2024 Election – Implications on Life Sciences

The Biden-Harris administration has seen limited promotion of bipartisan initiatives aimed at strengthening U.S. patent rights. The Patent Eligibility Restoration Act (PERA) seeks to clarify patentable subject matter, while the Promoting and Respecting Economically Vital American Innovation Leadership Act (PREVAIL) aims to modify Inter-Partes Review (IPR) proceedings within the United States Patent and Trademark Office (PTO). Despite their potential impact, the current administration’s lack of aggressive support leaves the future of these acts uncertain under Harris. Both are bipartisan initiatives designed to fortify U.S. patent rights amidst ongoing challenges, but may, however, find renewed support in a second Trump administration, although Trump has not explicitly endorsed them.

Under Harris, leadership at the PTO is expected to remain stable, with Kathi Vidal or a similar appointee likely to continue as Under Secretary of Commerce for Intellectual Property and Director of the PTO. Vidal’s tenure has been marked by efforts to enhance patent quality through continued IPRs, PTO re-examinations and substantive Director reviews, aiming to bolster the robustness and reliability of U.S. patents.

By contrast, a second Trump administration is expected to continue a business-friendly regulatory environment, focusing on reducing federal oversight and encouraging innovation. Drawing from the tenure of Director Andrei Iancu, Trump’s previous appointee, a new Under Secretary of Commerce for Intellectual Property and Director of the PTO is likely to advocate for streamlined examination rules that favor inventors. This approach would aim to reduce IPRs and PTO re-examinations of patents, thereby promoting innovation.

Harris has emphasized prescription drug costs, supporting the Inflation Reduction Act’s (IRA) provisions for Medicare drug price negotiations. She has also in the past alluded to the government’s use of federal march-in rights under the Bayh-Dole Act, potentially affecting the pharmaceutical industry and patent holders.

While Trump has occasionally addressed prescription drug costs, he has indicated a “most favored nations”-type strategy for negotiating these costs, rather than the approach taken under the IRA. Based on his previous term, it is unlikely that he would support the exercise of federal march-in rights under the Bayh-Dole Act.

Harris has pledged to sign the Protecting the Right to Organize (PRO) Act if passed by Congress. The PRO Act would amend the National Labor Relations Act (NLRA) in numerous ways, including narrowing the circumstances where employers can treat workers as independent contractors, making employee misclassification a violation of the NLRA, and expanding the circumstances where entities can be considered joint employers. If passed, the PRO Act would also limit employers’ ability to communicate with employees in response to potential unionization. By expanding the circumstances where entities are “joint employers,” the PRO Act would expose a significant number of employers, including potentially corporate parents and private equity sponsors, to obligations under the NLRA. By contrast, Trump has previously indicated he would veto the PRO Act if passed through Congress.

Additionally, Harris has promised to work towards raising the federal minimum wage, though she has not specified an amount during the 2024 campaign. She supports paid leave and increasing the Child Tax Credit, though the implementation details remain unclear. Trump has not indicated support for raising the federal minimum wage during his 2024 presidential campaign.

Harris has not directly commented on the FTC’s proposed ban on noncompete agreements, but the Biden-Harris administration has shown support for such a ban, which is currently enjoined pending legal challenges. Trump has also not directly commented on the FTC’s rule banning noncompetition agreements. However, based on his actions during his prior term, Trump may appoint commissioners to the FTC who would rescind the rule or instruct government lawyers not to defend it in court.

In 2019, Trump signed the Federal Employee Paid Leave Act (FEPLA) providing twelve weeks of paid parental leave to qualifying federal employees. The Trump campaign has not indicated whether Trump would work to expand this policy direction by supporting paid leave for non-public employees. It is not clear how the Trump administration would implement a paid family leave policy for non-public employees.

The Harris campaign proposes increasing the corporate tax rate from 21 percent to 28 percent, which would raise costs for corporate businesses and enhance the value of deductions and tax-planning strategies. This change would particularly impact non-U.S. persons using domestic corporations to “block” U.S. trade or business activity. In comparison, Trump would seek to reduce corporate tax rates from 21 percent to 20 percent. In addition, companies that manufacture their products in the United States would be eligible for a special 15 percent corporate rate. These changes would reduce business taxation and are intended to incentivize onshoring or U.S. investment.

If Trump is re-elected, it’s likely that he will aim to permanently extend the tax cuts introduced by the 2017 Tax Cuts and Jobs Act. Trump has also suggested he will seek to repeal a provision from the 2017 tax cut package that limits a taxpayer’s state and local tax deduction (SALT), adding US$1.2 trillion to the cost of extending the Act over the next 10 years.

Harris also supports taxing carried interest as ordinary income for individuals earning over US$1 million, potentially creating a “rush to exit” scenario for founders and family-owned businesses.

The Trump campaign has called for imposing higher tariffs, including tariffs of 10 – 20 percent on all U.S. imports and 60 percent on imports from China. These changes could create supply chain issues for many companies. However, there is a debate as to what extent the executive branch can unilaterally implement tariffs without congressional action.

A return to fundamental antitrust principles and reduced regulatory overreach based on unprecedented theories would provide more regulatory certainty regarding whether transactions are likely to obtain antitrust clearance. This shift would rely on objective evidence and economic analysis, making the regulatory landscape more predictable for businesses.

Under Trump, the departure of Lina Khan as FTC Chair would be likely. This would create a more business-friendly environment, encouraging investments in innovative companies and leading to a regulatory atmosphere more conducive to business growth and development. An increase in negotiated settlements, which have largely disappeared under the current administration, would result in fewer lawsuits, reducing the length and cost of legal battles and promoting a return to reasonable remedies that efficiently balance the interests of the government, private companies and consumers.

Harris has not commented on the potential departure of Lina Khan. Harris supports increased enforcement in the healthcare and life sciences sectors, which could lead to more investigations and litigations under novel antitrust theories, though not necessarily successful outcomes in all cases.

A Harris administration is anticipated to bring significant policy shifts, focusing on strengthening intellectual property rights, implementing labor reforms and adjusting tax policies. However, these changes may present challenges, particularly in terms of increased enforcement in healthcare and life sciences sectors.

A Trump administration is anticipated to also bring significant policy shifts, focusing on reducing federal oversight, fostering innovation and implementing business-friendly tax policies. However, these changes may introduce difficulties, particularly in terms of navigating new regulatory landscapes and potential supply chain disruptions. Strategic planning and comprehensive due diligence will be essential for businesses and individuals to navigate these evolving dynamics effectively.