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Voices of Frustration, Uncertainty in Medtech Election Perspective (Part I)

The medical device industry just wants some clear direction when it comes to the key issues and the political conversation in 2012.

Manufacturers want the government to foster a business-friendly environment that encourages growth, investment, and innovation. However, many stakeholders say the government is stifling these critical areas and are frustrated with the partisan approach taken by both Democrats and Republicans. The lack of an ability to find common ground regarding certain policies and the all-or-nothing approach to major decisions such as healthcare reform, has resulted in a battle over world views rather than key issues.

"The regulatory environment has gotten so arduous with all the validations and the way that a Class I, II or III device behaves in the marketplace. We’re not helping introduce healthcare reformation through innovation, we’re constraining it." --Toby Buck, chairman and CEO, Paragon Medical
“The ability to sit down and develop sensible policy inevitably through compromise on both sides just doesn’t seem to be happening anymore,” says Bradley Merrill Thompson, shareholder at Epstein Becker Green (Washington, DC). “It discourages people from getting involved, and it keeps good people from having any desire to go to Washington because the environment is so poisonous and not designed to get the will of the people done.”
 
The lack of compromise has also resulted in a much more cynical opinion of how the role of President of the United States does or does not affect the medical device industry.
 
“In a lot of quarters, there’s a fair amount of disinterest or ambivalence towards the presidential election,” Thompson says. “Who sits in the president’s office does directly impact other issues that people care about—just not so much the issues that impact the success or failure of the device industry. FDA doesn’t change radically each time the president changes or each time there’s a change in the party in control of Congress. Even with FDA changes in commissioner, it takes a long time for that to impact FDA regulation on a day-to-day basis.”
 
Regardless of who wins the election, the healthcare industry is facing a constrained budget environment, and much of its fate depends on economic growth, says Peter Neumann, ScD, director of research at the Center for Evaluation of Risk and Health. The center is located at the Institute for Clinical Research and Health Policy Studies at Tufts Medical Center. “Everyone in the device industry is going to have to think harder about the evidence they bring to the marketplace,” Neumann says. “There may be more regulatory oversight, [and] more reimbursement oversight or infrastructure with the Democrats than with the Republicans, possibly, and more decentralization with the Republicans.”
 
The industry appears to be fairly evenly split in its choice for president. In an online poll conducted by MD+DI in March, President Obama edged out Mitt Romney by less than 50 votes.
Many conservatives support Mitt Romney as the best alternative to Obama, citing his business experience with Bain Capital in the private equity industry as a positive for the device industry. Toby Buck, chairman and CEO of Paragon Medical (Pierceton, IN), says reelecting President Obama would be a big negative. He doesn’t think the current administration truly understands how the medical device industry works. “This administration simply doesn’t extend a level of deference or sensitivity to what this industry needs to operate effectively and demonstrate a high level of functional efficacy as it relates to innovation or product introduction,” Buck says. 
 
However, in a Q&A with MD+DI, Josh Makower, MD, praises President Obama’s focus on innovation and manufacturing exports, which he says are “central components of the medtech industry.”  

Healthcare Reform

In a recent report by PricewaterhouseCoopers Health Research Institute respondents (consumers) ranked healthcare as the second most important election issue, next to job creation.
 
The fate of the Patient Protection and Affordable Care Act will most likely have to wait until June, when the Supreme Court is expected to announce its ruling on the constitutionality of the bill. The Democrats love it, the Republicans hate it, and in the meantime, the device industry is trying to anticipate the affect that the 2700-page law will have on innovation, regulation, and patient care.
 
“The way our healthcare system works today, I wouldn’t say it’s broken; it just costs too much, so we have to get cost out of the game,” Buck says. “For those individuals who don’t have coverage, we’ve got to find a way to extend deference to those who are less fortunate. How that manifests in legislation is different from what is presently contemplated.”
 
Although healthcare reform is a heated debate and a largely divided issue, President Obama is being given credit for pushing this front-and-center dialogue about the need for change in the healthcare industry. “Change has to occur. We cannot continue to see the rate of healthcare inflation moving at three, four, [or] five times that of the rest of the economy,” says Mark Bonifacio, founder of Bonifacio Consulting (Natick, MA). “It’s not sustainable, and it’s going to head for a crash at some point.”

Part II: The Device Tax >>

Brad Thompson's Hot Topic of 2012: Medicare Reimbursement

"We've had significant cutbacks in diagnostics and the amount of the fee schedule changes that would be available for compensating laboratory test providers, and indirectly, and manufacturers of equipment. The recent decisions to cut back payment in that area stand to have a profound impact on our ability to get innovative diagnostics to market. People are very concerned and it’s influencing product development decisions and what products will be offered in light of those changes."

Brad Thompson is a shareholder at Epstein Becker Green

Maria Fontanazza is managing editor of MD+DI. Follow her on Twitter @MariaFontanazza.
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