Last night the House of Representatives passed an historic health care reform bill which will be sent to the President to be signed into law this week. The NVCA understands and supports the effort to reform our nation’s healthcare system and provide coverage to more Americans.  We are encouraged by several provisions in the bill, but continue to have concerns in other areas that could adversely impact investment in medical innovation. Some of these provisions could change with the Budget Reconciliation Bill currently working its way through the Senate, but the following summarizes the major provisions that currently impact innovation – for better and for worse:

+        Exclusivity for Follow-on Biologics--  The data exclusivity period for biologic innovation will be 12 years. Championed by Rep. Anna Eshoo, this provision helps ensure that the risk takers and innovators are adequately rewarded for their time and investment into groundbreaking medical innovation.

+        Cures Acceleration Network (CAN) -- Championed by Senator Arlen Specter, this provision provides a $500 million authorization for a new operating enterprise within NIH that will fund grants focused on "high need cures."  CAN will 1) operate based on recommendations from a widely representative board, including two venture capitalists; 2) reduce the barriers between lab discoveries and clinical trials for new therapies and; 3) facilitate FDA review for the high need cures funded by CAN.

+        Therapeutic Discovery Project Tax Credit – Championed by Senator Menendez, this provision allows companies to claim up to $25 million for certain qualified R&D expenses. 

+        Comparative Effectiveness Research (CER) -- Establishes an Independent Institute to assist patients, clinicians, purchasers, and policy makers in making health decisions by conducting research that would compare the clinical effectiveness, risk and benefits of two or more medical treatments or services.  The Institute will appoint advisory panels which will include industry, patients, and consumer groups.  CER reaffirms the "reasonable and necessary" standard of CMS. 

-         Medical Device Company Excise Tax -- The provision imposes an 2.9 % excise tax at the point of sale for every medical device company.  There is no small company carve out.  The tax is effective for taxable years after December 31, 2012.  Class I, II, and III devices will be taxed.

-         Medicare Commission -- This newly formed commission is tasked with reducing excess cost growth and improving the quality of care for Medicare beneficiaries.  NVCA believes this type of Commission could short-sightedly stifle the introduction of medical innovations into the healthcare system.

-         Medicare Capital Gains Tax -- This provision calls for a 3.8% Medicare tax on unearned income which will impact the capital gains tax rate.  The new tax is effective for taxable years after December 31, 2012. The NVCA will continue to advocate for a meaningful differential between capital gains and ordinary income.  

As mentioned above, while the larger Health Care Reform bill will be signed into law, Congress will continue to work through the Budget Reconciliation Bill which will amend certain provisions of the larger bill this week.  We are closely monitoring the proceedings to understand if any of our concerns might be addressed during this process.