Medical and Biopharma Gift Ban

The Massachusetts High Technology Council applauds Chairman Charles Murphy and the House Ways and Means Committee for proposing to remove anti-competitive marketing restrictions (known as a “gift ban”) on doctors and biopharmaceutical employers as part of an omnibus economic development bill.

Two years ago, the Council advised legislative leaders against creating duplicative marketing restrictions on key growth sectors that placed Massachusetts at a decided competitive disadvantage. As Council President Chris Anderson wrote in the attached 2008 Boston Globe op-ed, banning common forms of interaction with doctors keeps pharmaceutical companies from effectively educating them on life-altering drugs, countering the stated goal of controlling costs.

Indeed, these onerous and unnecessary restrictions have only served to demonize doctors and biopharmaceutical employers and have led many medical device companies to avoid doing business here. Rather than containing costs, this only-in-Massachusetts ban is limiting job growth and networking opportunities in innovation sectors – including our renowned university cluster – that thrive on such interaction.

In a similar competitiveness vein, based on emerging Council research, we also support the House proposal to extend a Net Operating Loss carrryforward period to 20 years and to lower the capital gains tax rate to 3% for investments made in Massachusetts-based start-ups as a first step in becoming more competitive on capital gains taxes. In each case, as with the gift ban, Massachusetts cannot afford to be an outlier among competitor states.

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Righting Healthcare Reform (Boston Globe)
By Christopher R. Anderson
March 31, 2008

IN A NOVEMBER 2005 letter to the Legislature, more than 20 state business associations declared support for measures that would deliver healthcare cost controls to the state’s ambitious reform efforts. After lauding measures like investing in electronic health initiatives and creating cost transparency at hospitals, the business leaders wrote, “Cost, after all, is the single biggest problem we face today in the delivery of health care.”

Unfortunately, that statement remains true today. Despite national attention for the 2006 reform plan, healthcare in Massachusetts has reached a crisis point. More residents now have health coverage, but the crushing costs of the program endanger its long-term
viability. This crisis has been brought about by the failure to address costs while focusing almost exclusively on access. For companies that have experienced years of double-digit increases for employee health premiums, the exploding cost of the healthcare law is not surprising.

During the debate, businesses successfully pushed for modest cost reforms. But even those appear to be stalling. Last week, the state’s most prominent champion of healthcare transparency, Harvard Pilgrim CEO Charles Baker, expressed frustration at the pace of
making healthcare data available on the state’s website, which was a mandate of the 2006 law.

With its massive cost overruns and missed deadlines, the healthcare reform law is quickly becoming the Big Dig of the next generation, an ambitious and beneficial but deeply flawed public initiative with back-breaking costs to the taxpayers. Unlike the Big Dig,
Massachusetts taxpayers, not Congress, will pay most of the healthcare tab.

Senate President Therese Murray deserves significant credit for proposing the first plan to address the serious challenge of controlling health costs without any new broad-based taxes. In particular, the increased investment in electronic medical records will benefit hospital efficiency and patient safety, while at the same time providing economic opportunities for Massachusetts technology employers. Murray also smartly proposed boosting enrollment at the University of Massachusetts Medical School, which already
has one of the nation’s top primary-care programs. In addition, proposals to encourage doctors to enter primary care and practice in underserved regions of the state have significant merit.

However, the recommendation to ban many forms of interaction with doctors keeps the pharmaceutical companies from effectively educating doctors on life-altering drugs. This counters the stated goal of controlling costs, as evidenced by the lack of specific cost
savings projections publicly attributed to this education ban. It is more of a political proposal than a fiscal one.

Marketing bans or restrictions are redundant because of federal law and could impact drug safety if critical information does not reach doctors or patients. Only a small percentage of drug compounds ever reach the consumer, and the state should not impose duplicative red tape that will hinder access to breakthrough treatments. For these reasons, the New Hampshire House of Representatives recently rejected a similar marketing restriction bill.

It would be shortsighted for the Commonwealth to commit $1 billion for the state’s life sciences industry while simultaneously undercutting biopharmaceutical employers that are expected to create jobs here. Last year, a High Tech Council study conducted by the University of Massachusetts discovered that from 2000 to 2006 13 of the leading pharmaceutical firms invested more than $13.4 billion in state biotech companies – far outpacing venture capital biotech investment. The study revealed that this investment typically occurs during the early stages of drug development when many drugs fail due to lack of funding. If the state deliberately works against the biopharmaceutical sector, it is hurting the entire life sciences community, and ultimately patient care.

A much better idea would be to reform the state’s medical malpractice laws. Creating a system that minimizes frivolous lawsuits and provides protections to doctors would greatly stabilize skyrocketing malpractice premiums, which are driving many good doctors out of state. A 2002 federal study showed that reforming the nation’s medical malpractice system would save up to $108 billion in annual healthcare costs. As Baker said, Murray is “doing us a big favor by throwing the gauntlet down” on cost reform.

Now all stakeholders in the debate must work together to make sure it is done right.

Christopher R. Anderson is President of the Massachusetts High Technology Council.