In the 2012 cycle, Abbott’s PAC donated $743,750 to federal candidates, and 55 percent of that went to Republicans.
Abbott Laboratories celebrated the spin-off of its pharmaceutical business on Jan. 1, 2013. The move outlined a clearer, more promising product portfolio for the North Chicago-based company, which now operates across four equally sized sectors – nutrition, diagnosis, medical devices and generic drugs. But there also was a reason not to celebrate. On the same day, the government imposed a 2.3 percent excise tax on medical devices as part of President Barack Obama’s Affordable Care Act, a business that became more important to Abbott after the spin-off.
The industry has called the new tax a job-killer. Abbott, in fact, has announced a series of layoffs that will put approximately 1,900 people out of work, about 6 percent of its total U.S. workforce. The company cited “changes in the health care industry, including U.S. health-care reform and the challenging regulatory environment” as a reason for the job cuts.
Medical device makers such as Abbott are giving money to the politicians who are fighting for them.
Rep. Erik Paulsen from Minnesota has sponsored a bill to repeal medical device tax. “It’s not only costing our country jobs and deterring innovation, but more importantly, it will reduce patient access to cutting edge medical products and treatments that save lives,” Paulsen said in a statement.
The Republican, who is also member of the House Ways and Means Committee, received $10,000 from the Abbott Laboratories Employee Political Action Committee in the 2011-2012 cycle. That was the second highest amount the PAC gave any federal candidate. In fact a large chunk of Paulsen’s campaign funds came from health-care companies and professionals.
The intention is obvious. The repeal of the device tax “would help all the companies in our group,” Wuensch said. She added in an email that many companies have reallocated research and development money and reduced overhead to offset the impact of the tax. “This said, I give the odds of such a repeal as very low.”
Despite the pessimism among many analysts and experts, politicians were confident – at least until a few weeks ago. In early April Paulsen’s bill gathered the critical 218th cosponsor, making it powerful enough to march forward. The senate version of the bill, introduced by Sens. Orrin Hatch of Utah and Amy Klobuchar of Minnesota, received a bipartisan vote of 79-20 in a non-binding resolution in favor of the repeal. The Utah Republican received a $4,000 contribution from Abbott’s PAC during the last election cycle.
Indeed the medical device tax repeal is only one of many changes in Obamacare that companies such as Abbott want, but it doesn’t mean they want the law thrown out completely. The duality can be traced in both Abbott’s statement and donations numbers from the company’s PAC.
Since President Barack Obama’s 2008 campaign, Abbott has adopted a much more balanced contribution strategy to maintain bonds with both Republicans and Democrats. In the 2010 cycle, when the Affordable Care Act became law, the PAC, in a very rare case, favored Democratic candidates over Republican ones.
At that time Abbott was still a pharmaceutical company, and a main lobbying group for the country’s pharmaceutical giants spent $150 million on an advertising campaign supporting Obama’s health-reform act. After the passage of the law, Abbott continued lobbying for its implementation.
“Having a more insured population, it would seems to me not only as the right thing, quite frankly, for a country but also from a pure business perspective--you now have a population of individuals that should be better positioned to pay for the drugs,” said professor Lawrence Singer, director of the Beazley Institute for Health Law and Policy at Loyola University Chicago. Singer added, however, that whether the act will be fully implemented is now “up for grabs.” He cited the fact that many states have refused to allow the expansion of their state Medicaid programs, even though the added cost would be borne by the federal government in the early years.
In the 2012 cycle, Abbott’s PAC shifted back to a Republican-favored strategy, donating more than $2.7 million to political campaigns, including $743,750 that went to federal candidates. Fifty-five percent of that went to Republicans. The biggest winner was Rep. Charles Boustany of Louisiana, a physician who received $15,000 from Abbott’s PAC.
“I believe Congress must do more to expand access to affordable health-insurance coverage. More importantly, we must address skyrocketing health costs,” Boustany said on his website. The Republican, who serves on the House Ways and Means Committee, argues that instead of handing personal medical decisions to Washington bureaucrats, a better way to reduce individual costs is by allowing more and better choices among competing private health-insurance plans. “Too often, government-run plans get a failing grade in this area,” he said.
Boustany’s comments pretty much summarize what health-care companies such as Abbott want – yea to more insurance access and nay to bigger government. Despite this, Abbott has continued lobbying for the reform law’s implementation.
Some analysis link Abbott’s efforts to a provision under the act that will protect biotech drugs from generic competition for 12 years. Before this, the Food and Drug Administration regulated only the approval of generics made from chemical compounds, excluding biotech drugs, which use living cells.
But Abbott entered 2013 with one more pro-Obamacare reason gone – its pharmaceutical business. The new company, formed by a spinoff, is left with a product portfolio that consists of nutritional products, diagnostics, established pharmaceuticals and medical devices. With all its businesses subjective to tightened legislation and pricing pressure, the company now seems eager to support those who oppose government interference in the practice of medicine.
According to the current statistics from OpenSecrets.org, Abbott’s PAC has given $46,000 to federal candidates in the new cycle beginning this year, and 76 percent of that went to Republicans.
“Abbott expects debate to continue during 2013 at all government levels worldwide over the marketing, availability, method of delivery and payment for health-care products and services,” the company said in its 2012 annual report. “It is not possible to predict the extent to which Abbott or the health care industry in general might be affected by the matters discussed above.”