Health Care Reform: Medical Device Manufactures, Sunshine Provisions and Big Fees

Medical Device Manufactures are making news in the health care reform debate by refusing to negotiating with the White House and Senate Finance Committee on expense cuts and fees.  In addition they are calling for expansion of the Physician Payment Sunshine Provisions of the House Health Care Reform Bill.

Sunshine

The Sunshine Provision in the current house health care bill states that in 2011, any manufacturer, group purchasing organization, or distributor must electronically submit to the Secretary of Health and Human Services (HHS)

1) The amount invested by each physician;

2) Any transfer of value to a physician; and

3)The value and terms of each ownership or investment. There is an exemption for payments to providers who provide health care services to a manufacturer’s employees, and non-healthcare-related subsidiaries.

One amendment sponsored by “Blue Dog” Indiana Democrat Baron Hill and favored by AdvaMed dealing with the Sunshine Provision would require drug and device manufacturers “to annually post payments made to physicians on a public government database,” and extend this disclosure “to physician-owned hospitals, distributors and group purchasing organizations.”   This type of amendment would expand the types of entities subject to the physician payment disclosure mandates.

The Wall Street Journal provided further coverage of these amendments noting that industry is “supporting a federal requirement,” instead of statewide requirements because it would be overly burdensome and confusing, which would force “manufacturers to spend millions of dollars to track all payments.” This would significantly drain valuable resources such as staff and money that could be used to advance research and development of new devices and drugs.

$40 Billion Fee

If the reporting requirements were not enough to square away doctors from conducting important research and device development, the Senate Finance Committee draft bill calls for device makers to pay $40 billion in fees over 10 years by assessing all manufacturers at a rate, based upon their U.S. sales, necessary to generate $4 billion annually beginning in 2010.” According to WSJ, these fees “resulted from a lobbying move” in which “representatives of the device industry … suggested that the government levy a tax on their adversaries: hospital-purchasing groups that negotiate for lower prices on medical supplies and some devices.”

The idea of such taxes on device makers is shocking. As Michael Mussallem, president of heart-device maker Edwards Lifesciences Corp. put it best: a “$40 billion tax would cut into research and hurt companies' ability to add jobs." Moreover, the idea that these taxes would be collected on market shares is too vague and uncertain. Adding a tax like this into the healthcare bill would only hurt patients even more, and industry even worse considering the present legislation already includes “significant cuts in Medicare reimbursements for diagnostic imaging such as CT scans and MRIs.

Ultimately, General Electric spokesman, Peter O'Toole, summed up the goals of every device manufacturer: "We want to ensure that patient access to these critical, life-saving technologies is maintained." We do as well, and taxing these companies because Congress is rushing another thousand page bill pass the public is not acceptable. Take action now, before the hospital you go to or your physician cannot perform a hip replacement or pacemaker because the business who makes it went out of business.