How to Repeal the Medical Device Tax: Lessons from Massachusetts

On July 9, Massachusetts governor Deval Patrick signed into law legislation easing a 2008 law prohibiting pharmaceutical and medical device manufacturers from giving certain gifts to healthcare providers and requiring them to disclose gifts of $50 or more. The law was revised to allow drug and device companies to pay for “modest” meals for providers that attend educational seminars.

The move was a legislative victory for the medical device industry—both AdvaMed and the Massachusetts Medical Device Industry Council (MassMEDIC) and been working to ease the so-called gift ban since its passage.

Here’s how they pulled it off and what the fight to repeal the medical device tax could learn from their efforts.

Help Legislators Understand the Industry

Medical device manufacturing is a highly complex business, and many of the associations’ efforts focused on ensuring that Massachusetts state legislators understood its intricacies.

The original gift ban law, for instance, included language stating that certain types of training could only be conducted if a written sales contract was in place, says Tom Tremble, associate vice president for state relations at AdvaMed. The problem, he says, is that physicians and other providers often want to learn how to use a device before deciding to buy it.

The law was also originally conceived with the pharmaceutical industry in mind, Tremble says. It was later expanded to include the medical device industry.

“We wanted to make sure we pointed out the differences as far as how devices are developed, how physicians are trained in their use and implantation in some cases, and how in some cases training is required by FDA,” Tremble says.

Show the Impact

Unlike the medical device tax, which doesn’t go into effect until 2013, medical device manufacturers felt the real effects of the Massachusetts gift ban for several years. To help get it revised, MassMEDIC president Tom Sommer says his organization focused on cataloging the difficulties medical device companies faced in complying with it.

MassMEDIC learned about expenses companies were incurring for compliance systems and heard stories about firms that were moving training and focus group meetings with physicians out of state. The law also hampered device companies’ ability to tap into the wealth of expertise at the state’s 16 teaching hospitals, Sommer says.

“We had an opportunity to testify a couple of times before state legislative committees to provide company examples of the difficulties of the provisions,” Sommer says. “We held scores of meetings with legislators bringing in members of ours who told them how this was impacting their business.”

Be Willing to Compromise

In Massachusetts, AdvaMed and MassMEDIC didn’t push for a total repeal of the gift ban; instead, they worked with legislators to get it revised.

“We’re not opposed to reporting these interactions,” says AdvaMed’s Tremble. “We just want to have reasonable regulations in place.”

The industry’s willingness to avoid throwing the baby out with the bath water was a big factor in helping to come up with revisions to the law that both worked for medical device manufacturers and that legislators were willing to pass, Tremble suspects.

By contrast, the state restaurant association, which opposed the law on the basis that it would result in lost business for Massachusetts restaurants, favored a complete repeal. The group was able to gain allies in the State House of Representatives, which in April voted to repeal the gift ban, but it couldn’t gain the traction it needed in the State Senate.

“We, working closely with MassMEDIC, tied it more to a technical correction,” Tremble says. “A lot of legislators saw what we were doing as a reasonable step.”

Sommer agrees.

“I think that the total repeal would have faced a much stiffer opposition,” he says.

That said, neither association seems willing to come to a compromise with regard to the medical device tax.

“Personally, I haven’t considered anything other than a complete repeal of the medical device tax,” Sommer says.

Form a Coalition

The medical device industry wasn’t the only industry that wasn’t happy with Massachusetts’s gift ban. The pharmaceutical and restaurant industries, and even some doctors, also opposed the law.

Though AdvaMed and MassMEDIC didn’t formally align with the pharmaceutical and restaurant industries in their push to get the law revised, Tremble admits that it likely helped that the device industry wasn’t alone in its opposition to the law.

“If you have a broader coalition, it can be more effective,” he says.

Be Patient

Developing legislation and getting legislators on board didn’t happen quickly. It took nearly four years from the time the original gift ban was passed to get it revised.

“I think one lesson that I would take from this is what a legislature gets done is not easily undone,” Sommer says.

Likewise, he suspects the medical device tax will not go down easily—especially since the Supreme Court ruled the Patient Protection and Affordable Care Act is constitutional.

“It is not something that necessarily could happen overnight,” Sommer says. “I don’t think it’s something that is going to be done very quickly.”

—Jamie Hartford is the associate editor of MD+DI. Follow her on Twitter @readMED.