The medical device industry in an “engine of medical and economic progress,” according to Steve Ubl, CEO of the Washington, D.C.-based Advanced Medical Technology Association (AdvaMed). Medical device bigwigs are gathering this week in Washington for the AdvaMed 2011 medtech conference. There are few in this gathering, who would disagree with Mr. Ubl’s assessment.
Right now, the news buzz—not just in D.C., but nationwide (particularly during recent Republican primary presidential debates) is the push for new jobs and economic recovery. The White House has made job creation a priority and current media push, and it seems the theme of this week’s medtech mix-and-mingle follows suit.
Ubl told a press gathering on Sept. 26 that one of the main themes of this fifth annual event is the “value the industry brings with the jobs it creates.”
Ubl, along with AdvaMed Chairman James Mazzo, senior vice president of Abbott Medical Optics Inc., outlined parts of the association’s agenda for the coming year. Ubl and Mazzo framed the discussion in terms of the healthcare gains the industry has helped to achieve.
For example, according to AdvaMed, over the last 20 years mortality rates from heart disease have decreased 50 percent; stroke deaths have dropped 30 percent; and breast cancer mortality is down by 20 percent.
The message from AdvaMed’s leadership to lawmakers is to not hinder that progress.
“I think it is fair to say that our engine is stalling, unless we move forward with some strong, positive action,” Ubl said. Some of that action includes U.S. Food and Drug Administration reform—i.e., medical device review process improvement—and repealing the medical device tax slated to go into effect in 2013.
At present, the United States accounts for 40 percent of the global medical technology market, creates 400,000 direct jobs and 2 million total jobs, and pays more than 40 percent of the average U.S. wage, but medical technology employment is slowing in the United States, AdvaMed claims. In addition, though the total medical technology trade has increased, the balance of trade in medical technology has decreased in the last 10 years, according to figures presented by the association.
FDA premarket approval for devices now takes years longer than in the European Union, and each additional month working through the PMA process in the United States, costs medical device companies incur hundreds of thousands of dollars.
Ubl said he has been encouraged by the response from the agency and the bipartisan support from government to tackle FDA performance improvement.
“The president of the United States has talked about the need to update the FDA review process in speeches and in an op-ed in the Wall Street Journal,” Ubl said. “There are several initiatives within the White Houses Office of Science and Technology Policy to ensure that we maintain our leadership. And there’s bipartisan support in the Congress.”
As the agency and industry begin reauthorization discussions for the medical device user fee program that is set to expire next year (the device industry pays fees for device approval that go toward partially funding the FDA), review times and other performance issues certainly will be part of the dialogue.
“We need stable FDA funding,” Ubl acknowledged. “We should have stable resources—any significant cuts to the agency would be counterproductive. We make no secret about our concerns with the device center’s performance and the drag it has put on the industry’s competitiveness. The FDA has acknowledged our concerns and wants to work toward resolution. The collaboration going forward is really key to success.”
Ubl said the user-fee discussions are just beginning. And that while his association supports stable, robust funding, simply throwing more resources at the FDA’s Center for Devices and Radiological Health is not a cure-all.
“Increased user fees alone not the answer,” Mazzo said. “I’m not a big believer that you throw money and people at a problem. I believe you first need to identify the problem and then address it correctly. That’s how successful business people run their companies. So just by adding more funding does not address the issues our member companies address. They’re talking about predictability, consistent questioning, and proper training. Those need to be established first. Once those are addressed, the discussion of funding comes after.”
On the issue of the device tax, AdvaMed’s leadership is bullish on efforts to repeal.
“We’re heartened by the growing momentum,” Mazzo said. Recent proposed legislation by Rep. Erik Paulsen’s (R-Minn.) bill has close to 200 co-sponsors, according to Mazzo. A recent study released by AdvaMed claims that the tax could reduce the medical device workforce by more than 10 percent. Ubl also told Medical Product Outsourcing that AdvaMed has had ongoing discussions with the Internal Revenue Service to clarify some elements of the device tax so companies and devices aren’t double-taxed. For example, at present, the definition of medical device manufacturer is ambiguous. It is possible that a contract manufacturer responsible for the bulk of a device’s production could be taxed along with their client who sells and markets the device. The IRS has been “receptive,” according to Ubl.
Ubl also noted that rather than a discussion of a wholesale repeal of healthcare reform—and he was quick to add that AdvaMed supported several elements of the reform that passed last year—a discussion of corporate tax reform would be a “much more conducive forum.”
AdvaMed representatives has met with the members of Congress’ Joint Select Committee on Deficit Reduction, also known in Washington as the debt “super committee” charged with hacking $1.5 trillion from U.S. deficit.
“We’re meeting with super committee members and are focused on some sectors of our industry that are potentially under discussion—whether it is imaging, DME (durable medical equipment) or clinical labs,” Ubl said. “[These are] sectors of our industry that have taken multiple reductions in recent years, and we are very concerned about these coming under additional scrutiny.
He also said cuts in hospital payments also are a concern.
“Most of our companies are directly involved with hospitals, which have already taken significant reductions in the context of healthcare reform,” Ubl said. “In general, deficit reduction will be with us for the foreseeable future. So from my perspective, if we want to see the path forward away from these types of ‘meat-ax’ cuts, we need to provide incentives for innovation to ensure that we’ are treating patients more efficiently and effectively.”