencies in FY19 will remain a top priority for the end of the 115th Congress.

PAHPA Reauthorization

The Pandemic and All-Hazards Preparedness Act (PAHPA), first enacted in 2006 and renewed in 2013, established new federal entities (e.g. Assistant Secretary for Preparedness and Response (ASPR) and the Biomedical Advanced Research and Development Authority (BARDA)) with authority to oversee preparedness efforts, and also authorizes funding for chemical, biological, radiological and nuclear (CBRN) priorities, like the Project BioShield Special Reserve Fund, funds to combat emerging infectious diseases and pandemic influenza, and funds for advanced R&D of medical countermeasures through BARDA.

Some of PAHPA’s current authorities expired at the end of September, while others are intact until later in December. Congress must renew the legislation well ahead of mid-December in order for these critical operations to continue. While the House of Representatives passed reauthorization legislation in September, the Senate has yet to take action on the proposal or pass a version of its own.  CLSA applauded House passage of a reauthorization bill in September, and is hopeful both chambers can reach an agreement and send compromise legislation to the President’s desk.  CLSA will continue to strongly advocate for a swift reauthorization of PAHPA before it expires to ensure the U.S. is prepared to respond to CBRN threats.

Medical Device Tax Repeal

In July 2018, the House voted 283 to 132 to permanently repeal the medical device excise tax.  Since then, a number of time-sensitive priorities (e.g. Justice Kavanaugh’s Supreme Court confirmation hearings, appropriation bills, etc.) have kept the Senate’s consideration of a repeal of the medical device tax from top priority status.  While the device tax is currently inactive, the 2-year medical device tax suspension expires Dec. 31, 2019 – the Senate must pass a permanent repeal this fall, otherwise both chambers will have to pass the measure again in 2019.

According to CLSA’s 2018 California Life Sciences Industry Report, California is home to 1,796 medical device firms employing over 77,200 people – more firms and employees than any other state in the nation, and representing 18.5% of the nation’s med tech workforce – making the impact of the tax on our state particularly troublesome.

CLSA and our allied stakeholders and advocates continue to demonstrate the harm posed by a return of the medical device tax, and urge that a full and permanent repeal be considered “must pass” legislation after the elections. CLSA has opposed the medical device excise tax since it was proposed and implemented as part of the Affordable Care Act in 2010, and we have been working ever since to see it permanently repealed.

Questions? Please contact Jenny Nieto (Carey), CLSA’s Vice President of Federal Government Relations and Alliance Development (jnieto@califesciences.org).