AdvaMed Leadership Calls Device Fee ‘Unreasonable’

The leadership of the Advanced Medical Technology Association (AdvaMed) is still hopeful for a “sensible” resolution to the medical device fee currently included as part of proposed healthcare reform legislation.

The Senate Finance Committee voted on Tuesday, Oct. 13, to send the bill to the floor—where lawmakers will attempt to combine the Finance Committee bill with a version advanced by the Senate’s Health, Education, Labor and Pensions (HELP) Committee, as well as a version from the House of Representatives. Either way, history is being made. Not since Theodore Roosevelt proposed universal health care during the 1912 presidential campaign has any such bill for healthcare reform come this far.

Steve Ubl, president and CEO of AdvaMed, along with the association’s Chairman Mike Mussallem—who is chairman and CEO of Edwards Lifesciences in Irvine, Calif.—told reporters during a the AdvaMed 2009 MedTech Conference in Washington, D.C., that the current proposal for $40 billion in device fees over the next ten years to help fund current healthcare reform efforts is “unreasonable.” The fee—or tax as most are calling it—would be based on a company’s revenue and market share.

Neither the HELP Committee bill nor House legislation contains a provision for medical technology fees.

“We continue to believe it is bad policy—bad for patients, bad for jobs and medical device innovation and progress, Ubl said. “Only in D.C. is $40 billion not considered a lot of money. But this is a tremendous amount when you consider that 95 percent of medical device firms earn less than $100 million.”

Mussallem added that the AdvaMed has been a “strong proponent” of healthcare reform—the group had issued its own set of principles for broad-based healthcare reform two years ago.

“The more policy makers learn about [the impact to device companies], the less they like it,” Ubl added.

Ubl said the fee would be a double-hit for the device industry. Not only would fees be levied against it, but certain other aspects of the bill also could impact medtech company sales. For example, nearly $160 billion in payment reductions to hospitals, as well as proposed cuts to imaging, diagnostics and lab supplies and durable medical equipment and clinical lab supplies also are included in the legislation.

“It strains credibility,” Ubl said, adding that lawmakers believe that cost reductions for certain services won’t impact device companies. With hospitals making less, they will have to reduce costs somewhere.

Mussallem shrugged of the suggestion that the fee would be offset by an increase in the number of insured, calling it an “unknown” until actual reform takes place.

“We have to stay focused on the prize—quality and affordable healthcare, and innovative medical technology is part of the cost-reduction effort. I am optimistic that as the debate continues that good sense will prevail.”

Some recent reports—unconfirmed by AdvaMed—have been that the association had been negotiating for a reduced fee structure. Neither Ubl nor Mussallem would confirm that, only saying that they were continuing to work with lawmakers. Ubl said that there were many things about the overall reform plan that AdvaMed supported. Comparative effectiveness programs, as well as physician payment disclosure reform and prevention and wellness plans—if implemented successfully—could be good for the industry and the public.

Mussallem told Medical Product Outsourcing that there is still some “wiggle room” for negotiations as multiple versions of healthcare legislation are combined.

“We’ve still got time,” he said. “We’re not finished yet.”

One industry executive, during a conference session about the financial state of the medical device industry, called the proposal “flawed” in answer to a question about where the money will come from to pay for the fee.

“It’s hard to say where it will come from. If it happens, we will have to pass it on,” said David Johnson, CEO of Skillman, N.J.-based ConvaTec, a wound-case device manufacturer. “Then that will increase the cost of healthcare, not lower the cost of healthcare.”