With the election now behind us, do you expect the medical device tax to be implemented, modified, or do you still have any hope that it might be repealed? And why?
David Dvorak: We will continue to aggressively seek the repeal of the device tax. We believe that it is bad policy, that it will hurt our industry’s ability to grow and hire, and that it will harm medical innovation.
AdvaMed has conducted extensive outreach to members of Congress to help them understand how this tax will cost jobs and harm patient care as companies cut back on R&D. Studies indicate that as many as 43,000 medtech industry jobs could be lost, and that patient access to life-changing medical technologies will suffer.
These messages are resonating on Capitol Hill. During the summer, the House voted in a strong bipartisan fashion—with 37 Democrats joining all Republicans—to repeal the device tax. A majority of Senate Republicans also have signed on to repeal, and a growing number of Senate Democrats have indicated their support as well.
We believe we are building momentum, and we are hopeful Congress will address the tax as part of ongoing budget negotiations.
With the administration and the House and Senate remaining relatively unchanged, how might this affect AdvaMed’s agenda in 2013 and going forward?
DD: The issues of importance to the medical device industry cut across party lines. The healthcare solutions that the medical technology industry provides—earlier disease detection, better patient outcomes, more efficient healthcare delivery—know no party affiliation. And that is why we have seen such strong bipartisan support in Congress—a rarity—for legislation that helps our industry to provide patients and physicians with innovative technologies in a more timely and efficient manner. For example, the legislation that reauthorized and strengthened the medical device user fee program passed with near unanimous support in both the House and Senate, and a bill to repeal the medical device excise tax passed the House with strong bipartisan backing.
Furthermore, the medical technology industry has a broad footprint, with a presence in all 50 states, and provides the kind of well-paying, high-tech jobs that will power the US economy in the 21st century. Members of Congress want to keep or attract these jobs in their districts and states and are inclined to support pro-growth, pro-innovation policies to help the industry thrive.
What are industry’s concerns in light of this political landscape?
DD: There are enormous challenges facing the country, and how those challenges are met could have a significant impact on our industry. For example, as Congress and the Administration grapple with how to resolve our long-term debt issues, we want to be sure that new policies to find cost savings in the healthcare arena do not ultimately limit patient access to new treatments and cures.
There also is the strong likelihood the new Congress will take up comprehensive tax reform. Reforming the tax system is key to creating jobs, growing the economy and developing new cures and treatments. AdvaMed has developed tax reform principles to ensure that our industry contributes to the coming debate.
AdvaMed’s principles call for tax reform that will repeal the medical device excise tax; provide a level playing field for medical device companies competing in global markets; encourage retention and expansion of jobs in the US; provide incentives for investment in R&D; and encourage the availability of capital for small and start-up companies.
Is FDA making sufficient strides to improve its approval process and to develop closer working relationships with device makers? Please explain.
DD: It remains too early to tell whether things are beginning to turn around, but we are very hopeful. Over the past year or so FDA has demonstrated that it clearly understands it needs to make improvements to its processes, and it deserve credit for that.
We believe the user fee reauthorization agreement included in the FDA Safety and Innovation Act is a potential game changer that could dramatically improve patient access to new medical devices and diagnostics. FDASIA includes a number of additional pro-innovation provisions that should help improve the efficiency and predictability of FDA’s review process.
While the new user fee agreement represents real progress over previous versions, in many ways the passage of the implementing legislation is only the beginning of the process. One of my goals as AdvaMed chair is to make sure that FDA is held accountable to meeting all of its commitments, and we are working with the agency to make that happen.
We will be closely monitoring every step of the implementation and providing thoughtful comment on any guidance or rules that are issued. We also will be looking for feedback from our members on how they think FDA’s implementation of the user fee agreement is proceeding.
Have you seen any progress (legislative, other measures) toward ensuring that the US retains its leadership role in terms of innovation (which has been a concern over the past several years)?
DD: I think we’ve seen the most progress in the area of FDA regulation, where the new user fee law has the potential to set the agency on a course to greater predictability and efficiency.
What are other medtech areas that have you most excited as the industry looks ahead?
DD: One of the most exciting opportunities for our industry and for the healthcare industry as a whole is the movement toward more personalized healthcare—matching the best treatment option to the individual patient.
More rapid and accurate molecular diagnostic tests, advances in imaging modalities, and intelligent surgical instruments are just a few of the patient-specific technologies that will allow physicians to treat patients with individualized precision unimaginable just a few short years ago.
This is good news for the future of healthcare, as earlier detection and more targeted treatments will improve patient outcomes, save lives, allow patients to recover more quickly and completely, and lower healthcare costs.
The medical technology industry is well-positioned to drive this trend of personalized care. Innovation in our industry is rapid—new product iterations appear on average every 18 months—and continues to move forward, creating new and better medical devices and diagnostics.
But we must make sure that regulatory and reimbursement policies do not stifle the advancement of these new technologies while ensuring patient safety.
What is it about medtech that you wish the public knew and appreciated, and what is the role of associations such as AdvaMed in effectively communicating this information?
DD: Thanks in large part to industry communications efforts, such as AdvaMed’s Life Changing Innovation campaign, I think there is a greater awareness and appreciation for the benefits medical technology provides to patients, health systems, and economies. This is a message that we need to continually reinforce and reach more people, especially health policy makers.
Just think of the remarkable progress we have seen over the last few decades, extending life and combating chronic disease. In large part due to medical innovation, life expectancy has increased by more than three years; deaths from heart disease have been cut in half; from stroke by 30%; and from breast cancer 20%; and disability in the elderly is down by 25%.
This innovation also generates incredible value. To take just one example in the area of orthopaedics, knee replacements reduce the need for custodial care among the elderly and save the healthcare system approximately $77,000 per patient.
Yet for all this value, prices for medical technology have remained consistently low over the last 20 years—around 6% of national health expenditures—growing at less than half the rate of overall prices in the economy and only one-fifth the rate of prices for other medical goods and services.