Policy and Legal

Policy and Legal

NAM Echoes Senators’ PBM-Reform Call

Pharmacy benefit managers—entities that increase health care costs for both manufacturers and manufacturing workers—are long overdue for reform, the NAM said yesterday.

What’s going on: Senate Finance Committee Chairman Ron Wyden (D-OR) and Ranking Member Mike Crapo (R-ID) announced at a Thursday press conference that they will ask Senate leadership to include in a government funding bill at the end of March legislation to rein in PBMs.

  • The NAM, which has been vocal for years about the need for PBM reform , immediately joined the senators’ call for action.
  • “Manufacturers stand with Chairman Wyden and Ranking Member Crapo in their calls for PBM reform as soon as possible,” said NAM Managing Vice President of Policy Chris Netram. “Manufacturers are committed to providing health benefits—with 93% of manufacturing workers eligible for employer-sponsored health insurance—even as PBMs continue to drive an increase in health care costs.”

Why it’s important: PBMs make health care more expensive for manufacturers and manufacturing workers by putting upward pressure on the list prices of medicines. Additionally, the three largest PBMs control 80% of the market, giving them tremendous leverage when negotiating contracts with manufacturing employers.

  • What’s more, they operate with very little federal oversight and offer minimal transparency into their business models.

What should be done: An overhaul of the PBM framework should include solutions that effectively address rebate, fee and contract structures.

  • “PBM reform, including in the commercial health insurance market, must increase transparency, ensure PBMs do not pocket manufacturer rebates and delink PBM compensation from the list price of medications,” said Netram.
Press Releases

Manufacturers Join Senators’ Call for Immediate Action on PBM Reform

Washington, D.C. Following a press conference today in which Senate Finance Committee Chairman Ron Wyden (D-OR) and Ranking Member Mike Crapo (R-ID) called for pharmacy benefit manager reform, National Association of Manufacturers Managing Vice President of Policy Chris Netram released the following statement:

“Manufacturers stand with Chairman Wyden and Ranking Member Crapo in their calls for PBM reform as soon as possible. Manufacturers are committed to providing health benefits—with 93% of manufacturing workers eligible for employer sponsored health insurance—even as PBMs continue to drive an increase in health care costs. PBM reform, including in the commercial health insurance market, must increase transparency, ensure PBMs do not pocket manufacturer rebates and delink PBM compensation from the list price of medications.”

Background:

  • As part of efforts to reduce health care costs for manufacturers and manufacturing workers, the NAM has advocated PBM reform consistently, including in the commercial health insurance market.
  • PBMs increase health care costs at the expense of manufacturers and manufacturing workers by applying upward pressure to list prices that dictate what patients pay at the pharmacy counter, pocketing biopharmaceutical manufacturer rebates and failing to provide adequate transparency about their business models.
  • The NAM supports reforms that will benefit employers by making PBM contracts more straightforward, transparent and predictable and workers by reducing the prices they pay out of pocket for their prescriptions.
  • Last year, the NAM launched a six-figure television and digital advertising campaign calling for reforms to ensure PBMs pass on prescription drug discounts directly to workers and employers.

-NAM-

The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs nearly 13 million men and women, contributes $2.85 trillion to the U.S. economy annually and accounts for 53% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org.

Policy and Legal

Extend Pro-Growth Tax Policies, Small Manufacturer Tells Senate

a group of people sitting at a table

If manufacturing is a team sport, the rules of the game are the U.S. tax code—and to ensure a level playing field for everyone, that code must remain constant, Ketchie President and Owner and NAM Small and Medium Manufacturers Group Chair Courtney Silver told the Senate Finance Committee Tuesday.

The main way to do it, she said, is by restoring three key tax policies: immediate expensing for domestic R&D, enhanced interest deductibility and full expensing.

What’s going on: Thanks to the 2017 Tax Cuts and Jobs Act, Silver’s family-owned, North Carolina–based precision machining company and many other manufacturers were able to grow their companies, invest in workers and give back to their communities, Silver said in testimony during the “American Made: Growing U.S. Manufacturing Through the Tax Code” hearing.

  • But two years ago, “the rules of the game began to change, making it more difficult for manufacturers to thrive in America,” she went on. “Crucial policies began to expire.”

Why it’s important: If Congress does not act soon, additional pro-growth tax cuts will expire, further harming manufacturing in the U.S.

  • And “more tax increases are on the way,” Silver told committee members, referring to the additional TCJA provisions scheduled to expire next year. “Other critical provisions expire at the end of 2025, which will have a direct impact on the manufacturing sector. Ketchie will be directly harmed by the loss of the pass-through deduction, the increases in our tax rates and the reduced protection from the estate tax.” 

Unstoppable combination: The 2017 tax reforms, “paired with pro-growth policies like immediate expensing of capital investments, drove historic growth in the manufacturing sector,” Senate Finance Committee Ranking Member Mike Crapo (R-ID) said during the hearing, citing NAM data on the significant, positive impact of the cuts.

  • Indeed, “Ketchie might not be here today if we did not have the economic boom caused by tax reform in the years prior to the pandemic,” said Silver, who called immediate expensing for domestic R&D expensing, enhanced interest deductibility and full expensing “a game-changer for the manufacturing industry.” 

Team players: Congress must restore these three provisions and other critical provisions that are set to expire next year.

  • “Manufacturing truly is a team sport, and you are all on that team,” Silver told the committee. “Small companies like mine are counting on you to play with us rather than against us, and to ensure that our tax code does the same.”
  • The NAM has called on the Senate to advance the House-passed Tax Relief for American Families and Workers Act, which would restore the three key tax policies.
Policy and Legal

NAM Hosts German, Mexican Delegations

a person wearing a suit and tie sitting at a table

The NAM was host to multiple representatives and dignitaries from Germany and Mexico last week for a series of meetings aimed at strengthening the ties between the two countries and the U.S.

What’s going on: On different days last week, the NAM met with German Ambassador to the U.S. Andreas Michaelis; the leadership of the Mexican Business Coordinating Council; the presidents of the Federation of German Industries and the Germany-based Mechanical Engineering Industry Association; and a delegation from the Germany-based Transatlantic Business Initiative.

  • A discussion common to all the gatherings: improving international cooperation to support closer economic partnerships between our countries.

a man wearing a suit and tie

The U.S.–Europe relationship: In a meeting with Michaelis, Germany’s ambassador to the U.S. since August 2023, the NAM expressed the importance of a continued, positive economic relationship between the U.S. and Europe—especially now, given Russia’s continued war against Ukraine.

  • “Great to meet with German Ambassador to the U.S. Andreas Michaelis to discuss the importance of strengthening our economic ties and our shared democratic values,” NAM President and CEO Jay Timmons wrote in a social post.
  • Germany, the fourth-largest economy in the world, is a vital U.S. trade and investment partner. In 2022, it contributed $196 billion of manufacturing trade and $218 billion of manufacturing investment.

a group of people sitting at a table

Challenges remain: However, some proposed and expected European Union regulations present a hurdle to future collaboration, a matter the NAM raised in its meetings.

A key partner: In their discussion with Mexican Business Coordinating Council President Francisco Cervantes—with whom Timmons met last summer ahead of the third United States–Mexico–Canada Agreement “Free Trade Commission” in Cancun, Mexico—NAM leaders underscored the significance of the increasingly close trade ties between the U.S. and Mexico.

  • In 2023, for the first time in two decades, Mexico became the leading source of goods imported into the U.S., and in 2022, the value of the U.S. products and services trade with Mexico was $855 billion.
  • The CCE is Mexico’s broadest business federation.

Concerning disruptions: Last year, in a move that worried both the NAM and the CCE, the U.S. twice suspended the processing of commercial imports from Mexico so it could redirect U.S. Customs and Border Protection personnel to handle an influx of migrants at the U.S.–Mexico border.

  • These temporary closures cost manufacturers in the U.S. hundreds of millions of dollars each day. 

USMCA: The groups also discussed the USMCA, underscoring the importance of maintaining this critical agreement while also continuing to spotlight commercial challenges in Mexico:

  • Its energy policies, which favor Mexican energy firms and have denied and revoked permits to major U.S. energy investors
  • Its de facto ban on genetically modified corn, as well as some of its telecommunications-sector policies and its treatment of state-owned enterprises
Policy and Legal

NAM to White House: Maintain, Improve Trade Facilitation Measure

As lawmakers consider proposals to scale back the de minimis treatment of low-value goods entering the U.S., the NAM and several of its partners are reminding stakeholders of the importance of having a streamlined, tariff-free customs entry process for such imports.

  • These shipments are still subject to all U.S. laws and information requirements that enable enforcement at the border.

Last week, a group consisting of labor unions, select business associations and other stakeholders formed a coalition against certain de minimis imports, according to CNBC 

A critical provision: The NAM and six allied groups pushed back, urging the White House to maintain the so-called “de minimis” import entry type, which permits goods valued at less than $800 to enter the U.S. in a streamlined manner and tax-free.

  • “De minimis has benefitted thousands of American small businesses across all sectors,” said the groups. “For example, de minimis allows businesses to obtain inputs for domestically manufactured products into the United States more efficiently and with fewer unnecessary administrative requirements.”
  • “It has also made purchasing goods online more affordable and accessible for consumers at a time of inflation and supply chain challenges. … The average value of a de minimis package is roughly $50. If de minimis were to be eliminated or significantly degraded … a $50 delivery could become a more than $100 delivery.” 

Combating disinformation: Proponents of eliminating or significantly degrading de minimis cite several concerns with the entry type that are unfounded, the NAM and its allies said.

  • “There is no evidence that illegal products are more prevalent in de minimis shipments,” they went on, citing a CBP executive who refuted the false claim that de minimis shipments aren’t screened.
  • When it comes to fentanyl, “[a]s government enforcement statistics make clear, the overwhelming majority of fentanyl enters the United States in large shipments from Mexico … smuggled in passenger vehicles, by pedestrians, and concealed in truck shipments. De minimis packages, on the other hand, arrive in the United States overwhelmingly by air transportation throughout the country.”
  • Finally, eliminating the de minimis entry type would strain border control. “[D]egrading de minimis and routing one billion shipments into more resource intensive processing streams would require tens of thousands of CBP personnel to process information that is not related to enforcement and collect duty, rather than spending that time on activities that would actually interdict illicit items.”

Other solutions: The letter urges the administration to consider “practical, innovative ways to improve de minimis without increasing costs for consumers and small businesses.”

  • Customs and Border Protection should use the authority it already has to build on existing enforcement of U.S. trade laws at the border by separating the vast universe of compliant shipments from illicit packages.
  • This can be done through a rulemaking to formalize ongoing tests that require additional information on low-value shipments, closing information sharing gaps and employing a more “future proof” approach to include the use of technology.
Policy and Legal

Top DOE Official to NAM: You’re Critical to America’s Energy Future

a man wearing glasses and looking at the camera

The Biden administration sees private-sector partners as essential to the future of American energy policy and production, Deputy Secretary of Energy David Turk told NAM board members in Phoenix, Arizona, recently.

What’s going on: “I don’t think we can do anything in the federal government that impacts the real world without enabling, listening to, supporting and trying to be very thoughtful” with private-sector partners, Turk said, calling manufacturers a key force in helping the United States “accelerate our energy independence.”

  • In a discussion about energy policy in the clean energy transition—with a focus on nuclear energy, hydrogen and the role of the federal government—Turk took questions and comments from leading figures in the private-sector energy economy on issues ranging from the Biden administration’s freeze on liquefied natural gas export permits, to the need for a robust hydrogen economy, to the implementation of long-awaited transmission infrastructure to ensure energy reliability and affordability.
  • The talk also touched on the potential impact of increased natural gas exports on domestic prices and consumers. NAM board members argued that higher exports would not make gas more expensive for U.S. consumers and LNG exports are vital to ensure energy security for our allies.

The conversation: In a roundtable lunch, NAM board members told Turk that the push and pull of the Biden administration’s policies on energy—calling on U.S. producers to increase energy output to reduce consumer prices while calling for an overall reduction in fossil fuel production—makes their goal of increasing American energy reliability and independence more difficult to realize, while creating market gaps that can be filled by cheap energy from Russia and other geopolitical rivals.

“Why did this happen? Why did it come out? How does that achieve any of our shared objectives on the national security stage in terms of climate change?” NAM President and CEO Jay Timmons asked Turk, noting that the Biden administration’s decision to stop approving new export licenses for U.S. LNG undercuts its own stated carbon agenda in the long run.

Turk told NAM board members that U.S. consumers pay roughly one-fifth as much for LNG as those in Asia and Europe, which he called “huge” for economic competitiveness, but still acknowledged that the differential doesn’t accommodate the needs of all manufacturers involved in the energy economy.

“There’s a competitive advantage if our manufacturers are paying less for a key input than others,” Turk said. “There’s a benefit and a difference between the price right now that we pay in the U.S. versus others internationally.”

Meeting matters: The U.S. is the world’s top exporter of LNG, an affordable, plentiful energy source that’s in growing demand and is much cleaner than traditional forms of coal-powered energy—especially in Europe, where LNG has been critical in keeping allied countries from seeking Russian energy sources. For NAM board members to be able to confront Biden administration officials on energy policy directly is a huge win for LNG producers and for manufacturers overall.

“We have more dialogue, more discussion, more interaction with members of the Biden administration than any administration that I’ve been involved in with the NAM,” Timmons said. “Where we have differing opinions, we do get feedback”—and, in the case of the meeting in Phoenix, we provide it. 

Policy and Legal

Biden Touts Accomplishments, but Misses the Mark Elsewhere

a man and a woman dressed in a suit and tie

In his State of the Union address Thursday, President Biden rightly celebrated manufacturing’s accomplishments—but he “missed the mark in several key areas,” according to NAM President and CEO Jay Timmons.

What happened: President Biden has reason to be proud when it comes to certain manufacturing-critical pieces of legislation, Timmons said, and the president touched on these in his speech.

  • “On my watch, federal projects like helping to build American roads, bridges and highways will be made … creating good-paying American jobs,” President Biden told the audience, referring to the NAM-supported Bipartisan Infrastructure Law. And “[t]hanks to my CHIPS and Science Act, the United States is investing more in research and development than ever before.”
  • The NAM has been a vocal supporter of CHIPS, which has supported large and small businesses all along the supply chain through an infusion of funds to boost much-needed domestic semiconductor production.
  • And the president stood strong with the people of Ukraine and in defense of democracy, two areas in which the NAM has been consistent and unwavering in its own support. “Overseas, Putin of Russia is on the march, invading Ukraine and sowing chaos throughout Europe and beyond. … But Ukraine can stop Putin if we stand with Ukraine and provide the weapons it needs to defend itself. That is all Ukraine is asking.”

No new taxes: But the president also laid out some wrongheaded plans for America, manufacturers and the economy, the NAM said, such as his push to raise taxes on manufacturers.

  • “If the cost of manufacturing in America is driven up by his agencies’ continued regulatory onslaught and a successful push to raise taxes, investment will be driven overseas and Americans will be driven out of work,” said Timmons, who appeared on Bloomberg’s “Balance of Power” ahead of the speech to discuss manufacturing priorities.

Protect U.S. innovation, competitiveness: In addition, the Biden administration’s push to invoke so-called “march-in” rights—which would allow it to seize the patents of any innovations it deems too highly priced in the event those patents had been developed in any part with federal money—would “rob Americans and the world of future cures and chill research into new breakthroughs across the manufacturing industry,” Timmons continued.

  • “And if President Biden continues to heap blame on pharmaceutical manufacturers, rather than reining in pharmacy benefit managers with cost-saving reforms, Americans and their employers will continue to endure rising health care costs.”

What should happen: The president and manufacturers in America “share a profound commitment to democracy and to the values that have made America exceptional,” Timmons went on.

  • A surefire way to restore faith in the democratic system is for Democrats and Republicans to prove it still works—“by delivering smart policies for the American people and by bolstering the industry that is the backbone of our economy and improves lives for all.”
Press Releases

Manufacturing Front and Center in State of the Union Address

But Biden Misses Marks with Attack on Sector

Washington, D.C. Following President Biden’s State of the Union address, National Association of Manufacturers President and CEO Jay Timmons released the following statement:

“Tonight, President Biden celebrated manufacturing’s accomplishments during his presidency, and rightly so. He signed into law some of the most consequential pro-manufacturing legislation in recent years—the Bipartisan Infrastructure Law, the CHIPS and Science Act and even key provisions of the Inflation Reduction Act. What’s more, manufacturers have stood proudly with him in his efforts to champion democracy abroad, most notably in Ukraine, and to reach solutions to address our broken immigration system. These are urgent priorities on which Congress should heed his call and act swiftly.

“But President Biden missed the mark tonight in several key areas when he laid out his plans going forward. If the cost of manufacturing in America is driven up by his agencies’ continued regulatory onslaught and a successful push to raise taxes, investment will be driven overseas and Americans will be driven out of work. If his campaign to ‘march-in’ to manufacturers and seize their intellectual property advances, it will rob Americans and the world of future cures and chill research into new breakthroughs across the manufacturing industry. And if President Biden continues to heap blame on pharmaceutical manufacturers, rather than reining in pharmacy benefit managers with cost-saving reforms, Americans and their employers will continue to endure rising health care costs.

“President Biden and Congress have a choice to make: they can take bipartisan action on the priorities manufacturers have outlined in our ‘Competing to Win’ agenda, an agenda that will unquestionably lift the quality of life for all Americans, or they can retreat to partisan corners and put our future in jeopardy.

“The president spoke passionately tonight about protecting democracy and our way of life at home and around the world. Manufacturers share a profound commitment to democracy and to the values that have made America exceptional and keep manufacturing strong—free enterprise, competitiveness, individual liberty and equal opportunity. And one of the surest ways to restore faith in democracy is for both parties to work together and prove that this experiment still works—by delivering smart policies for the American people and by bolstering the industry that is the backbone of our economy and improves lives for all.”

-NAM-

The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs nearly 13 million men and women, contributes $2.85 trillion to the U.S. economy annually and accounts for 53% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org.

Policy and Legal

SEC Finalizes Scaled-Back Climate Rule

The Securities and Exchange Commission has approved new climate disclosure requirements that have been in the works for the past two years. Changes made to the rule represent progress for manufacturers—though the industry will still face new cost burdens, the NAM said Wednesday night.

What’s going on: The SEC voted Wednesday in favor of requiring public companies to disclose greenhouse gas emissions and other climate-related information. Thanks in part to ongoing NAM advocacy—which Law360 (subscription) covered this week—the agency dropped its onerous, unworkable Scope 3 emissions mandate.

  • That provision would have forced public companies to divulge information about emissions coming from anywhere in their supply chains—including from small and family-owned businesses.

Heeding the NAM: “The NAM demonstrated for the SEC the practical realities of such a sweeping proposed rule, encouraging the SEC to make significant changes to remove inflexible and infeasible mandates, require disclosure only of material information and protect small manufacturers from the impact of these requirements,” NAM President and CEO Jay Timmons said following the vote.

Key changes: In addition to the Scope 3 change, the SEC exempted smaller public companies from Scope 1 and Scope 2 emissions reporting and delayed the rule’s effective dates. The final rule also is more narrowly focused on so-called “material” information (data investors need to make informed decisions) than what had been proposed previously.

Keeping a close watch: The final rule “remains imperfect,” Timmons continued. “[A]nd it remains to be seen whether the rule in its entirety is workable for manufacturers.”

  • “The NAM remains committed to ensuring the SEC acts within its statutory authority, prioritizes flexibility and provides much-needed guidance—just as we are committed to providing leadership in addressing environmental challenges. This is why the NAM is keeping all options on the table as we evaluate the rule’s potential impacts on the manufacturing sector.”
Policy and Legal

NAM, Allies File Suit Against EPA Over Air Standard

a sign on the side of a building

The NAM and seven association partners have filed suit against the Environmental Protection Agency to challenge the office’s overly stringent, recently finalized rule on particulate matter, or PM2.5, the NAM said Wednesday.

What’s going on: The eight groups filed suit in the D.C. Circuit to push back on the EPA’s National Ambient Air Quality Standards rule, which last month it lowered from 12 micrograms per cubic meter of air to 9, a 25% reduction and a stifling burden on manufacturers, the NAM said.

  • “In pursuing this discretionary reconsideration rule, the EPA should have considered the tremendous costs and burdens of a lower PM2.5 standard,” said NAM Chief Legal Officer Linda Kelly. “Instead, by plowing ahead with a new standard, the agency not only departs significantly from the traditional NAAQS process, but also gravely undermines the Biden administration’s manufacturing agenda—stifling manufacturing investment, infrastructure development and job creation in communities across the country.”
  • Participating in the suit with the NAM—which has repeatedly urged the EPA against overtightening the standard—are the American Chemistry Council, the American Forest & Paper Association, the American Petroleum Institute, the American Wood Council, the U.S. Chamber of Commerce, the National Mining Association and the Portland Cement Association.

Why it’s important: If it’s enacted, the stricter PM2.5 standard would cost businesses and the U.S. economy huge sums, hampering company operations and job growth and forcing tough choices on states and towns nationwide.

  • The total cost of complying with the new acceptable concentration level could be as much as $1.8 billion, according to the EPA’s own estimates—and that number could go up.
  • What’s more, it would make the U.S. less competitive globally. “Europe’s current PM standard is 25; China’s is 35,” NAM Managing Vice President of Policy Chris Netram told the House Energy and Commerce Subcommittee on Environment, Manufacturing and Critical Materials last month. “If we want the next manufacturing dollar to be spent in America rather than abroad, a standard of 9 is simply not feasible.”

NAM in the news: The New York Times (subscription) covered the lawsuit.

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