Medical Device Tax Update from Advamed, Plus User Fees Under Threat

 At a special press conference this afternoon, Advamed CEO, Stephen Ubl, and board chairman, David Dvorak, discussed the association's plans for the coming year. Advamed 2012 is being held at the Boston Convention Center for the next three days.

A key issue, as you might guess, and the big topic of conversation was the device tax. Advamed says it hopes to revisit repeal of the device tax, which it sees as a strain on U.S. competitiveness. Over a lame duck session of Congress(to be held after the presidential election), Ubl says he hopes the tax will be repealed.”We’ve seen considerable Senate support for the repeal, and it seems to be growing,” says Ubl. He takes it as a sign that the device tax could be repealed.“If it doesn’t happen--although I don’t like to speculate--there are corporate tax reforms that could be enacted [after implementation].” he says.

Both Ubl and Dvorak note the significant harm the device tax will have on jobs, Dvorak called it a “job-killing tax” at least 4 times during the 1 hour press conference. He says companies are already looking at 2000 lost jobs in the last few months, in addition to lost VC funding, and other strategic reorganizations.“Its really a confluence of events,” says Dvorak. The regulatory uncertainty of the last few years, coupled with healthcare reforms happening independent of Obama care legislation have made the environment of the medical device industry a challenging one. Ubl also spoke about other aspects of healthcare reform that industry has agreed to pay for, such as the upcoming unique device identification (UDI) and sunshine reporting. “These will be expensive initiatives, but industry sees the benefit of the UDI program--however, does that mean industry should pay twice?”

But other fiscal and regulatory policies were also high in the mind of medical device manufacturers. For one, sequestration of user fees could stymie FDA’s ability to function efficiently for the coming year. Recently FDA explained that user fees passed under the FDA Safety and Innovation Act are a risk of being seized under the Budget Control Act. Under the BCA, federal agencies could lose 7.8% of funding, effective January 1, 2013. Further, the Act allows the same percentage to be taken every year for a decade if budgeters are unable to save $1.2 trillion from the budget, according to RAPS.

Nonappropriated funding paid for by the medical device industry could be similarly sequestered under the terms of the BCA. Advamed is waiting to see what a lame duck session of Congress decides (the meeting will be held after the presidential election).

Advamed’s position is that if FDA cannot use its funds to the fullest, patients, physicians, and industry will suffer. “We want to come back to the substance of of the argument, which is increased transparency for the regulatory process, better timetables, and a consistently improving processes, noted Dvorak. That can’t be done properly if FDA doesn’t get full use of its funds, he says.

“FDA has assured us that it does have reserve funds, even if it cannot get user fees in full--but we are monitoring the issue,” Ubl explains.

 - Heather Thompson is editor-in-chief of MD+DI.

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