As Trump moves to repeal, J&J says preserve some of ACA
- As the Trump administration begins its efforts to dismantle the Affordable Care Act, pharma giant Johnson & Johnson is pushing lawmakers to consider replacement options that encourage value-based care and payments.
- Speaking on a call with analysts Tuesday morning, company CEO Alex Gorsky said J&J believes "any ACA replacement must support a competitive market for individual health insurance."
- Gorsky doesn't expect a repeal or weakening of the ACA to significantly hurt J&J's business, as implementation under the Obama administration did not lead to "any significant uptick in business" in the first place.
On day one of the new administration, President Trump signed an executive order instructing federal agencies to defer and delay any provision which would "impose a fiscal burden" on states or any other costs on individuals and providers.
The order doesn't change the ACA itself, but starts the process of unwinding Obama's signature healthcare law.
In that context, Gorsky outlined J&J's expectations for potential changes and set the record on the company's priorities for any move to repeal or replace the ACA.
"We are advocating for important elements like increased access, coverage of pre-existing conditions and coverage of young people on their parents' health plan to continue in the future," Gorsky said.
J&J also supports broadening preventive care and giving "more latitude" for wellness programs and other similar incentives.
Gorsky, along with 11 other CEOs of leading corporations in the U.S., met with President Trump in a meeting on Monday. Despite Trump's recent criticizes of pharma and pricing practices, the conversation focused more broadly on economic growth, as well as tax and regulatory policies, Gorsky said.
J&J, along with other big pharmas, is hopeful for changes to the U.S. corporate tax code which could allow the companies to repatriate cash held off-shore or otherwise lower tax bills.
First among J&J's hopes is a system based on territorial taxation, which would tax only local income earned inside a country. The U.S. uses a worldwide taxation system that imposes corporate income tax on all of a business' income, regardless of where it was earned. Companies can defer tax on income earned abroad by keeping that money off-shore, which many pharmas currently do.
"We also believe that there should be incentives for innovations such as research and development and the cash currently held abroad should be allowed to be brought back into the U.S. at a more competitive tax rate," Gorsky explained further.
Changes in tax law favorable to business could be a catalyst for increased biopharma M&A activity, although a tax holiday on repatriation could also fuel stock buybacks.
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