The senator called the Obama Administration’s healthcare legislation “a threat to the medical device industry.”

Jim Dickinson

July 8, 2011

3 Min Read
Washington Wrap-Up: Hatch Says Healthcare Reform Unfairly Targets Device Industry

Calling the Obama Administration’s healthcare legislation “unconstitutional” and “a threat to the medical device industry,” Senator Orrin Hatch (R-UT) predicted in June that taxes targeting the pharmaceutical, insurance, and medical device industries will result in “open-ended entitlement inflation.”

He said it is inherently unfair to hit only selected industries in order to raise revenue for “entitlement premium subsidies.” Hatch said such taxes will result in a $2100 increase in the cost of individual premiums sold to consumers. Moreover, he said the adverse effects of the tax will not be limited to the medical device industry, but will result in an across-the-board increase in medical costs.

Addressing attendees at the MDMA annual meeting in Washington D.C., Hatch took particular issue with the “mandate” requiring individuals to purchase health insurance. “If they can force you to buy something you don’t want, they can force you to do anything,” he said. “Any time politicians call for ‘shared sacrifice,’ it’s time to hold on to your wallets.” 

Hatch said legislators in both parties should support repealing the 2.3% nondeductible excise tax that will be levied on the medical device industry as part of the healthcare reform initiatives. He said repeal is critical to keeping U.S. device makers competitive with foreign manufacturers and encouraging them to stay in the United States. Hatch said the excise tax represents a “back-end” tax on device sales, working at cross-purposes with the research and development tax credit extended to many manufacturers. Citing that inconsistency, Hatch said there is an urgent need for “comprehensive tax reform.”

Speaking more broadly, Hatch said FDA has become too “risk-averse” in recent years, resulting in a “hostile, adversarial relationship” between the agency and industry. He cited recent studies indicating that the device approval process in the United States takes more time than the approval process in Europe, delaying Americans’ access to innovative products and encouraging device makers to move offshore. He rejected any notion that the lengthier approval process in the United States provides an additional safety margin for consumers, as product recalls occur at roughly the same measure in both systems.

With FDA commissioner Margaret Hamburg scheduled to follow him, Hatch concluded his remarks by conceding that she “has been doing a pretty decent job.” For her part, Hamburg jokingly thanked Hatch for providing an “interesting start to her presentation,” and said she looks forward to working with the senator on bipartisan healthcare issues.

Hamburg stressed that FDA has been listening to concerns expressed by representatives of the medical device industry, and understands their points of view. “The 510(k) approval pathway is not well-suited to handle many increasingly complex products coming before the agency,” she said, “and it does not always provide adequate assurance of safety and effectiveness.”

Hamburg pointed out that FDA is comprehensively assessing the changes that must be made within CDRH to address those concerns, and to make the center more responsive to its public health mission. She said it is of paramount importance to strengthen the “regulatory science base,” because doing so will make the path to product approval more timely and less costly.

Echoing sentiments expressed earlier at the conference by CDRH director Jeffrey Shuren, Hamburg took issue with those that claim things are better in Europe. The European regulatory model is not superior, she said, “it’s just different.” She pointed out that, that unlike European regulators, FDA requires robust clinical data for high-risk devices. “Lowering [the] standards that require demonstration of effectiveness is not a good idea,” she said. “Patients must have confidence that products are both safe and effective. FDA and the industry both have an important stake in assuring such confidence.”

From the Editors: We're changing how we post Washington Wrap-Up at Instead of posting one long column once a month, we'll be posting individual stories on a weekly basis. Be sure to check this space regularly for the latest dispatches from Jim.

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