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Graham-Cassidy a Mixed Bag for Medical Device Industry
Date:9/22/2017

ROCKVILLE, Md., Sept. 22, 2017 /PRNewswire-USNewswire/ -- As the latest Obamacare repeal effort moves is debated, sponsored by Republican Senators Bill Cassidy (R-LA) and Lindsey Graham (R-SC) medical device market firm Kalorama Information notes that the medical device industry is in an odd place.  The industry wants repeal of the medical device tax, the 2.3% excise tax on medical device sales passed along with the Affordable Care Act.  But they also want covered patients, increased visits and hospital customers with the funding to invest in devices.   This is why statements have been mild or non-existent on insurance reform and highly vocal on a host of less publicized issues.  Kalorama Information covers medical devices, with a particular emphasis on in vitro diagnostic devices.  The healthcare market research firm's market studies are available at www.kaloramainformation.com.

The global device market nears 400 billion-dollars and the U.S. is the largest country device market, according to the firm.  Because of the variety of types of medical devices, there are many competitors. Still, less than twenty firms earn about half of the revenue in the device market.  Most companies operate in just a few markets, though the top companies such as J&J, GE Healthcare, Siemens and Medtronic are multi-billion dollar companies that operate in several categories. There are thousands of companies making devices in the United States alone, and the industry is concerned about the fees and taxes they pay while they compete in the market. 

"This isn't an industry that follows the CNN-type issues," said Bruce Carlson, Publisher of Kalorama Information.  "There hasn't been a great clamor for reform outside of tax repeal, but they also have not joined with their hospital and provider customers in urging against reform."

The bill has a number of functions that repeal fundamental Affordable Care Act functions but leave a few elements in place.  It would allow states to 'block grant' Medicaid funding - receive funding and spend as they decide with requirement to fund disabled individuals.  Allow states to institute a work requirement for receiving Medicaid funding, except for pregnant or disabled individuals.  The bill would also repeal the individual mandate and penalties associated, lower standards for mandating coverage of pre-existing conditions, allow more than double the maximum contributions to HSAs and allow the purchase of catastrophic plans with high deductibles and few benefits. 

And most notably for the industry, it would repeal the medical device tax, while keeping in place other taxes, such as those on insurance companies.   

The tax remains a huge issue for medical device industries, especially as a December 2017 deadline looms where the tax will be collected again by the IRS if nothing is done.   In Q 2018, if there is no change, medical device companies will once again have to fill taxpayer is not required to file Form 720 to report sales and pay excise taxes.   Not surprisingly the industry has set it sights on the tax as a job and innovation killer. 

But when it comes to packaging repeal with other larger programs, statements are more nuanced.   The statement of leading groups supportive of the previous Obamacare repeal attempts speak to the tax portion only.  The president of the Medical Device Manufacturers Association saluted the last significant healthcare reform repeal attempt for  "the inclusion of a full repeal of the medical device tax in reconciliation legislation is a positive 1st step to permanently end this punitive policy once and for all."  Another group, AdvaMed, has consistently aimed its cannon at the medical device tax component of reform but its president indicated during the last reform attempts that "We are not an industry that is, I think, positioned or prepared to speak to the question of insurance reforms." 

With specific ACA areas not relating to the device tax, such as Accountable Care Organizations (ACOs), criticism is more nuanced.  AdvaMed has argued for "additional patient care safeguards" on ACOs – especially provisions that might penalizing them buying expensive devices, but the group has not called for outright repeal.     

"I think for the industry, they want the repeal of the device tax but it's possible they could get it outside a reform bill because there's so much bipartisan support for that isolated component," Carlson said.  

Cassidy-Graham is not the number one issue on the medical device industry's radar, according to Kalorama Information.  Local coverage determinations to see that payment decisions are decentralized,  user fees, where they won a big victory with the signing of the recent MDUFMA bill but will want to keep that in place, speeding up approval times and reforming the FDA process, PAMA and its implementation on the testing/diagnostic device side, device labels, these are all larger issues for the industry.  They keep an eye on the insurance reform but save the big efforts for these.

 Kalorama Information covers medical devices, with a particular emphasis on in vitro diagnostic devices.  Device reports are available at https://www.kaloramainformation.com/medical-devices-market-c1126/.

About Kalorama Information

Kalorama Information, a division of MarketResearch.com, supplies the latest in independent medical market research in diagnostics, biotech, pharmaceuticals, medical devices and healthcare; as well as a full range of custom research services. Reports can be purchased through Kalorama's website and are also available on www.marketresearch.com and www.profound.com.

We routinely assist the media with healthcare topics. Follow us on Twitter, LinkedIn and our blog on our company website.  

Please link any media or news references to our reports or data to http://www.kaloramainformation.com/.

Press Contact: 
Bruce Carlson
212 807 2262 
bcarlson@marketresearch.com

 

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