Utah’s 2018 legislative session was a very active 45 days for our industry! BioUtah, along with many of its members, continued to build relationships, educate policy makers about the life sciences industry, and advocate on key issues important to the growth of the industry. In January, we held our second annual legislative lunch, where we shared BioUtah’s policy priorities with legislators prior to the legislative session. On February 20, BioUtah partnered with the Utah Governor’s Office of Economic Development (GOED) and the Kem C. Gardner (KCG) Policy Institute to hold the first life sciences day at the State Capitol. At the event, we unveiled our 2018 BioUtah Utah Life Sciences Industry Report that included new economic data on the industry from the KCG Policy Institute. Executives from Tolero Pharmaceuticals and Stryker addressed lawmakers and other stakeholders in attendance. Company representatives from Edwards Lifesciences, Merit Medical, Nelson Laboratories and others from industry were also on hand to showcase their innovations, providing a robust snapshot of Utah’s strong life sciences community.
BioUtah and its members were actively engaged during the legislative session. We testified before the legislature on tax reform, talent development and workforce needs, and drug importation legislation. BioUtah expressed strong concerns about allowing prescription drugs to be imported from Canada and provided comment on changes to the USTAR program, the freezing of TAP funding and GOED’s TCIP funding for start-up companies.
A short summary of legislative activity of interest to our industry is provided below.
Workforce and Talent Development
Strengthening workforce development and talent recruitment are two of BioUtah’s top priorities. With Senator Ann Millner’s leadership, several bills were passed that could help address our workforce challenges:
- SB 104, Talent Recruitment and Retention Strategy, creates a loan repayment program that incentivizes students to enroll in degree programs that align with high-demand, high-wage jobs and then remain in the state after graduation.
- SB 131, Talent Ready Utah Amendments, ensures more collaboration across institutions, agencies and industries to fill in the state’s talent gaps through the creation of the Talent Ready Utah Center within GOED. This new center will promote the inclusion of industry partners in education and provide outreach to employers regarding workforce development programs. BioUtah will be exploring how this new initiative could potentially further enhance and advance the Medical Innovations Pathways program and other BioUtah-related workforce efforts.
Tax Policy Changes
Several tax bills were passed that are important to the industry, including repeal of the sales tax on business inputs and 3-year life penalty on manufacturers. Below is a summary of the key tax bills passed by the legislature.
- HJR 20 puts a 10 cent gas tax on the November ballot. If the 10 cent gas tax passes, the legislature will swap an equivalent amount of the state’s share of the increase out of sales tax earmarks for state transportation projects to education, roughly $141 million in FY 2023
- SSB 233 repeals the sales tax on business inputs, including the 3 year life penalty on manufacturers. However, the repeal will only become effective if the U.S. Supreme Court overturns the Quill decision, or allows States to begin collecting online sales tax. If and when this happens, SB 233 would require that new sales tax money be applied to the sales tax exemption first.
- SSB 293 was the most significant tax bill passed this session, making several significant changes in tax policy: 1) reduces the income tax rate from 5.0% to 4.95%, 2) changes and phases in over time, the state’s corporate tax apportionment formula, moving to a single-sales factor, and 3) increases property tax in two significant ways:
- The bill will freeze the basic levy property tax, increase guarantees and equalize property tax funding to encourage local districts to use existing property tax authority. The freeze of the basic levy will last for 5 years.
- The bill indexes the property tax rate and ties the WPU and basic rate together. For every 1% percent increase in the WPU, it will pull in a corresponding amount from the property tax. The bill sponsors intend for the WPU and property tax to be tied together at a 85/15 split. The aim is to maintain property tax as an ongoing component of education funding. However, there is a debate about how this indexing mechanism will actually work. The overall goal of the agreement is to increase education funding by $385 million by FY 2023.
BioUtah worked with patient groups, Pharma, BIO and a number of its member companies to defeat, HB 163, which would have allowed the importation of prescription drugs from Canada. We believed that HB 163 could not adequately ensure the safety and efficacy of drugs coming across the border. Safety and quality are of paramount importance in the life sciences industry and the patients they serve.
BioUtah felt that importation had already been examined and addressed by the federal government through the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA). The MMA would allow pharmacists and wholesalers to import certain drugs (not including controlled substances or biological products) from Canada to the United States only when the Secretary of Health and Human Services (HHS) certifies to Congress that such importation will pose no additional risk to public health and safety and will result in significant cost-savings to American consumers. No Secretary has provided such certification to date. Therefore, we believe this issue should remain at the federal level.
BioUtah also believes that state drug importation legislation, such as HB 163, could have a chilling effect on Utah’s dynamic life sciences industry, and especially hit hard Utah’s emerging biotech and pharmaceutical companies.
BioUtah will continue to work with the sponsor of HB 163 to educate him and other legislators about our concerns with this legislation. We will also engage in a broader discussion about ways in which to address drug pricing issues, a key objective of the bill.
Changes to USTAR’s Mission
The legislature passed, SB 239, made significant changes to USTAR's programs. The legacy USTAR programs including the Principle Researchers at the University of Utah and Utah State University as well as the USTAR buildings on each campus were transferred to their respective universities. USTAR will undergo a study during the interim legislative session to examine the appropriate role of government in technology-based economic development programs as well as the effectiveness, efficiency and cost of USTAR's programs. During this time, USTAR will honor all grant commitments that have been made and those that will be made in the currently open round of TAP. However, any future funds for new grants or programs will be on hold until future evaluations of USTAR are completed. The legislation also places a hold on GOED’s TCIP program, which will also be re-evaluated during the interim. The results of the interim study will determine when these programs may proceed. Any questions should be directed to USTAR.
The state business incentives and grant programs, including USTAR’s TAP program and GOED’s TCIP program, have been critical to helping life sciences companies survive the funding “valley of death” and continue on the path towards successful commercialization.
The USTAR building at the University of Utah has played a significant role in fostering collaboration between the university and private sector. Specifically, the Nanofab lab has allowed private companies to work in conjunction with university professors to further develop commercialization projects.
BioUtah will work closely with the Legislature, GOED and USTAR to closely examine these programs, their function and return on investment to the taxpayers. We believe these programs have greatly benefitted Utah’s economy. We want to make sure there are appropriate and adequate avenues to ensure that great ideas from our universities and small companies are able to be tested and commercialized, and ultimately help create jobs and grow our economy.
In closing, BioUtah will continue to be a voice for the life sciences community’s policy priorities at both the state and federal level. However, we can’t be effective without you. Please contact BioUtah to learn how you can get involved!
With warm regards,
President & CEO