BayBio Policy Corner for Friday, March 1, 2013

As Sequestration Takes Effect, Impact on Biotech Could Be Significant
With the passing of the deadline to avoid sequestration, the focus has now shifted to how Congress could avoid a government shutdown at the end of March.  If cuts are enacted, biotech will be greatly affected in a variety of ways.  Some of the largest cuts will be to the National Institutes of Health (NIH) which is the biggest funder of medical research in the U.S.  Companies and institutes that currently receive NIH funds, or funds from other governmental departments and agencies such as the National Science Foundation (NSF), the Department of Energy, the National Cancer Institute and NASA, could see substantial reductions that would negatively affect research and development.  Education and public health funds would also be cut at the end of the month.  According to the White House, California could lose $284.88 million in education funds, the largest cut of the 50 states.  Almost 10,000 fewer low-income college students would receive aid and over 3,600 fewer would qualify for work-study programs.  On the public health front, $1.1 million in funding for vaccines would be lost, and cuts to the AIDS Drug Assistance Program (ADAP) could result in thousands of patients losing access to life-saving HIV medications.  The state health department would lose millions in funding, resulting in over 49,000 fewer HIV tests.  The White House’s report on the impact sequestration will have on California can be accessed here.

The FDA will also lose a substantial amount of its funding, more than 5% of its annual $4.1 billion budget.  Included in these cuts are the user fees paid by our industry to ensure timely reviews of new drugs, devices, and diagnostics.  As BioCentury reported Thursday, the Obama administration is asking Congress to release about $41 million in user fees collected under the PDUFA program.  This would allow the agency to access these non-tax payer funds for the balance of the fiscal year and spare any interruption of reviews due to sequestration.

Biotech Industry Faces Challenging Year in Sacramento
The California legislature introduced 2,312 bills by the February 22, 2013 deadline for new legislation.  Out of those bills, several areas of concern and opportunity for the industry were immediately apparent, and span a range of issues, including: biosimilar substitution, drug takeback, extended producer responsibility for medical sharps waste, green chemistry, mail-order pharmacies, NOL tax credit utilization, oral chemotherapy out-of-pocket caps, privacy (including genetic privacy), Prop. 13 reform, Prop. 65 reform, and sales and use tax exemptions for manufacturing and R&D equipment – to name a few.   There are also several bills in the healthcare space without specified revenue streams which we will be closely monitoring to ensure that we are not amended into the bill for that purpose.  BayBio’s Government Relations Committee has taken positions on several bills, and will discuss the remainder at our next monthly call on Friday, March 22nd.  If you would like more information regarding the Government Relations Committee, please contact Ritchard Engelhardt, Vice President of Government Affairs, at

BayBio Urges Opposition to Medicare Part B Cuts
BayBio, along with BIO and state affiliates across the country, has urged Congressional opposition to any proposals that would seek to reduce Medicare payments for providers of drugs and biologics under Medicare Part B. Part B provides an invaluable pathway for patients to access a narrowly defined, limited number of products injected or infused under the direction of a physician.  A few years ago, Part B drug reimbursement was reformed and payment amounts were dramatically reduced as part of the Medicare Modernization Act (MMA), due to the introduction of a new system called the Average Sales Price (ASP).   Payments are now set using market-based Average Sales Price (ASP) data, which reflect the actual prices paid by physician and other drug purchasers.  Congress set the reimbursement rate for most Part B drugs at ASP + 6%.  With mounting pressure to reduce the budget deficit, we want to ensure Congress does not look to make any reductions to Medicare Part B physician reimbursement rates, and urge support of the ASP + 6%.  A copy of BayBio’s letter can be found here.

BayBio to Participate in Annual BIO Fly-In with Local Entrepreneurs
BayBio will again travel to Washington, DC for the annual BIO fly-in on Capitol Hill March 12-13.  Participants of the event spend the day meeting with Members of Congress and their staff to discuss the most important legislative issues facing the biotechnology industry.  This year, we are proud to announce the expansion of our scholarship program that we began in 2012 for small company entrepreneurs to join our contingent to detail their work, the challenges that the face doing business in California, and the promising products they have in early stage development.  In 2013, the BayBio contingent will include:

  • Gail Maderis, President and CEO – BayBio
  • Ritchard Engelhardt, Vice President, Government Affairs – BayBio
  • Mallori Merandino, Policy Associate – BayBio
  • Caleb Bell, CEO and Founder – Bell Biosystems
  • Stephen Cary, CEO and Co-Founder – Omniox
  • Ryan Witt, Consultant for various small company startups in the Bay Area

For more information or to register, please see   If you have any questions, please contact Mallori Merandino at