Senator Warns of Impact from Price Controls Proposal

There certainly is no shortage of headwinds that potentially could impact America’s medical device industry over the next few years, whether it be the sputtering economic recovery, increased scrutiny from U.S. regulators or a 2.3 percent excise tax set to take effect in 2013.

Now there’s another obstacle that possibly could thwart growth, particularly overseas: proposed price controls from China. The top Republican on the U.S. Senate Foreign Affairs Committee is warning that China’s proposed price controls on medical products could adversely affect both American companies and Chinese patients. Many U.S. medical device companies have made significant investments in research and manufacturing facilities the Middle Kingdom, hoping to capitalize on the anticipated meteoric growth of that country’s middle class and demand for healthcare goods and services. Price controls, however, could potentially cut into profits and make American products less competitive in China.

Such controls also could exacerbate tensions between the two countries. China already has rubbed U.S. lawmakers the wrong way for allegedly manipulating its currency to boost exports. Using price controls to squeeze out American medical products from its market—which could become the world’s largest—only would add fuel to the proverbial fire.

U.S. Sen. Richard G. Lugar (R-Ind.), though, is hoping to dampen the flames of impending controversy with a diplomatic approach to the issue. He has urged Chinese Ambassador Zhang Yesui to consider the concerns of American device makers when debating the merits of a price control proposal unveiled last summer by the National Development and Reform Commission.

“Representatives of the industry have expressed serious concerns about medical device price controls proposed by the NDRC,” Luger wrote in a December letter to Yesui. “I am hopeful that you will convey these concerns to appropriate agencies in your government and encourage them to engage further dialogue that could explore alternatives to price controls.”

“This approach would be consistent with our mutual support for transparency and consultation as we work together to find mutually beneficial ways to further harmonize our commercial relations. Both the United States and China would stand to benefit from a solution that achieves China’s healthcare objectives without harming this important industry,” Luger concluded.