Welcome to MassDevice’s annual audit of the ups, downs and in-betweens of the year that was. For the medical device industry, 2011 was more or less defined by a nagging sense of uncertainty that hung over the world’s med-tech companies like a grey cloud above a summer picnic.
But what did we learn from all the conjecture? In truth, not much. The year ends much as it began, full of questions with no cut and dry answers as we turn the calendar over into the new year.
From sweeping regulatory changes promised, but never delivered, by the FDA, to the industry and regulatory backlash against the impending 2.3% excise tax, the industry didn’t move the chains too far in the past twelve months.
Sure, we worried about the slowing pace of innovation and the growing cost of business, but in the end most of the anxiety produced very few results. That is, unless you were one of the thousands of unfortunate souls who found themselves on the wrong end of a pink slip from all the layoffs the industry faced.
Here’s the close of the top 10 stories of the year for the medical device world. Stay tuned in 2012 for the trends that continue to shape the industry!
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3. Health care laws hit the Supreme Court
Legal decisions regarding President Barack Obama’s health care overhaul bounced back and forth as lawsuits made their way around the country before heading to the nation’s highest court.
Challengers to the law argued that the individual insurance mandate, which requires that all Americans buy health insurance, is a violation of Congress’ constitutional authority to regulate economic activity and that legislators were inappropriately using their interstate commerce powers.
The law is set to take effect in 2014, and would penalize Americans with a fine if they fail to carry health insurance.
In August the U.S. Court of Appeals for the 11th Circuit ruled against the law, agreeing with a January decision that the law oversteps Congress’ bounds. That same day, a Ninth Circuit court dismissed a case against the reform measures on the grounds that challengers hadn’t demonstrated any injury.
In September a Fourth Circuit court dismissed two challenges to the mandate, but did so without passing judgement on the law itself, and the case continued its way to higher courts.
The Supreme Court in November agreed to hear a case challenging the individual insurance mandate, with initial arguments expected to begin in March and a decision possible as early as June.
2. Changing of the guard – The big CEO swap of 2011
William Hawkins announced his retirement from med-tech titan Medtronic at the end of last year, officially handing the keys to the corner office over to Omar Ishrak in June. In a series of exclusive interviews with MassDevice Hawkins reflected on his decade at Medtronic, including presiding over on of the largest med-tech recalls in recent history, the bidding war over Guidant Corp. and why the time had come for him to leave the world’s largest pure-play device maker.
In May, Ray Elliott stepped down as CEO of Boston Scientific after more than 2 years leading the Boston-based device giant. During his 26-month tenure, Elliott reduced the company’s workforce by more than 2,200 employees, paid down more than $2.5 billion in long-term debt, turned over more than 75 percent of the management team and reduced BSX’s exposure to Guidant Corp.’s legal woes with a $296 million deal with the U.S. Justice Dept.
He was replaced in November by former Johnson & Johnson (NYSE:JNJ) chairman Michael Mahoney, who took over as president and will take on the CEO role in Nov. 2012 after a transition period intended to accommodate contracts with JNJ.
Former Covidien CEO Richard Meelia handed the corner office over to José (Joe) Almeida in June after 4 years at the helm. Meelia officially parted ways with the company this month with the decision not to stand for re-election as chairman of the board.
The award for most dramatic turnover, however, goes to Olympus Corp. (TYO:7733), where the termination of short-lived CEO Michael Woodford exposed decades of channeling money through investment funds to hide losses.
1. Mystery at the FDA
The top story of the year hands down was the climate of uncertainty over the regulatory environment for the device industry.
In January the FDA announced that it planned to make 25 changes to its 510(k) medical device clearance program. The efforts didn’t assuage many industry leaders’ fears about draconian changes to the way a majority of medical devices are brought to market, mostly because the feds punted all the major decisions until the release of an Institute of Medicine report that the agency spent big bucks on.
In the interim, several industry-funded reports condemned the federal watchdog agency for putting the kibosh on the innovation pipeline only heightened fears that the end may be nigh for American exceptionalism in the medical device world.
As agency and industry jockeyed back in forth in forums from Washington, D.C., to Minneapolis for much of the year, each party blaming the other for the ever-increasing timelines to approval, the IOM added a bit of intrigue of its own when in July it recommended scrapping the 510(k) program altogether.
The recommendations weren’t warmly received by any party and nearly derailed already contentious medical device user fee reauthorization negotiations.
Unfortunately for everyone involved the year’s end didn’t provide much clarity at all. The agency has yet to publicize the the remaining changes it plans to make to the 510(k) program.
Stay tuned; we certainly will.
Keep reading MassDevice.com in 2012 to make sure you’re up to date on the headlines that continue to shape the medical device industry.