The trade association’s president and CEO muses about the state of the medical device industry.
By Stephen J. Ubl
Looking back on 2013, I’m struck by all the positive progress that has been made on some long-standing medical device industry issues. Putting aside the device tax for a moment, there are discreet issues that typically fly below most people’s radar but are very important to certain segments of the medical technology community. For example, getting CMS to recognize and begin to address charge compression, a technical calculation that inappropriately reduced Medicare payment for many device-related procedures, was a step forward. Likewise, HHS’s Office of the Inspector General issued a Special Fraud Alert and subsequent report that highlights the inherent conflict-of-interest risks posed by physician-owned distributors. These are incredibly complex issues that take enormous amounts of time and resources just to convince policymakers that there is a problem, let alone take steps to resolve them.
A more high-profile example would be the FDA’s final rule establishing a unique device identification (UDI) system. This again was the result of several years’ interaction with the agency, and we believe the final rule includes many industry-proposed recommendations—such as no direct marking of implantables—that will help maximize the usefulness and value of the potential UDI system as a postmarket tool.
This is also the year AdvaMed made great strides in our strategic plan. First, we are expanding our advocacy reach into key emerging markets. In China, we hired an executive director for our office, which we hope to set up by the end of this year. In India, we hired a strategic consultant and public relations firm to help us improve understanding of the value of medical technology. And in Brazil, we are working in partnership with the alliance of local trade associations to push for appropriate regulatory and reimbursement regulations in addition to strengthening of the compliance culture.
Second, we have really stepped up our research activities, generating the kind of data you need today to support any policy position. I would just like to highlight two of those studies, in particular: One demonstrates that prices for key categories of implantables have fallen significantly in recent years, while the second shows medical devices are not the cause of wide variations among hospitals in the amounts they charge for similar procedures. Both of these studies clearly refute those who falsely claim medical technology is a driver of healthcare costs.
The third part of our strategic plan involves bolstering our member engagement activities. This year we’ve had record numbers of our CEOs and company employees engaged in our advocacy efforts, whether through Capitol Hill fly-ins, facility visits, or signing up for our Life Changing Innovation campaign.
While we accomplished a great deal in 2013, AdvaMed has a full plate for 2014. It goes without saying that repeal of the medical device tax will again be our number-one challenge.
In addition, we will continue our efforts to push back against polices that limit patient access to medical technology. Medicare payments for imaging services such as MRIs, for example, have been slashed more than 60% in recent years. Similarly, the Clinical Lab Fee Schedule has had zero or negative updates in 15 of the last 23 years and does not adequately value cutting-edge molecular diagnostics. And competitive bidding programs have led to drastic cuts for durable medical equipment and could force a significant portion of DME suppliers to go out of business.
However, the biggest issue to confront industry next year may well be the implementation of physician payment disclosure or Sunshine legislation. Overall, we supported the final version of physician payment disclosure included in the Affordable Care Act because it provides a clear, comprehensive national program of reporting and disclosure. AdvaMed’s Code of Ethics is quite rigorous in its definitions of proper and improper, and we support appropriate disclosure of relationships between medical technology companies and physicians.
It is important to remember, however, that medical device companies are unique in that they must rely on physician experience and feedback to develop better treatments for patients. Additionally, because the effectiveness of a device often depends on a physician’s skill in using it, it is essential that physicians receive education and training.
That is why it is crucial that the information regarding physician payments should be disclosed in a form that makes the context of the payment clear, so that people can understand the payment’s purpose and appropriateness. The final rule allows for companies to provide this important context for each payment, but we will continue to closely monitor the systems CMS will put in place to ensure this context can be provided in a meaningful way.
Make no mistake: Implementation will be a complex and expensive process for companies, so we were glad CMS’s final Sunshine regulation provided adequate time for our member companies to put in place the business systems necessary to ensure they are able to fully comply.
We have many challenges to confront in 2014, but far more opportunities. We have a compelling message to communicate about the value that medical technology provides for patients, health care systems, and economies worldwide, and I look forward to sharing that message with policymakers in the months to come.
Stephen J. Ubl is the president and CEO of AdvaMed.