Good Day BIO: Midterms preview - plus, R&D tax changes and OOP 'smoothing'

It’s Election Day—we got expert insights on which races are worth staying up late to watch tonight. Plus, BIO joined a letter on an R&D tax change and Avalere released a new report (with support from BIO) on the need for out-of-pocket “smoothing.” (793 words, 3 minutes, 57 seconds)

Midterms preview: 4 things to watch today

While we’re unlikely to know the final tally today, a few key races are worth staying up late to watch. We spoke to BIO experts and consultants from Akin Gump Strauss Hauer & Feld LLP, Subject Matter, and Todd Strategy Group to find out what to watch on Election Day.

1. U.S. Senate: Watch Pennsylvania.

In the race for the seat being vacated by Sen. Pat Toomey (R-PA), Republican Mehmet Oz (“Dr. Oz”) faces Democrat John Fetterman, a race that “will be a key indicator for the direction of the remainder of the evening,” said G. Hunter Baters, Partner at Akin Gump Strauss Hauer & Feld LLP. “If Republicans are ultimately victorious, we will know early that it will be a good night for other GOP candidates.” 

“Democrats can’t win the Senate without one pick-up, and it’s the only one,” said Steve Elmendorf, Managing Partner & Co-Founder of Subject Matter.

Read more about Pennsylvania and why it matters to biotech—plus five more Senate races to watch.

2. U.S. House: Watch Virginia and New Hampshire for signs of a ‘red wave.’

Keep an eye on three Democratic incumbents who face uphill Republican challenges:

• Elaine Luria (VA-2)
• Abigail Spanberger (VA-7)
• Jennifer Wexton (VA-10)

VA-2 and VA-7 could be among the first toss-up districts reporting results, with polls closing at 7:00 pm Eastern.

Watch for early Republican victories in competitive races in New Hampshire, too.

3. What about the states?

Here’s what Patrick Plues, BIO’s VP of State Government Affairs, is watching today:

• Gubernatorial races where the party in control could switch: Arizona, Maine, Michigan, New York, Nevada, Oregon, and Wisconsin – “Oregon and New York being the most significant.”
• Gubernatorial races in biotech-heavy states: California, Maryland, Massachusetts, and Pennsylvania. “Frankly, none of these gubernatorial races are competitive, and the Democrat candidates are heavily favored to win,” said Plues.
• State legislature races where party control could flip: Arizona, Minnesota, and Michigan.

4. ‘It’s the economy, stupid.’

Two out of three consultants quoted that famous James Carville line.

“Americans are focused on pocketbook issues and outweigh such issues over philosophical discussions on the status of democracy, which has been a theme of Democrats’ campaigns,” said Todd Strategy Group.

“As a midterm election year without Donald Trump on the ballot, this is not a ‘choice’ election, but rather a referendum on the current American economic environment,” noted Bates.

Read the whole thing. 

CFOs oppose tax change that kills R&D incentives

A group of 178 CFOs of major corporations, including BIO members, urged congressional leaders to reverse a change in the tax code that limits deductions on R&D. 

The context: R&D costs would no longer be deductible immediately but must be “amortized over five years domestically and 15 years for international costs,” under a change put in place in 2017 and taking effect January of this year, The Wall Street Journal explained.

The $29.1 billion tax hike is “a significant step backward” for the U.S., especially when other countries give a “super deduction” for R&D and China is expanding this tax break, said the letter sent Friday. “Unfortunately, the current playing field is tilted against the U.S.”

BIO’s taking action: BIO sent a similar letter to congressional leaders in June to “urge immediate legislative action,” and joined a coalition of 400 companies and associations in another letter in October. BIO members also “flew in” to D.C. in September to lobby on the issue.

What’s next: There is bipartisan support to delay the change, but it must be passed by December to avoid harming research.

CMS must smooth way for out-of-pocket smoothing, report says

Provisions in the Inflation Reduction Act (IRA) theoretically make it easier for Medicare Part D beneficiaries to pay for medicine, but government intervention is necessary to ensure private insurers, pharmacies, and pharmaceutical benefit managers deliver intended benefits to patients, says an Avalere Insight report published yesterday—Bio.News got a first look.

What’s in the Inflation Reduction Act? Along with harmful drug price controls, the legislation includes measures to limit out-of-pocket (OOP) spending for medications for Medicare Part D patients.

Specifically: The IRA includes a spending cap of $2,000 per year and an “OOP smoothing” provision to spread out patients’ payments over the course of a year.

But: “additional clarity from the Centers for Medicare & Medicaid Services (CMS)” is needed to make the OOP smoothing effective and workable, says the Avalere Insight report (which was funded by BIO).

What should we do about it? Patient groups and stakeholders should take advantage of CMS’s current stakeholder engagement process and a comment period planned for 2023, the report says. 

Read more about the report. 

Get tips for engaging with CMS.

President Biden’s Tuesday: Waiting for election results like the rest of us—but get ready for a long night (or week) because final results could take time, The New York Times reports.

What’s Happening on Capitol Hill: Election Day—don’t forget to vote.