PhRMA names Business Roundtable head as new chief - Update
This article was originally published in SRA
Business Roundtable president John Castellani is to become the new president and chief executive of US pharmaceutical industry body PhRMA, one of the most high-profile positions in Washington, DC1.
When Mr Castellani joins PhRMA on 1 September, he will succeed Billy Tauzin, the former Republican Congressman for Louisiana who took over at the group in 2005. Mr Tauzin moved to a senior advisory role with PhRMA after announcing in February this year that he would retire from the group2.
Mr Castellani has led the Business Roundtable – a coalition of business chief executives from some of the biggest US multinationals – for the past nine years. Like PhRMA, the Business Roundtable was an active player in the recent US healthcare reform debate, and was largely supportive of President Barack Obama and Congressional Democrats. But the Roundtable has lately shown signs of growing discontent with the Administration's stances on key regulatory and legislative issues such as taxation of foreign earnings, free trade agreements and financial regulatory overhaul, saying these policies may result in a hostile environment for investment and job creation3.
International tax increases for US multinationals (with the potential to make sweeping changes to US tax law) have been considered as part of a larger bill, HR 4213, much to the concern of the Business Roundtable, and the group has fought to have foreign tax credits excluded from any revenue-raising sections being considered. Members of the Committee on Ways and Means and the Senate Finance Committee appear to be on a path to curtail what they view as abuses of the US foreign tax credit system. These members seek to limit tax credits used by US multinationals, claiming companies have manipulated the credits beyond their intended use. House Ways and Means chairman Sandy Levin (Democrat– California) has charged that this has led to "tilting the playing fields in favour of investment overseas" and hurt creation of US jobs.
The subject is not likely to go away, and last month Mr Castellani told The Hill newspaper that he disagreed with Chairman Levin's assessment, and argued that foreign tax credits directly support about 20 million US jobs4. "This is a case where the political rhetoric trumps the economic reality," he stated. Mr Castellani has urged senators to table the debate on foreign tax credits until Congress takes up full-blown tax reform.
Another Business Roundtable member (and PhRMA board member), Lilly's chairman and chief executive John Lechleiter, had also cited concerns over HR 4213 and a potential effect on the pharmaceutical industry. In remarks last month at a meeting of the Detroit Economic Club, Dr Leichleiter stated5: "We strongly oppose the international tax revenue raisers in the bill, which will hurt the US economy and deplete US jobs. These are long-standing provisions in the tax code – not loopholes as some are calling them – and should be addressed only in the context of comprehensive tax reform." He also pointed out other concerns of multinationals: "These international tax revenue raisers further exacerbate a corporate tax system that is out of step with the rest of the world. Our corporate tax rate is too high and we should not tax the foreign earnings of US global companies. We need a corporate tax system like the rest of the world – one that encourages, rather than discourages, investment in the US."
With the passage of healthcare reform in the US, Mr Castellani must also become the face of big pharma as PhRMA members deal with implementation of that bill. His predecessor Mr Tauzin was given high marks for crafting a deal with the Obama Administration that many viewed as broadly favourable to companies and the best that the pharmaceutical industry could have expected; final passage of the bill, however, raised a number of concerns for pharma6.
Mr Castellani said in a conference call that he wants to accelerate measures that improve Medicare drug coverage, establish insurance exchanges and curtail the "overly broad powers" of the Independent Payment Advisory Board that reform legislation set up to oversee healthcare system costs and Medicare. One goal for working with the US administration is to "get the economy moving" and further job creation, and despite disagreements in policy, there remains a common objective, he said.
President Obama had spoken on several occasions with members of the Business Roundtable, claiming that "healthcare reform will be good for business". The newspaper Politico stated that, as president of the group, Mr Castellani got high marks for navigating the group through the healthcare reform debate7. The paper added that the Roundtable was generally supportive of reform and when it was critical it did so in a way that did not alienate its Democratic allies.
"At this critical moment, it's important that we have the highest standard of leadership in this position. And we have that in John. John is the gold standard," said PhRMA's board chairman Jeff Kindler, who is also Pfizer's chairman and chief executive, in a statement.
Mr Castellani has experience in business, public affairs and government relations. Prior to joining the Roundtable, he served in senior posts at Tenneco Inc, the National Association of Manufacturers and TWR Inc. He began his career as an environmental scientist at General Electric.
References
1. PhRMA press release, 13 July 2010, www.phrma.org/news/news/john_j_castellani_lead_phrma_new_president_ceo
2. Billy Tauzin to step down from PhRMA amid uncertainty in US healthcare reform, RAJ Pharma online, 15 February 2010
3. Business Roundtable letter to White House, 21 June 2010, www.businessroundtable.org/sites/default/files/2010.06.21%20Letter%20to%20OMB%20Director%20Orszag%20from%20BRT%20and%20BC%20with%20Attachments.pdf
4. The Hill, 3 June 2010, http://thehill.com/blogs/on-the-money/international-taxes/101257-extender-bill-sets-unusual-precedent-for-taxing-investment-partnerships
5. John C Lechleiter, Comments to Detroit Economic Club, 9 June 2010, www.phrma.org/about_phrma/ceo_voices/frontier_within_advancing_american_medical_innovation
6. US healthcare reform signed into law – update, RAJ Pharma online, 31 March 2010
7. Politico, 13 July 2010, www.politico.com/news/stories/0710/39654.html