ADVOCACY REPORT HEALTHCARE DISTRIBUTION MANAGEMENT ASSOCIATION ELECTION IMPACT & HDMA 2014 Election Impact & Advocacy Report

Transcription

1 NOVEMBER 2014 HEALTHCARE DISTRIBUTION MANAGEMENT ASSOCIATION ELECTION IMPACT & ADVOCACY REPORT

2 TABLE OF CONTENTS Executive Summary 1 Election Results Federal 3 Senate 4 House of Representatives 5 Election Results The States 7 Governors 8 Legislative Chambers 9 Attorneys General 10 Congressional Committee Impact 11 Senate 12 House of Representatives 13 ELECTION IMPACT HDMA Advocacy Efforts 16 Congressional Testimony HDMA Hill Days 17 HDMA Distribution Center Challenge 18 In Appreciation 19 HDMA Political Action Committee (PAC) 20 Conclusion 26 ADVOCACY CONTRIBUTING WRITERS Jewelyn Cosgrove, Associate Director, Federal Government Affairs Devin Boerm, Director, State Government Affairs ABOUT HDMA HDMA is the national association representing primary healthcare distributors, the vital link between the nation s pharmaceutical manufacturers and healthcare providers. Each business day, HDMA member companies ensure that 15 million prescription medicines and healthcare products are delivered safely and efficiently to more than 200,000 pharmacies, hospitals, long-term care facilities, clinics and others nationwide. HDMA and its members work daily to provide value and achieve cost savings, an estimated $42 billion each year to our nation s healthcare system. For more information, visit Copyright 2014 by the Healthcare Distribution Management Association All rights reserved. No part of this publication may be reprinted or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording or by an information storage and retrieval system, without permission in writing from the Healthcare Distribution Management Association.

3 1 EXECUTIVE SUMMARY While the 2012 election focused on presidential politics, the 2014 election focused almost entirely on who would gain control of Congress. Following a tumultuous election cycle, Republicans gained the majority in the Senate by a margin of 53 to 46 with one race heading to a run-off winning at least eight seats. In the House of Representatives, Republicans gained at least 15 seats, creating the largest Republican majority in the House in decades. With Republicans now in the majority of both chambers of Congress, all speculation is focused on the relationship with the White House and how the two branches of government can achieve their policy goals. With the new class of lawmakers and a switch in party control, the 114 th Congress could address a number of major policy issues affecting distributors in With that in mind, HDMA developed the 2014 Election Impact & Advocacy Report to highlight these issues. This report includes an overview of the political landscape at the federal and state levels, analyzes issues that may affect healthcare distributors including traceability, corporate tax reform, prescription drug abuse and Medicare reimbursement and the changes that will occur as a result of the elections. Finally, this year s report highlights HDMA members advocacy activities and includes a summary of HDMA s Political Action Committee (PAC) efforts. Below is a summary of the federal priority issues for distributors in Traceability Last year, Congress passed the Drug Supply Chain Security Act as part of the Drug Quality and Security Act (Public Law , Title II) establishing a comprehensive, uniform traceability framework for pharmaceutical products nationwide. Distributors are actively working to implement the law, collaborating with supply chain counterparts, regulatory agencies and state legislatures. HDMA is continuing to work with Congress as it oversees implementation of the law. Tax Reform It is likely that comprehensive tax reform will be a major priority for the new Congress. Specifically at risk for pharmaceutical distributors, a corporate tax reform package could involve repealing the last-in, first-out (LIFO) tax accounting method, which was included in Ways and Means Committee Chairman Camp s (R-Mich.) proposal earlier this year. With a new Chairman of Ways and Means in the 114 th Congress, it is likely there will be further discussion, hearings and proposals on tax reform. HDMA will remain involved in those discussions and continue advocating for the exclusion of LIFO repeal from any tax reform efforts. Prescription Drug Abuse In the past year, Congress spent a great deal of time addressing the nation s prescription drug abuse challenges. Proposals in both chambers have called for enhancing prescription drug monitoring programs, promoting development of abuse-deterrent drugs, increasing education and improving treatment options. While there were several

4 2 bills that HDMA supported, the Association actively advocated for S. 2862/H.R [sponsored by Sens. Hatch (R-Utah) and Whitehouse (D-R.I.); and Reps. Marino (R-Pa.), Blackburn (R-Tenn.), Welch (D-Vt.) and Chu (D-Calif.), respectively]. These bills would clarify specific provisions in the Controlled Substances Act and provide opportunities for further collaboration with DEA. It is unlikely that S. 2862/H.R will be enacted this year but these issues will continue into the 114 th Congress. HDMA remains actively involved in the Alliance to Prevent the Abuse of Medicines as well as an informal coalition of stakeholders supporting S. 2862/H.R Medicare Reimbursement Congress will need to address the Medicare Sustainable Growth Rate (SGR) issue as the current reimbursement rate will expire in March 2015, and physicians will face a significant cut in reimbursement. HDMA continues to advocate for legislation that would exclude prompt pay discounts from the Medicare Average Sales price, which could be considered as part of SGR reform. HDMA recently joined the Patient Access to Community Treatment coalition, which advocates for many of these priorities. In short, there is much work to be done when the 114 th Congress begins in January and with these issues and others, it is clear that lawmakers will continue to face significant partisan challenges over the course of the next legislative session.

5 ELECTION 2014 Federal Results election impact report

6 4 SENATE The most highly anticipated races of the 2014 election were in the U.S. Senate. Democrats, by a margin of 55-45, with two Independents included in their caucus, controlled the 113 th Congress. On Election Day, they were defending 21 seats to the Republicans 15, including seven states that President Obama lost in the 2012 presidential election. Three Republicans and five Democrats resigned or retired, leaving a number of Senate seats open. Combined with the negative presidential approval ratings and the notorious six-year itch for the President s party, Democrats were on the defensive for the majority of the election cycle. Conversely, Republicans only had two vulnerable incumbents, Senate Minority Leader Mitch McConnell (Ky.) and Senator Pat Roberts (Kan.), both of whom were successful in defending their seats. In the 114 th Congress, Republicans will control the chamber for the first time in eight years. With 10 races that were considered close, Republicans nearly swept the board. Incumbent Senators Kay Hagan (D-N.C.), Mark Pryor (D-Ark.), Mark Udall (D-Colo.) and Mark Begich (D-Alaska) lost their seats. In the race yet to be decided, Senator Mary Landrieu (D-La.) will face Rep. Bill Cassidy (R-La.) in a runoff election on December 6 after neither candidate received more than 50 percent of the vote. Republicans picked up open Democratic seats in Montana, South Dakota, West Virginia and Iowa; and kept Republican open seats in Nebraska, Oklahoma* and Georgia. Democrats kept the open Michigan seat, and successfully defended incumbents Senator Jeanne Shaheen (D-N.H.) in a tight race and Senator Mark Warner (D-Va.). Senator Warner ended up in a race much closer than polls indicated prior to Election Day, but ultimately defeated challenger Ed Gillespie (R) by fewer than 20,000 votes. *Oklahoma Senator Tom Coburn is resigning, effective at the end of the 113 th Congress. Rep. James Lankford (R-Okla.) won the seat and will have to run for the seat again in SENATE SEATS BY PARTY Democrat Republican Independent Unknown Pre-election: 45 Republicans and 55 Democrats Post-election: 53 Republicans and 46 Democrats, 1 TBD

7 5 Quick Facts Iowa elected its first female U.S. Senator when Joni Ernst (R) defeated Rep. Bruce Braley (D) to replace retiring Democratic Senator Tom Harkin. She also will serve as the first female combat veteran in the history of the U.S. Senate. West Virginia also elected its first female U.S. Senator with Republican Rep. Shelley Moore Capito beating opponent Natalie Tennant in the race to replace retiring Senator Jay Rockefeller. She will also be the first Republican to hold a Senate seat in West Virginia in 56 years. Senator Tim Scott (R-S.C.) had been appointed to serve in the seat vacated by Sen. Jim DeMint (R) in 2012 and won his election handily. In doing so, he became the first African-American senator elected in the South since Reconstruction. HOUSE OF REPRESENTATIVES Republicans held a strong advantage given President Obama s low polling numbers and ultimately were successful in solidifying their control of the House for another two years. The new Republican majority is the largest in the House since World War II Republicans held 246 seats in 1947 and may even exceed that record when all the races are finally decided. Early projections had the Republicans picking up six to 10 seats in the House, but the Republicans far surpassed all expectations. As of the publishing of this report, Republicans picked up at least 15 seats. While some races have yet to be called, at least 16 incumbents lost their seats, including 13 Democrats and three Republicans. Races that were considered toss-ups, where either party could win the seat, went overwhelmingly to Republicans, and moderate Democrats like 19-term Democratic Rep. Nick Rahall (D-W. Va.) and five-term Rep. John Barrow (D-Ga.) lost their seats even after surviving many Republican waves in previous elections. HOUSE SEATS BY PARTY Democrat Republican Undetermined

8 6 Pre-election: 234 Republicans and 201 Democrats Post-election: 244 Republicans and 186 Democrats, 5 TBD Republicans had a net gain of 12 seats at the time of this report s publishing. Though Democrats lost a number of seats, they won three formerly Republican seats. Quick Facts If after all races are decided the Republican Party holds 249 seats in the House of Representatives, it would be the largest Republican majority since Six out of nine House incumbents in Massachusetts had no opponent facing them in the general election. The entire state delegation is composed of Democrats. Republican Elise Stefanik became the youngest woman ever elected to Congress from New York s 21 st district at age 30. She also is the first Republican candidate to win the district. Pharmacist Buddy Carter (R) was elected to represent Georgia s first congressional district. The Blue Dog Coalition a group of centrist Democrats that at its founding had around 35 members was decimated for a second midterm in a row, losing at least three members on Election night with two more races too close to call. Only two members of the coalition in close races were able to win re-election outright. The Blue Dogs will likely number fewer than 10 members in the next Congress.

9 8 ELECTION 2014 State Results Pre-election State Party Control Post-election State Party Control Democrat Republican Split *Alaska Governor is undecided. election impact report

10 8 During the last mid-term election cycle in 2010, Republicans made huge gains in state elections. Republicans held majorities in 57 legislative chambers, Democrats in 41, with Nebraska non-partisan. Given the Republicans dominant position going into the 2014 midterm elections, there was some speculation that it would be difficult to make even larger gains to swing the pendulum further to the right. However, the Republican wave extended to the state level races, leaving Democrats with their lowest level of influence in almost a century. GOVERNORS Thirty-six gubernatorial seats were up for grabs in the 2014 midterm cycle. Of the seats up, there were 30 incumbents, Republicans were defending 23 seats while Democrats defended 13. Democrat Republican Undecided Pre-election Gubernatorial Party Control: 29 Republicans; 20 Democrats; 1 Independent Post-election Gubernatorial Party Control: 31 Republicans; 17 Democrats; 2 Undecided (Alaska and Vt.) Gubernatorial Race Highlights Democrats picked up two seats; Republicans picked up four. Rhode Island switched from Independent to Democrat. A Democrat beat an incumbent Republican in Pennsylvania. A Republican beat an incumbent Democrat in Illinois. Republicans won open seats previously held by Democrats in Massachusetts, Maryland and Arkansas. The Alaska governor s race is still undecided. Vermont s legislature will have to pick its governor, after neither gubernatorial candidate received 50 percent of the vote. They are likely to approve the current Governor, Peter Shumlin (D).

11 9 LEGISLATIVE CHAMBERS Out of a total of 7,383 state legislators going into the election, 3,820 were Republicans, 3,418 were Democrats and 26 were third-party lawmakers. In 2014, 46 states held elections for 6,049 legislative seats. It appears that Republicans have a net gain of about 350 to 375 seats, pending recounts, absentee ballots and still undecided seats. This gives them control of more than 4,100 of the 7,383 legislative seats nationwide. Democrat Republican Split Non-partisan Pre-election Legislative Chamber Splits: 57 Republicans; 41 Democrats; 1 non-partisan unicameral Post-election Legislative Chamber Splits: 68 Republicans; 30 Democrats; 1 non-partisan unicameral Legislative Chamber Highlights Republicans picked up chambers in Colorado, Minnesota, New Hampshire, New Mexico and West Virginia. Republicans won both the House and Senate in Nevada. Republicans took the majority in 10 legislative chambers across the country.

12 10 ATTORNEYS GENERAL There are 43 states that elect attorneys general, with 31 holding elections in In five states, (Alaska, Hawaii, New Hampshire, New Jersey and Wyoming), the governor appoints the attorney general. Maine s state legislature chooses their AG by a secret ballot process. The state Supreme Court appoints the AG in Tennessee. Due to a charter amendment passed by voters in 2010, the Washington, D.C., attorney general office was on the ballot in 2014 instead of being appointed by the mayor. Democrat Republican Undecided Pre-election Attorneys General: 24 Republicans; 26 Democrats Post-election Attorneys General: 27 Republican; 21 Democrats; 2 undecided (Alaska and Maine) Attorneys General Highlights There is a new governor-elect in Hawaii; the new attorney general is likely to be a Democrat. There are more Republican attorneys general than ever before in U.S. history. Arkansas and Nevada changed party hands from Democrat to Republican in open seats. In the states that appoint their attorney general, New Hampshire and Wyoming re-elected their current governor; New Jersey did not have an election; and Alaska s race has not yet been called.

13 Congressional Committee Impact As Congress returns, the departure of a number of members from key committees, through either retirement or defeat, will potentially change the dynamic of how those committees will conduct business. *The House and Senate are holding organizational meetings during the week of November 17, when each party will likely determine the chairmen and ranking members of the next Congress for each committee. This outlook is based on likely outcomes. election impact report

14 12 SENATE Senate Finance Committee Chairman 114 th Congress Senator Orrin Harch (R-Utah) Senate Health, Education, Labor and Pensions (HELP) Committee Chairman 114 th Congress Senator Lamar Alexander (R-Tenn.) Ranking Member 114 th Congress Senator Ron Wyden (D-Oregon) Ranking Member 114 th Congress Senator Patty Murray (D-Wash.) *likely The Senate Finance Committee was shaken up in the middle of the 113 th Congress with the resignation of Senator Max Baucus (D-Mont.), who became Ambassador to China. In his stead, Senator Ron Wyden (D-Oregon) took over as the top Democrat, while Senator Orrin Hatch (R-Utah) remained Ranking Member. In the next Congress, the two will switch positions as Republicans take the majority in the chamber. The Senate Finance Committee will continue to play a key role in the 114 th Congress, as the committee has spent a great deal of time discussing comprehensive tax reform over the past two years. While a corporate tax reform deal is not likely in the short-term, considerable debate and work has gone into negotiating what such a deal might look like. Expect to see discussions surrounding corporate inversions, a lower overall corporate tax rate and the elimination of deductions as part of the effort. Lastly, the committee also may address changes to Medicare reimbursement through SGR reform, among other issues. Quick Look 24 current members Senate Finance Committee Retirements: 0 Republicans, 1 Democrat Defeated: 0 Republicans, 0 Democrats The Senate HELP Committee will see significant change in the next Congress. Chairman Tom Harkin (D-Iowa) is retiring from Congress at the end of this year, having been a key player on healthcare issues, a champion for establishing uniform traceability standards for pharmaceutical products, and most recently advocating on the issue of prescription drug abuse. With Republicans now the majority in the chamber, Senator Lamar Alexander (R-Tenn.) will be the next Chairman of the Senate HELP Committee. It is expected that Senator Patty Murray (D-Wash.) will assume the top spot for the Democrats as Ranking Member. Senator Kay Hagan (D-N.C.) was the only member of the committee to lose re-election. Of note, S. 2862, the Regulatory Transparency, Patient Access, and Effective Drug Enforcement Act of 2014, sponsored by Senators Orrin Hatch (R-Utah) and Sheldon Whitehouse (D-R.I.) legislation that HDMA actively supports was referred to the Senate HELP Committee. This bill clarifies the Controlled Substances Act and provides DEA registrants an opportunity to submit corrective action plans to address regulatory concerns. The committee has conducted significant outreach to stakeholders through their Prescription Drug Abuse Working Group, and it is expected that the committee will remain engaged on this issue. Quick Look 22 current members Senate Health, Education, Labor and Pensions Committee Retirements: 0 Republicans, 1 Democrat Defeated: 0 Republicans, 1 Democrat

15 13 Senate Judiciary Committee Chairman 114 th Congress Senator Charles Grassley (R-Iowa) Ranking Member 114 th Congress Senator Patrick Leahy (D-Vt.) The Senate Judiciary Committee also has jurisdiction over matters related to the Controlled Substances Act, which could lend its influence over such issues as prescription drug abuse. However, most bills related to prescription drug abuse have been referred to the Senate HELP Committee thus far. The leadership of this committee will remain largely unchanged, though Senator Charles Grassley (R-Iowa) will take over as Chairman and Senator Patrick Leahy (D-Vt.) will become Ranking Member. No members of the committee were defeated in the election. Quick Look 18 current members Senate Judiciary Committee Retirements: 0 Republicans, 0 Democrats Defeated: 0 Republicans, 0 Democrats HOUSE OF REPRESENTATIVES House Energy and Commerce Committee Chairman 114 th Congress Congressman Fred Upton (R-Mich.) Ranking Member 114 th Congress Undecided From a leadership perspective, Congressman Fred Upton (R-Mich.) will remain Chairman of the House Energy and Commerce Committee. For Democrats, however, the top committee spot is being contested. Ranking Member Henry Waxman (D-Calif.) is retiring, and there is a two-way race to replace him between Rep. Frank Pallone (D-N.J.) and Rep. Anna Eshoo (D-Calif.), both of whom have extensive experience on the committee. Additionally, long-serving congressman and former committee chairman Rep. John D. Dingell (D-Mich.) is retiring after an impressive career spanning nearly 60 years that included passing the Prescription Drug Marketing Act, the predecessor to the Drug Quality and Security Act, which he was also instrumental in supporting. Rep. Dingell received the HDMA Rx Safety and Healthcare Leadership Award in Twelve members of the Committee will not return in the next Congress. Retirements and members running for higher offices were behind the majority of departures, including Mike Rogers (R-Mich.), Phil Gingrey (R-Ga.), Jim Matheson (D-Utah) and Bruce Braley (D-Iowa). Rep. Cory Gardner (R-Colo.) won his race for Colorado Senate and Rep. Donna Christensen (D-V.I.) won her race for Governor of the Virgin Islands territory. Reps. John Barrow (D-Ga.) and Lee Terry (R-Neb.) lost their bids for re-election. Rep. Terry served as Chairman of the Subcommittee on Commerce, Manufacturing and Trade. Of note, seven of these members served on the Subcommittee on Health, which will see a great deal of turnover in the next Congress. In the last Congress, the Energy and Commerce Committee had great bipartisan success on a number of priority issues for the distribution industry. This committee passed the Drug Quality and Security Act last year and the Ensuring Patient Access and Effective Drug Enforcement Act (H.R. 4709) this summer. Next year, the committee is likely to continue examining the issue of prescription drug abuse, as well as the 21 st Century Cures Initiative to spur healthcare innovation in drug development and treatment. Quick Look 54 current members House Energy and Commerce Committee Retirements/Running for Other Office: 5 Republicans, 5 Democrats Defeated: 1 Republican, 1 Democrat

16 14 House Ways and Means Committee Chairman 114 th Congress Congressman Paul Ryan (R-Wis.) *likely Ranking Member 114 th Congress Congressman Sander Levin (D-Mich.) Chairman of the House Ways and Means Committee David Camp (R-Mich.) is retiring from Congress at the end of this year. Congressman Sander Levin (D-Mich.) will return as Ranking Member, serving alongside a new Chairman, widely anticipated to be current Budget Committee Chairman and former Vice Presidential candidate Paul Ryan (R-Wis.), but reports suggest Rep. Kevin Brady (R-Texas) also may seek the gavel. The committee will likely continue to look at issues such as tax reform and Medicare reform in the next Congress. Quick Look 39 current members House Ways and Means Committee Retirements: 3 Republicans, 1 Democrat Defeated: 0 Republicans, 0 Democrats House Committee on Oversight and Government Reform Chairman 114 th Congress Undecided Ranking Member 114 th Congress Congressman Elijah Cummings (D-Md.) The House Committee on Oversight and Government Reform (OGR) is only expecting one retirement this year, but Rep. Darrell Issa (R-Calif.) is term-limited as Chairman. At least four members of the committee are actively seeking the top spot for Republicans, including Reps. Jason Chaffetz (R-Utah), Michael R. Turner (R-Ohio), Jim Jordan (R-Ohio) and John L. Mica (R-Fla.) Ranking Member Elijah Cummings (D-Md.) will remain the top Democrat in the 114 th Congress. Reps. Kerry Bentivolio (R-Mich.) and John Tierney (D-Mass.) were defeated in their primaries and Rep. Steven Horsford (D-Nev.) lost his bid for re-election. Rep. James Lankford (R-Okla.) won the race to replace Senator Tom Coburn (R) following his resignation at the end of this year. The OGR Committee, with its broad oversight jurisdiction, may become involved in DEA enforcement oversight in the next Congress. In the past few years, the committee also has been engaged in drug shortages, gray market distribution and wholesaler licensure, though the passage of a uniform pharmaceutical traceability standard in the Drug Quality and Security Act may change this dynamic with these issues having been addressed in the legislation. It is expected that the committee will remain engaged in these issues in the next Congress. Quick Look 40 current members House Committee on Oversight and Government Reform Retirements: 3 Republicans, 0 Democrats Defeated: 0 Republicans, 2 Democrats

17 15 House Judiciary Committee Chairman 114 th Congress Congressman Robert Goodlatte (R-Va.) Ranking Member 114 th Congress Congressman John Conyers (D-Mich.) The House Judiciary Committee took a much larger role in distribution industry issues in the 113 th Congress. House Judiciary members Reps. Tom Marino (R-Pa.) and Judy Chu (D-Calif.) co-sponsored the Ensuring Patient Access and Effective Drug Enforcement Act of 2014 (H.R. 4709) and worked closely with Chairman Robert Goodlatte (R-Va.) and the House Energy and Commerce Committee to finalize the legislation for House passage. The committee is committed to examining DEA enforcement questions and has indicated there may be additional work in the next Congress. Chairman Goodlatte will remain as Chairman and Congressman John Conyers (D-Mich.) is expected to stay on as Ranking Member of the committee. Committee members Reps. Howard Coble (R-N.C.) and Spencer Bachus (R-Ala.) retired. Quick Look 39 current members House Judiciary Committee Retirements: 2 Republicans, 0 Democrats Defeated: 0 Republicans, 1 Democrat

18 HDMA Advocacy Efforts election impact report

19 17 Successful advocacy plays a key role in delivering positive legislative outcomes and developing relationships with congressional leaders. HDMA cultivates and offers support for advocacy activities by our members through the Distribution Center Challenge, HDMA Hill Day and more. A number of legislative successes this year are due to the dedicated work by HDMA members to proactively communicate and promote the role of pharmaceutical distribution in delivering healthcare across the country. Congressional Testimony On April 7, 2014, HDMA President and CEO John M. Gray testified before the House Energy and Commerce Subcommittee on Health in support of H.R. 4069, the Ensuring Patient Access and Effective Drug Enforcement Act of 2014, sponsored by Representatives Tom Marino (R-Pa.) and Marsha Blackburn (R-Tenn.)* In his testimony, Mr. Gray urged Congress to support the legislation which would bring greater clarity to DEA registrants of their regulatory responsibilities surrounding the Controlled Substances Act. He also expressed strong support for provisions to establish a corrective action process for registrants to address regulatory concerns, and noted the negative impact enforcement efforts have had on patient access to needed medications. met with senators and representatives to discuss prescription drug abuse and advocate for legislation addressing prescription drug abuse and DEA enforcement efforts. After a number of productive meetings, these legislators signed on as co-sponsors of the Ensuring Patient Access and Effective Drug Enforcement Act (H.R. 4709, formerly H.R. 4069), ensuring the bill would have bipartisan support in the House and providing a pathway forward to floor passage in July. The opportunity to meet directly with Congressman Peter Welch (D-Vt.) and his staff to discuss the challenges our industry faces every day was worthwhile and allowed us to highlight issues directly affecting our company. We are pleased that Congressman Welch took a leadership role in sponsoring H.R. 4709, a bill that will help address some of the issues related to prescription drug abuse. - Meg Glazier, Burlington Drug Company HDMA Hill Days 2014 (L to R) : Brad Pine, Smith Drug Company; Rep. Trey Gowdy (R-S.C.); and Ken Couch, Smith Drug Company (L to R) Brad Pine, Smith Drug Company; Meg Glazier, Burlington Drug Company; Ken Couch, Smith Drug Company This year, HDMA hosted two Hill Days in Washington, D.C., drawing participation from representatives of HDMA member companies with a variety of perspectives. On February 5, members HDMA s second Hill Day took place on July 22. Member companies joined HDMA staff for several meetings with key tax policy staff in the House and Senate to discuss the impact LIFO repeal would have on the distribution industry. A marathon day of meetings included detailed discussions with staff for Speaker of the House John Boehner (R-Ohio), Senate Minority Leader Mitch McConnell (R-Ky.), House Majority Whip Kevin McCarthy (R-Calif.) and the House Ways and Means Committee, among

20 18 others. HDMA s Hill Day came at an important time to ensure that ongoing conversations between lawmakers on comprehensive tax reform kept distributors concerns top of mind. I participated in the LIFO-related HDMA Hill Day in July and met with a number of high-level committee and congressional leadership staff to discuss tax issues. Our Hill Day gave congressional staff actionable information on tax policy and how proposals to reform the corporate tax code could impact distributors, including the potential repeal of LIFO. Lawmakers appreciate hearing directly from their constituents to understand the priority issues affecting the industry. I can t imagine trying to achieve this kind of access and planning on my own; it was a great time saver. - Greg Drew, Value Drug Company HDMA Distribution Center Challenge Each year, HDMA encourages member companies to invite their members of Congress, state legislators and governors for tours of their facilities. Site visits for legislators are uniquely suited to share perspectives on policy decisions from the distribution industry. The value of the Distribution Center Challenge has been showcased to deliver legislative changes as a lawmaker becomes aware of their bill s impact and co-sponsorships of key legislation both significant victories for our industry. AmerisourceBergen hosted State Representative Gary Scherer (R) in Ohio on August 27, This year, numerous companies hosted legislators, providing the context necessary to demonstrate to policy makers how distributors are working to implement the Drug Quality and Security Act, the challenges they face in combatting prescription drug abuse and how the industry delivers millions of pharmaceutical products daily to pharmacies and dispensers all across the country. McKesson hosted Congresswoman Doris Matsui (D-Calif.) at their Sacramento Distribution Center on June 20, Cardinal Health hosted Utah Attorney General Sean Reyes staff on a tour of the Cardinal Health Salt Lake City Distribution Center on June 16, Having our member of Congress tour our facility was not only an important opportunity for our company, but it allowed us to advocate for issues important to our entire industry. Representative Marsha Blackburn (R-Tenn.) now has a first-hand understanding how the policies she is helping to secure in Washington will benefit her constituents in Tennessee. As a result of that tour, we now have a relationship with an important advocate for our company and our industry. - Tim Booth, Metro Medical Supply

21 19 In Appreciation HDMA thanks those members that made a commitment to engaging public officials on Capitol Hill and in the states. For those still considering participation, all distributor members are encouraged to engage in HDMA s advocacy efforts in the coming year. R

22 HDMA Political Action Committee (PAC) election impact report

23 21 HDMA Political Action Committee (PAC) Along with the Association s other advocacy activities, the HDMA Political Action Committee (PAC), the official PAC for primary pharmaceutical wholesalers, focuses on advancing distribution causes and interests with federal legislators. The HDMA PAC contributes to House and Senate legislators on key congressional committees, such as the House Energy and Commerce Committee, the House Ways and Means Committee, the Senate Finance Committee, the Senate Committee on Health, Education, Labor and Pensions, as well as leadership. Additionally, HDMA PAC recognizes champions on both sides of the aisle who meet its contribution criteria. The HDMA PAC is a critical component of our legislative strategy each year and I am proud to be a long-time supporter. It is truly the political arm for our entire industry, combining the voluntary contributions of executives across the membership to support candidates for federal office who understand and share our probusiness, pro-distribution philosophy. If you aren t contributing to the HDMA PAC, you are missing a key opportunity to be a leader in our organization and I strongly urge you to join us in supporting candidates that share our common interests. - Ken Couch, Smith Drug Company In 2014, HDMA PAC raised nearly $80,000 from members of HDMA s Board of Directors and HDMA staff. It was a record-setting cycle for the industry s political action committee, providing us the opportunity to support additional members of Congress and continue to build relationships with new committees and leaders. This year, HDMA PAC contributed to members on both sides of the aisle and in both chambers, contributing $73,000 to support pro-distribution candidates. HDMA PAC supported 15 Senate campaigns and 26 in the House, as well as the Republican Main Street PAC and the Senate Moderate Democrats PAC. Of those lawmakers who received HDMA PAC funds, all but one were reelected Senator Kay Hagan (D-N.C.) That equates to a winning percentage of 98 percent in the 2014 election cycle for HDMA PAC recipients.

24 22 HDMA PAC Results HOUSE Reelected Defeated Rep. Marsha Blackburn (R-Tenn.-07) Committees: Energy and Commerce RETIRED Rep. Jim Gerlach (R-Pa.-06) Committees: Appropriations; Ethics Rep. Kevin Brady (R-Texas-08) Committees: Ways and Means; Joint Taxation; Joint Economic (Chair) Rep. Robert Goodlatte (R-Va.-06) Committees: Judiciary (Chair); Agriculture Rep. Vern Buchanan (R-Fla.-16) Committees: Ways and Means Rep. Trey Gowdy (R-S.C.-04) Committees: Judiciary, Oversight and Government Reform; Education and the Workforce Rep. Mike Burgess (R-Texas-26) Committees: Energy and Commerce; Rules Rep. Gene Green (D-Texas-29) Committees: Energy and Commerce RETIRED Rep. Dave Camp (R-Mich.-04) Committees: Ways and Means (Chair); Joint Taxation Rep. Brett Guthrie (R-Ky.-02) Committees: Energy and Commerce; Education and the Workforce Rep. Diana DeGette (D-Colo.-01) Committees: Energy and Commerce Rep. Ron Kind (D-Wisc.-03) Committees: Ways and Means Rep. Charlie Dent (R-Pa.-15) Committees: Ways and Means Rep. Bob Latta (R-Ohio-05) Committees: Energy and Commerce Rep. Renee Ellmers (R-N.C.-02) Committees: Energy and Commerce Rep. Tom Marino (R-Pa.-10) Committees: Judiciary; Foreign Affairs; Homeland Security

25 23 HDMA PAC Results HOUSE Reelected Defeated Rep. David McKinley (R-W. Va.-01) Committees: Energy and Commerce Rep. Peter Welch (D-Vt.-At large) Committees: Energy and Commerce; Oversight and Government Reform Rep. Frank Pallone (D-N.J.-06) Committees: Energy and Commerce; Natural Resources Rep. Ed Whitfield (R-Ky.-01) Committees: Energy and Commerce Rep. Joe Pitts (R-Pa.-16) Committees: Energy and Commerce Rep. Paul Ryan (R-Wisc.-01) Committees: Budget (Chair); Ways and Means Rep. Aaron Schock (R-Ill.-18) Committees: Ways and Means; House Administration Rep. John Shimkus (R-Ill.-15) Committees: Energy and Commerce Rep. Patrick Tiberi (R-Ohio-12) Committees: Ways and Means Rep. Fred Upton (R-Mich.-06) Committees: Energy and Commerce (Chair)

26 24 HDMA PAC Results SENATE Reelected Defeated Senator Lamar Alexander (R-Tenn. 14) Senator Patty Murray (D-Wash. 16) Committees: Appropriations; Energy & Natural Resources; Health, Education, Labor & Pensions 2016 Committees: Appropriations; Budget (Chair); Health, Education, Labor and Pensions; Rules (Ranking); Rules & Administration & Administration; Veterans Affairs Senator Cory Booker (D-N.J. 14) Senator Rob Portman (R-Ohio 16) Committees: Commerce, Science & Transportation; Environment & Public Works; Small Business & 2016 Committees: Budget; Energy & Natural Resources; Finance; Homeland Security & Governmental Entrepreneurship Affairs Senator John Cornyn (R-Texas 14) Committees: Finance; Judiciary; Minority Whip Senator Pat Roberts (R-Kan. 14) Committees: Agriculture, Nutrition, & Forestry (Ranking Member); Finance; Health, Education, Labor and Pensions; Rules & Administration; Select Ethics Senator Mike Enzi (R-Wy. 14) Senator Tim Scott (R-S.C. 14) Committees: Budget; Finance; Health, Education, Committees: Commerce, Science & Labor and Pensions; Homeland Security Transportation; Energy & Natural Resources; & Governmental Afairs; Small Business & Health, Education, Labor & Pensions; Small Entrepreneurship Business & Entrepreneurship; Special Aging Senator Kay Hagan (D-N.C. 14) Committees: Armed Services; Banking, Housing & Urban Affairs; Health, Education, Labor and Pensions; Small Business & Entrepreneurship 2018 Senator Debbie Stabenow (D-Mich. 18) Committees: Agriculture, Nutrition & Forestry (Chair); Budget; Energy & Natural Resources; Finance Senator Johnny Isakson (R-Ga. 16) Senator Pat Toomey (R-Pa. 16) 2016 Committees: Finance; Health, Education, Labor and Pensions; Veterans Affairs, Select Ethics 2016 Committees: Banking, Housing & Urban Affairs; Budget; Finance; Joint Economic 2016 Senator Patrick Leahy (D-Vt. 16) Committees: Agriculture, Nutrition & Forestry; Appropriations; Judiciary (Chair); Rules & Administration; President Pro Tempore 2016 Senator Ron Wyden (D-Ore. 16) Committees: Budget; Energy & Natural Resources; Finance (Chair); Select Committee on Intelligence; Select Committee on Taxation (Chair) Senator Chris Murphy (D-Ct. 16) 2016 Committees: Foreign Relations; Health, Education, Labor and Pensions; Joint Economic

27 25 Thank you to all the supporters of HDMA PAC: The Chairman s Circle ($3,000-$5,000) AmerisourceBergen Corporation PAC Ann Bittman, HDMA Ken Couch, Smith Drug Co. Curascript/Express Scripts PAC Kristen LaRose Freitas, HDMA Perry Fri, HDMA Elizabeth Gallenagh, HDMA John Gray, HDMA Terry Haas, Harvard Drug Patrick Kelly, HDMA McKesson Corporation Employees Political Fund Dave Neu, AmerisourceBergen Corporation Al Paonessa, Anda, Inc. Dale Smith, H. D. Smith Chris Smith, H. D. Smith PAC Member ($100-$999) Dan Bellingham, HDMA Devin Boerm, HDMA Linda Caporaletti Hoyt, HDMA Mary Coppola, HDMA Jewelyn Cosgrove, HDMA Marjorie DePuy, HDMA Anne Johnson, HDMA Michael Kody, AmerisourceBergen Corporation Elizabeth Lankford, HDMA Brooke Naylor, HDMA John Parker, HDMA Allison Tusznyski, HDMA The President s Circle ($1,000-$2,999) Dawn Boyter, Richie Pharmacal Co., LLC Maria Burns, Burlington Drug Co. Cardinal Health PAC Gregory Drew, Value Drug Co. Anita Ducca, HDMA Scott Franklin, Top Rx Sam Lazich, DMS Pharmaceutical Group, Inc. David Moody, Mutual Wholesale Drug Co. Tony Rattini, Miami-Luken, Inc. Karen Ribler, HDMA George K. Richards, Capital Wholesale Drug. Co. Lenny Rodriguez, Attain Med, Inc. Ted Scherr, Dakota Drug, Inc. Mary Tim Smith, R&S Northeast For more information about the HDMA PAC, or HDMA s grassroots advocacy initiatives, contact: Jewelyn Cosgrove, Associate Director, Federal Government Affairs, at (703) or jcosgrove@hdmanet.org.

28 26 CONCLUSION The composition of the next Congress and the state legislatures will help shape HDMA s strategies for pursuing favorable legislative proposals and advocating on behalf of the industry. The next year will require proactive efforts on behalf of HDMA members to promote the essential role each company plays in the healthcare supply chain and advocating on such issues as comprehensive tax reform, prescription drug abuse, Medicare reimbursement, wholesaler licensure and traceability implementation. Should you have any questions about the impact of the election or the months ahead, please contact HDMA government affairs staff: Patrick Kelly Executive Vice President, Government Affairs Elizabeth A. Gallenagh Senior Vice President, Government Affairs and General Counsel Kristen L. Freitas Senior Director, Federal Government Affairs Daniel G. Bellingham Senior Director, State Government Affairs Devin Boerm Director, State Government Affairs Jewelyn Cosgrove Associate Director, Federal Government Affairs Elizabeth A. Lankford Manager, State Government Affairs Pam A. Ritter Senior Administrator, Government Affairs

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