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Welcome to Washington, DC! DTC 2012: THE REGULATORY AND LEGISLATIVE LANDSCAPE ELECTION YEAR 2012 JIM DAVIDSON IT IS A PRESIDENTIAL ELECTION YEAR... IN CASE YOU HAVE BEEN IN ANTARCTICA Or missed any of the stimulating debates Elections affect you and your businesses Imagine your industry if David Kessler stayed 4 more years instead we have had DTC advertising from 1997 to year odyssey a AGENDA FOR TODAY Thank you and DTC National for allowing me to record this since I cannot be with you in person We have much to review Healthcare reform the threats to dismantle reform and what they mean for you The 2012 election and what the results may mean for you The looming budget battle in Washington FDA and the slow train to DTC expansion 2012 A YEAR OF GREAT PORTENT FOR HEALTHCARE AND DTC Affordable Care Act: Signature Obama achievement in jeopardy 2012 election: Serious implications for healthcare reform GOP candidates lead with attacks on ACA Future determined by Supreme Court or 113th Congress U.S. SUPREME COURT HEARD ARGUMENTS MARCH Court expected to deliver opinion on ACA in late June Two main issues: Constitutionality of individual mandate Severability of mandate from remainder of the act Does Act unreasonably force states to spend more on Medicaid, which is the ACA vehicle for extending coverage to uninsured WHAT COULD HEALTHCARE REFORM CHANGES MEAN FOR YOUR INDUSTRY Industry could lose potential 50 million new customers/patients If they lose health insurance they lose their drug coverage Seniors voting power probably trumps cuts to Part D Medicaid cuts could mean reduced payments for drugs WHAT ARE THE POLITICS OF HEALTHCARE REFORM ISSUES? Individual mandate Republicans were for it before they were against it! GOP presidential and congressional candidates lead the recent attacks Yet, mandate developed by GOP think tank Heritage Foundation Four GOP Senators introduced it in 1993 WHAT ARE THE POLITICS OF HEALTHCARE REFORM ISSUES? Two of these sponsors are past and current top Republicans on Finance Committee Senator Obama was AGAINST individual mandate in 2008 Reminiscent of Abbott and Costello's Who's on First Talk about Etch-A-Sketch! THE 2012 ELECTION MAY HAVE SERIOUS IMPLICATIONS FOR AFFORDABLE CARE ACT President's approval rating end of March: 46% (Gallup) Cook Report: 10 Senate seats are tossups 7D and 3R seats Nelson (NE) already listed as a likely R pickup (Kerrey could disprove) Ds need 25 pickups to take back the House THE PARADOX OF POLITICS Republican presidential/congressional candidates oppose Obamacare Pharmaceutical business often more aligned with GOP (former PhRMA President was a House GOP Committee Chairman) A GOP majority likely change to Obama care and reduce number of Americans on insured care While Rs sympathetic to less taxation or regulation, fewer insureds mean less opportunity to market more health care to new consumer/patients ON THE OTHER SIDE OF THE AISLE If Ds control both (or even one) branches of government, comprehensive health care reform continues to be implemented Business opportunity for industry likely to grow if Democrats expand Obamacare But DTC and healthcare marketing may become more vulnerable to Democrats regulatory and legislative restrictions Question remains whether all Democrats believe pharmaceutical industry contributed enough to healthcare reform BEST JUDICIAL AND POLITICAL OUTCOMES FOR THE PHARMACEUTICAL AND MARKETING INDUSTRIES? Best scenario for DTC: Supreme Court upholds the individual mandate This would preserve market access for all and drug reimbursement for industry While dollars and responsibility for Medicaid may shift between federal government and states program still is expected to grow Divided or Democratic Congress appear to insure rollout of Affordable Care Act and 50 million new insured Americans IN THIS ELECTION YEAR A MAJOR BUDGET FIGHT IS BREWING Sequestration to take effect January Budget Control Act Law requires $106 billion in automatic spending cuts for FY 2013 $97 billion must come from discretionary programs Economy scheduled to pickup $1 trillion from expiring Bush tax cuts ADVERTISING DEDUCTION FREQUENTLY VIEWED AT RISK Tax added by House Ways and Means Committee to ACA Disallowance of pharmaceutical advertising = $37 billion Dropped after four days of protests All advertising discussed by Congressional Super Committee SHIFT GEARS FROM TAXES TO REGULATION FDA (and the FTC) notable for making rules without rulemaking DTC advertising created by 1997 agency guidance Approaching 3 years without online guidance Proposed pre-review guidance could slow ad approval Ambiguous authority to require dual mode for warnings Courts have struck down FDA speech restrictions DTC TRAIN SLOWING DOWN AT THE FDA STATION DEJA VU? Just a brief refresher Last PDUFA authorization prompted major conflict (2007) Chairmen Waxman and Kennedy sought 3 year Moratorium on ads for new drugs Pre-clearance of all DTC advertising Special warning icon for any drug designated by FDA Authority to pre-approve all drug marketing plans TENSION BETWEEN PRE-APPROVAL AND POST PUBLICATION ENFORCEMENT First Amendment prohibits prior restraint of speech 2007 congressional proposals crossed that line Roberts - Towns - Buyer amendments restored the balance Other ways to slow down advertising reaching its market FDA ADDRESSES PRE-REVIEW AUTHORITY FDAAA GAVE COMMISSIONER Issued guidance March 2012 for 'Pre- Dissemination Review' Authority for pre-review in 2007 FDAAA Identified categories FDA wants to review Initial TV ad for new drug or new indication TV ads for drugs subject to REMS TV ads for controlled substances 1st TV ad after a safety labeling update 1st TV ad after an enforcement letter (warning or untitled) Any TV ad 'otherwise identified by FDA as subject to predissemination review' GUIDANCE STILL WAVES THREAT OF ENFORCEMENT BEFORE PUBLICATION FDA cannot bar ad publication after 45-day pre-review period Can inform advertisers that proceeding without complying with Section 503B is a violation of the Act FDA guidance omits mention of Section 503B(c): 'This section does not authorize the Secretary to make or direct changes in any material submitted pursuant to subsection (a).' DE FACTO DTC TV PRIOR APPROVAL Congress created ambiguity FDA trying to sort it out Subsection (e)(1) says Secretary may require inclusion of disclosure of serious risk if it would be 'false or misleading' without disclosure One observer: 'De facto DTC TV prior review and approval' 502(n) says absent exceptional circumstances FDA cannot require prior approval of an ad FDA IS ENTERING A CHALLENGING PERIOD If FDA had not acted in 1997 the Courts likely would have stepped in FDA regulatory system only as strong as the consent it commands from the regulated industry and consumers Question whether the current regulatory structure would survive review by a U.S. Supreme Court that is protective of commercial speech THANK YOU! Jim Davidson, Chair Public Policy Group Polsinelli Shughart Washington, D.C.
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