Mark Leahey02.26.07
The Device Industry’s D.C. To-Do List for 2007
Mark Leahey
As the medical device industry gears up for what is expected to be a very busy year in Washington, it is appropriate to look ahead and highlight some of the key healthcare issues that Congress is likely to address in the coming year. Before we explore these issues, the industry should be familiar with some of the changes that have occurred on the Hill as a result of the November elections.
Same Faces, New Places
With the change in power, Democrats lead committees in both the House and Senate.
On FDA issues, Sen. Edward Kennedy (D-MA) chairs the Senate Health, Education, Labor and Pensions Committee with Sen. Michael Enzi (R-WY) serving as the ranking member. Rep. John Dingell (D-MI) chairs the House Energy and Commerce Committee, and Rep. Joe Barton (R-TX) is the ranking member.
On Medicare issues, the Senate Finance Committee is led by Chairman Max Baucus (D-MT), and Sen. Charles Grassley (R-IA) serves as the ranking member. On the House side, Rep. Charles Rangel (D-NY) is chair of the Ways and Means Committee, and Rep. James McCrery (R-LA) is the ranking member. The Energy and Commerce Committee has jurisdiction over Medicare issues as well. Finally, competition issues will be handled by the Senate Judiciary Committee, chaired by Sen. Patrick Leahy (D-VT) and ranking member Sen. Arlen Specter (R-PA). On the House side, Rep. John Conyers chairs the Judiciary Committee and Rep. Lamar Smith (R-TX) serves as the ranking member.
Top Issues for the Device Industry
MDUFMA Reauthorization
When Congress passed the Medical Device User Fee and Modernization Act (MDUFMA) in 2002, the intent was to increase funding for the FDA to ensure that patients had timely access to safe and effective products. More than four years into the program, the industry has mixed reactions to the program. As indicated in a 2006 report prepared for the FDA by the Lewin Group, “almost 70% of responding device manufacturers perceived that MDUFMA goals have not resulted in meaningful improvements in either predictability or timeliness of device review.” However, there is general consensus from the industry that the program is worth continuing if reasonable fees and enhanced performance are established.
Given that the program is set to expire this year on Sept. 30, it is expected that Congress, the FDA and the industry all will work hard to reach an agreement that is satisfactory to every party.
GPO Reform
As discussed in this column previously, medical technology entrepreneurs are faced with a healthcare purchasing marketplace that is dominated by a handful of group purchasing organizations (GPOs) that receive billions in fees from the companies whose products they are charged with evaluating. While group buying can be pro-competitive and efficient, the way that certain GPOs currently operate in the healthcare marketplace limits competition and innovation, and it does not always save the healthcare system money.
In any free market, unfettered competition keeps product prices low and provides the best incentive for continued innovation. However, certain GPOs are limiting competition and removing the incentive to innovate. As a result, patients are deprived of the latest advances in medical care when entrepreneurs are denied fair access to the marketplace.
In 2007, the device industry will continue to work with Congress to ensure that all companies have the ability to gain access to the hospital marketplace and that the GPOs’ perverse funding mechanism is reformed. This can be achieved by eliminating the GPO “safe harbor” and restoring the illegality of kickbacks in the healthcare system. The end result would be better patient care at a better price.
Device Contract Gainsharing
Patient and physician access to the most appropriate medical technologies and therapies is critical to the success of our healthcare system. However, access may be further compromised if device contracting gainsharing (DCG) arrangements are permitted. While certain pay-for-performance arrangements provide incentives to physicians for improved outcomes or better data collection, DCG provides payments to physicians for limiting their access to appropriate technologies or for limiting patient care.
The device industry is opposed to any program that would create a financial incentive for doctors to limit patient care or access to medical technologies. These DCG arrangements would negatively affect personalized patient care, stifle medical device innovation and, ultimately, may result in higher long-term costs to the healthcare system.
In 2007, the industry will work with Congress, the Centers for Medicare and Medicaid Services (CMS) and the Depart-ment of Health and Human Services to ensure that the two CMS gainsharing demonstration projects do not compromise patient care and innovation by rewarding limitations on patient care or a physician’s access to medical technologies.
Promoting Access to Innovative Technologies
In 2007, the industry will focus on a variety of areas in which Medicare policies can have a dramatic impact on access to the benefits of new and improved medical technologies.
For example, the industry will continue working with the CMS on the development of a predictable, reasonable and responsive set of standards for determining national coverage for device-driven procedures and technologies. Device companies will be active in ensuring that the agency does not inappropriately overextend its use of coverage with evidence development or create disincentives for Medicare beneficiaries to access new treatments being studied in clinical trials or that are commercially available. The industry will work to assure that the local coverage process is not inappropriately bypassed in favor of the national coverage process and ensure that local carriers employ open and transparent procedures for developing coverage policies.
In 2007, device manufacturers will continue working to improve the accuracy, transparency and predictability of the prospective payment system payments and processes for rate-setting. Similarly, the community will work to improve and expand special payment mechanisms for new technologies, such as the outpatient new technology, and pass-through payments and inpatient new technology payments. In addition, as the ambulatory surgical center payment structure is refined, the industry will advocate for a system that accurately pays for medical technology.
Strengthening Business Infrastructure
While government often can be an obstacle to the success of entrepreneurs, federal policies also can help create an infrastructure that supports the creation of new medical technologies and the growth of the companies that bring these innovations to market. Recognizing this, the industry supports policies that protect intellectual property, facilitate technology transfer, support scientific and clinical research as well as increase access to capital.
The device industry also believes a vibrant American health research enterprise is the strongest foundation for the ongoing collaborations between medical device manufacturers and academic physicians that are leading to great advances in medical technology and the public health. Therefore, manufacturers will continue to work with the health research community to increase support for the FDA, National Institutes of Health, Department of Veterans Affairs and its research programs, small-business research and innovation grants as well as other programs that support America’s preeminence in biomedical research and engineering.
It also is critical that the device industry work to ensure that certain federal regulations do not have the unintended impact of harming a company’s ability to grow and innovate. For example, a coalition of industry organizations plans to work with the Securities and Exchange Commission to revise overly burdensome Sarbanes-Oxley tax regulations for smaller companies.
Where to Go From Here?
As you can see, there are significant issues facing the medical technology industry in 2007. It is critical that your company, whether you are an OEM or contract service provider, get involved in the process. Together we can make a difference.