Potential Election Impacts on the Life Sciences Sector
With President-elect Trump announced as the winner of the 2024 election, the landscape of U.S. policy is poised for potential shifts that could significantly impact the life sciences sector. To a large degree, the extent to which the Trump administration will be able to enact its plans will depend on the outcome of the congressional elections, but read on to discover the potential changes and their implications.
Intellectual Property and Legislative Policies
The 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 will aim to reduce IPRs and PTO re-examinations of patents, thereby promoting innovation.
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 will support the exercise of federal march-in rights under the Bayh-Dole Act.
Labor and Employment Policies
Trump has indicated he will seek to veto the PRO Act if passed through Congress. The PRO Act aims to revise definitions of joint employer, employee and supervisor under the National Labor Relations Act (NLRA), impose stricter standards for classifying workers as independent contractors and limit employers’ ability to communicate about unionization. The PRO Act intends to also expand the circumstances where entities are “joint employers,” exposing a significant number of employers, including potentially corporate parents and private equity sponsors, to obligations under the NLRA.
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 also signed the Federal Employee Paid Leave Act (FEPLA) providing twelve weeks of paid parental leave to qualifying federal employees. Trump’s administration has not indicated whether it will work to expand this policy direction by supporting paid leave for non-public employees.
Tax and Tariffs
Trump has expressed interest in reducing 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. It is also likely that Trump 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.
The Trump admistration 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.
Antitrust Policies
A return to fundamental antitrust principles and reduced regulatory overreach will provide more regulatory certainty as to whether transactions will likely obtain antitrust clearance based on objective evidence and economics. The expected departure of Lina Khan as FTC Chair may create a more business-friendly environment, encouraging investments in innovative companies. An increase in negotiated settlements, which have largely disappeared under the Biden administration, may lead to fewer lawsuits and a return to more settlements that efficiently balance the interests of government, private companies and consumers.
The Trump administration is anticipated to 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.
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