New Republican Congress to Tackle Health Reform, Biomedical Innovation, Tax Policy

The 2014 mid-term elections handed over control of the Senate to Republicans and boosted the GOP majority in the House, a clear blow to Obama administration policies, including the president’s landmark health reform initiative.  Voters were most dismayed about the economy and lack of jobs, but U.S. military snafus overseas and concerns about the Ebola outbreak further heightened dissatisfaction. Democrats who voiced support for health reform lost key races, a sign of broad unhappiness over Washington gridlock - even among those who have benefited from expanded health coverage.

Thus, a first order of business next year for Republican leaders is legislation to repeal the Affordable Care Act (ACA) of 2010. Such a measure will be largely symbolic, designed to provide an opportunity for Republicans to fulfill campaign promises to kill Obamacare, and a presidential veto is certain. There are many ACA features that even conservatives applaud, such as ensuring coverage to individuals with pre-existing conditions, and many Republicans will be reluctant to end benefits for some 15 million Americans that have gained coverage through federal and state exchanges and expanded Medicaid programs.

However, there are a number of ACA revisions that could be enacted through other legislative vehicles. These include a delay in implementing the employer mandate, eliminating the never-formed Independent Payment Advisory Board, and making tweaks in certain ACA definitions and timeframes. Medical device makers are pushing hard for fast action to kill the added tax on medical devices, particularly for small companies, but the legislators will have to find some kind of “pay-for” to offset lost revenue estimated at $29 billion over 10 years.

Republican victories greatly diminished prospects of further Medicaid expansion, as Florida, Georgia, Wisconsin, Maine and Kansas re-elected governors with stated opposition to broader state coverage. A Republican governor in Arkansas, moreover, may roll back its recently revised Medicaid program. But there could be change in Alaska, as well as other states that already are seeking to implement modified expansion programs. The State Children’s Health Insurance Program (SCHIP) expires next year, and reauthorization legislation could provide a vehicle for Medicaid reform and entitlement revisions.

When Congress returns to Washington this month for a lame-duck session, the top item on the agenda is to enact a spending bill to keep the government running through most of 2015. The biomedical research community will be looking for signs of increased support for the National Institutes of Health and the Food and Drug Administration – or if Republicans plan to take large swipes at federal spending across the board.

Both parties also will decide committee leaders and membership to reflect the composition of the new Congress. Sen. Lamar Alexander of Tenn. is slated to head the Senate Health, Education, Labor & Pensions Committee, and Sen. Orrin Hatch of Utah is in line to chair the Senate Finance Committee. There also will be new leaders of the House Ways & Means Committee and other key House panels due to retirements and House limits.

An early budget deal would, enable GOP leaders to focus next year on more substantive legislation, such as tax reform, immigration reform, an international trade measure and highway and infrastructure funding. Authorization of the Keystone Pipeline is at the top of the agenda. New committee leaders already are discussing tax change options, including corporate tax reform that addresses taxation of overseas corporate profits, an important issue for pharmaceutical companies seeking “inversions” through mergers with foreign companies.

Arizona voters approved a “right to try” ballot measure that allows drug makers to provide not-yet-approved medicines to patients with terminal illnesses. That could spur action on similar legislation proposed to Congress, most likely as part of the House Energy & Commerce Committee’s “21^st Century Cures” legislation. That initiative has bi-partisan support for new incentives to develop antibiotics and other needed medical products and for streamlining certain regulatory requirements, and could provide a vehicle for additional FDA policy changes and research reforms.