Device Makers Fear Medicare Cuts in 111th Congress

Posted October 22, 2008 at 2:01pm

Lobby groups that represent the medical device and technology sector have a long to-do list for the 111th Congress. But much of that agenda will mean playing defense to ward off Medicare funding cuts and other potential pitfalls for the worldwide industry worth nearly $200 billion a year.

“It’s going to be a tough year for most folks who are looking at Medicare,” said Tim Trysla, executive director of the Access to Medical Imaging Coalition, whose members include Medtronic, Johnson & Johnson and the trade association AdvaMed, among others. “Congress is going to be looking at cuts.”

Trysla, who is also a counsel in Alston & Bird’s health care practice, said the device industry will work to prevent a repeat of the Deficit Reduction Act, signed in 2006, which resulted in cuts to the reimbursement rates paid for imaging services, such as MRIs, PET scans and ultrasounds.

When it comes to this issue and more general matters for the device sector, lobbyists are making the argument that even though imaging tests are expensive, they can save money in the long run because they curb unnecessary exploratory surgeries.

Stephen Ubl, AdvaMed president and chief executive officer, said his organization also will work to spread its story.

“In my view, it’s a really unique American economic success story, which doesn’t get told frequently enough,” Ubl said. “It’s a source of well-paying jobs, a very entrepreneurial space, and it allows patients all over the world to live longer, more productive lives.”

His group represents companies that make imaging machines and replacement hips and knees, companies that do lab testing, and others that are in the device and technology arena.

One of AdvaMed’s biggest priorities next year is comprehensive health care reform. “We do support universal coverage,” Ubl said.

AdvaMed and other medical technology groups say they will also keep an eye on proposals to create a new entity that would compare drugs, devices and surgical procedures.

Mark Leahey, executive director of the Medical Device Manufacturers Association, whose membership is mainly smaller firms and startup companies, said he supports the idea of evaluating different technologies and therapies to see which ones actually result in better patient outcomes. But as with all legislation, he’s concerned about the details and unintended consequences.

“In theory, it makes a lot of sense,” Leahey said. “The concern is that the focus on better outcomes will be lost or … instead of focusing on the best outcomes for the patient, they’re going to insert cost into the valuation.”

Maureen Zilly, director of government relations with the Medical Imaging and Technology Alliance, said the discussion, known as “comparative effectiveness,” would be a great opportunity for medical imaging and radiation therapy.

“It can show good outcomes for patients,” said Zilly, whose group is a a division of the National Electrical Manufacturers Association. “Anything that concerns cost is probably going to be at the forefront now,” she added. “We don’t want to be naive, but we do think that imaging and radiation therapy can show their effectiveness through a comparative effectiveness organization.”

Ubl’s group is supportive of the idea but wants any recommendations to be based on standards that are deemed medically appropriate by doctors. “We don’t want to see cost controls jeopardize one of the key strengths of the health care system, quality and innovation,” Ubl said. “AdvaMed is supportive of this type of research if it is used to inform clinical decision making. We should have a seat at the table.

“We are also concerned that if it’s not handled in the appropriate way, it could serve to deny patients safe and effective products that have been approved by the FDA,” Ubl added.

Next year, AdvaMed also plans to focus on funding for the Food and Drug Administration and legislation that will concentrate on the safety of imported food and pharmaceuticals.

“The overwhelming majority of devices are manufactured in places that have well-developed regulatory systems,” Ubl said. “We’re somewhat in a different position than other industries.”

Some of the groups will also focus their lobbying efforts on matters that aren’t specific to medical technology.

AdvaMed, for example, supports pending and new free-trade agreements, while MDMA is watching patent reform efforts.

“If you’re a small startup, the only asset you have is your [intellectual property],” Leahey said. “We have real concerns over the patent reform bill that was passed in the House — 80 percent we agreed with, but we don’t support any patent bill that would make it easier or cheaper to infringe. We’re for a bill that would strengthen the patent system.”