Additionally, H.R. 3635, a bill that passed the House in September, seeks to improve transparency and accountability in Medicare Administrative Contractors’ (MACs) Local Coverage Determination (LCD) process for devices.
Device Tax Repeal
On July 24, the House passed H.R. 184, the Protect Medical Innovation Act. The bill, introduced by U.S. Rep. Erik Paulsen (R-MN), would permanently repeal the 2.3 percent excise tax on medical devices. The medical device tax was originally enacted as part of the Affordable Care Act (ACA) in 2010 and was suspended for two years in January 2018. The bill garnered bipartisan support in the House and now moves to the Senate for consideration. The medical device tax is a burdensome levy that harms job creation, impedes economic growth, and deters innovation. A full repeal of the device tax would give manufacturers the security to make multi-year investments in infrastructure and research and development to continue providing patients with lifesaving technology.
On June 5, U.S. Reps. Jackie Walorski (R-IN) and Suzan DelBene (D-WA) introduced H.R. 5997, the Ensuring Patient Access to Critical Breakthrough Products Act of 2018. The legislation would require Medicare to cover all breakthrough devices approved through the FDA’s expedited review process for three years and make a coverage determination within those three years. For a medical device to earn a breakthrough designation, it must provide a more effective treatment for life-threatening or irreversibly debilitating diseases than existing approved alternatives; offer significant advantages over alternatives; or have its market availability be in the best interest of patients. If passed, this legislation would provide patients with quicker access to cutting-edge medical technology as well as expeditious and adequate reimbursement for manufacturers promoting innovation.
Local Coverage Determination
On Sept. 12, the House passed H.R. 3635, the Local Coverage Determination Clarification Act of 2017, a bill introduced by U.S. Reps. Lynn Jenkins (R-KS) and Ron Kind (D-WI). The legislation seeks to improve transparency and accountability in MACs’ LCD process by requiring public and open MAC meetings on record, requiring disclosure of the rationale for an LCD and evidence for that decision, and requiring MACs to provide stakeholders with a meaningful reconsideration process for an LCD. The current LCD process lacks transparency and opportunity for stakeholder input; therefore, patients are at risk of being denied access to critical medical technologies. This legislation would improve the LCD process and provide Medicare beneficiaries access to the products and services they need. A similar bill, S. 794, the Local Coverage Determination Clarification Act of 2017, was introduced in the Senate by U.S. Sens. Johnny Isakson (R-GA) and Tom Carper (D-DE), but has yet to be considered.
2018 Midterm Elections Update
The long primary season has finally come to a close. All eyes now move to the general elections on Nov. 6, where the party makeup of Congress and the direction of the country will be determined. After narrowing to just three points in May, the generic ballot now favors the Democrats by 12 to 13 points in the general elections. Additionally, a never-ending wave of controversy in the White House continues to submerge President Trump’s approval ratings, which have dropped from a high of 44 percent approval in June to under 40 percent in September. This puts Trump’s numbers among the lowest approval ratings in the first two years of any post-World War II president besides Jimmy Carter. These indicators could spell disaster for incumbent House Republicans, especially if a rising tide of Democratic voter enthusiasm surfaces ,coupled with disillusioned suburban Republicans staying home on election day.
However, Republicans still have several inherent advantages due to geography and redistricting. Many of the congressional district boundaries are favorable towards Republicans, having been drawn by Republican legislatures over the past decade. Republicans are also more efficiently allocated in areas outside of cities, while Democrats have the propensity of packing themselves in tight urban districts that lean heavily Democratic. With just two months to go before the midterm elections, the Democrats need to flip 23 seats to retake the House and we anticipate they will win 18 to 22 seats.
There are several prominent Republicans of particular importance to the life sciences industry that are vulnerable in the upcoming midterms. U.S. Rep. Erik Paulsen (R-MN), a member of the House Ways and Means Committee who represents the western Minneapolis (Minn.) suburbs, faces a tough re-election campaign against Democratic primary winner Dean Phillips. Phillips, a local businessman, won the Democratic primary with more than 81 percent of the vote and is running as a moderate to appeal to white-collar suburban voters. Paulsen’s district voted for Hillary Clinton by 10 points in 2016, but still supported Paulsen, who received 56.9 percent of the Congressional vote. Paulsen is notable for leading the House efforts to repeal the medical device tax.
U.S. Rep. Mimi Walters (R-CA), who represents Orange County, is another industry champion who faces a tough race in November. As the only California Republican on the House Energy and Commerce Committee, Walters has led many efforts to promote growth and innovation in the life sciences sector. For her work, she was awarded the “Champion of Healthcare Innovation” award in 2015 by the Healthcare Leadership Council. Additionally, major life science firms such as Allergan, Johnson & Johnson Vision, and Edwards Lifesciences are located in her district. In her race this fall, Walters faces Democrat Katie Porter in a district that Hillary Clinton won by six points.
Another vulnerable member is U.S. Rep. Peter Roskam (R-IL). Roskam represents the northern Chicago suburbs and is the current chairman of the House Ways and Means Health Subcommittee. As chairman, Roskam presided over hearings and legislation to promote healthcare innovation and has been a prominent voice for the industry. Northern Illinois is also home to Baxter International, Abbott Laboratories, AbbVie, Astellas Pharma, and Takeda Pharmaceuticals. Roskam’s district voted for Hillary Clinton by seven points in 2016, and an energized 63,000 Democrats showed up for the district’s Democratic primary in March, as opposed to just 8,600 in 2016. Sean Casten, an energy executive and the winner of the Democratic primary, will take on Roskam in what is sure to be a competitive race.
The results of recent Senate primary races suggest optimism for Republicans’ overall hopes of maintaining their majority in the Senate. As we mentioned in our earlier update, Democrats have to defend nine Senate seats in states that Trump won in 2016, while Republicans only have one incumbent seat, U.S. Sen. Dean Heller (R-NV), in a state that Hillary Clinton won. Two top-notch Republican challengers have won their primaries in Florida and Missouri, and those victories should worry two unpopular incumbent red-state Democratic senators. Additionally, the preferred Republican candidate prevailed in the primary for Arizona’s open Senate seat, which the GOP hopes to keep red. We anticipate the Republicans will net two to three seats in the Senate, leaving the party with either a 53-45 or 54-44 majority (U.S. Sens. Bernie Sanders (I-VT) and Angus King (I-ME) are independents who caucus with Democrats).
In Florida, incumbent U.S. Sen. Bill Nelson (D-FL) will have to fend off a strong challenge from Republican Gov. Rick Scott, who handily won the GOP primary on Aug. 28 with more than 88 percent of the total vote. Despite having been in Florida politics for over 40 years, Nelson has very low name recognition compared to the two-term governor. Additionally, Scott’s approval numbers are around 54 percent, while only 40 percent of Florida voters approve of the job Nelson has been doing. Scott, who launched a large Spanish ad campaign, is also more popular with Latino voters, who make up more than one in five eligible voters in the Sunshine State. To make matters worse for the incumbent Democrat, Scott has outraised Nelson nearly four to one and is willing to self-fund his campaign with a net worth of over $175 million. We predict that Gov. Rick Scott will win this Senate seat.
On Aug. 7, Missouri Attorney General Josh Hawley won the Republican primary to face two-term incumbent U.S. Sen. Claire McCaskill (D-MO). The 38-year old Hawley was the Republican Party’s favored candidate and is sure to give the embattled McCaskill a tough re-election campaign. Missouri has been increasingly hostile to the Democratic Party, as President Trump won the state by more than 18 points in 2016. To make matters worse, McCaskill’s approval rating sits at just 38 percent and only 31 percent of Missouri voters say she deserves to be re-elected. We foresee Hawley winning this election by 1.6 to 2.3 points.
The Republican Party got another boost on Aug. 28, when its preferred candidate, U.S. Rep. Martha McSally (R-AZ), won the Republican primary for Arizona’s open Senate seat. McSally, a U.S. Air Force veteran, will take on Democratic nominee and fellow U.S. Rep. Kyrsten Sinema (D-AZ) in the general election. Trump won Arizona two years ago by three points, but only around 47 percent of the state’s voters approve of his performance. Although Arizona is traditionally conservative, this will be a tight race as Sinema has styled herself as a moderate, having voted with President Trump’s position 58 percent of the time during her tenure in the House. Recent polling shows McSally with a slight edge, and we believe she will prevail on election day in what should be a very close race.
Jeffrey J. Kimbell, president and founder of Jeffrey J. Kimbell & Associates Inc., represents 35 clients in the life sciences community seeking legislative and policy remedies in Washington. Founded in 1998, the firm provides strategic solutions to hand-selected clients seeking creation, modification, or proper implementation of public law.
David C. Rudloff is a manager of government relations at Jeffrey J. Kimbell & Associates Inc. He previously worked as a litigation paralegal at Covington & Burling in Washington, D.C. Rudloff graduated from Davidson College in 2016 with a bachelor of arts degree in political science.