The recent economic downturn impacted everyone from Wall Street to Main Street, including your local, state, and federal government. It’s in the news on a daily basis – every level of government has budget concerns. Elected officials are trying to close billion dollar budget gaps without raising taxes by making painful cuts. This week, New Jersey Governor Chris Christie described the result of this process as the “new normal.” How could this “new normal” affect the life sciences industry across the country?
One would assume that public officials are looking not only at cuts that can be made, but also at new ways to generate revenue. This might allow them to save jobs, boost their approval ratings – and help improve their budgets’ bottom lines. As members of a deep-pocketed industry, life sciences companies should be prepared to subsidize these efforts – or, perhaps more accurately put, continue to subsidize these efforts.
The government’s regulation and oversight of the life sciences industry generates a lot of money for governments. Investigations and lawsuits often result in very high settlements. Just over the past two years, Pfizer settled a suit for $2.3 billion; Eli Lilly received a $1.4 billion fine; Allergan settled a suit for $600 million; AstraZeneca received a penalty of $520 million; Novartis settled a suit for $422.5 million; Glaxo was ordered to pay $400 million; Forest Labs settled a suit for $313 million; Elan settled for approximately $203.5 million; and Johnson & Johnson received a penalty of $81 million, and the list goes on. Additionally, PDUFA fees can run in the millions. Licensing requirements force companies to pay annual fees. Companies face possible penalties for failing to report or under-reporting their aggregate spend data in various states. Violations of countless other laws and regulations at the national, state and even local level also trigger potential monetary penalties.
If there is continued pressure to balance budgets without raising taxes, how will government bridge the gap? Will government decide to raise these fees and monetary penalties? Will there be more inspections at the state and federal level? Will there be more vigilant oversight of companies’ advertising and promotional activities? Stay tuned.
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