I love Mad Men and it’s not because of the clothes, the cocktails, the writing, characters, or the enchanting Joan Holloway (although let’s be honest, she helps).
No, I love Mad Men because of Don Draper, the cantankerously flawed genius and creative backbone of the fictional firm of Sterling, Cooper and then Sterling, Cooper, Draper, Price (and Campbell). Not only is Draper cool. but he dishes out more sage business advice than a liquored-up Dale Carnegie.
But enough about my television habits. Here’s the brass tacks: The medical device industry needs to pay attention to what I’ll call Draper’s Golden Rule. To paraphrase, “if you don’t like what they’re saying about you, change the conversation.”
For the past 18 months the medical device industry has been in a collective (and justifiable) snit over the 2.3% medical device tax. The levy is poorly conceived and as we reported this week, incredibly complex to implement.
At best, it’s a cost that medical device companies will pass on to hospital customers (if they can), which will then pass it along to health insurance companies and eventually on to the consumer through higher insurance rates, therefore nullifying the point of health care reform’s mission. At worst, it’s a job-killing levy that will cripple innovation and harm one of the lone bright spots of the economy over the past 5 years.
Now, there are currently 3 concurrent efforts to repeal the tax and most of them are centered in the Beltway. But can the industry really bet on the Supreme Court nullifying the Patient Protection & Affordable Care Act, or a turnover of control in the Senate and White House? Seems unlikely. And while repeal supporters may be buoyed by the repeal of certain provisions in the health care law, such as the IPAB and 1099, there’s still a long way to go.
What we do know now is that the counterattacks on the tax created by industry have done little to sway its allies in Congress into meaningful action, or capture the attention of the GOP presidential field, which should be all over the fact that one of the country’s healthiest and most successful industries are cutting jobs in anticipation of the tax. Clearly these efforts need a boost.
So, guess what. It’s time to employ Draper’s Golden Rule and change the conversation, folks. The medical device industry needs to go direct to consumer.
Think about it – every industry, from pharmaceuticals to energy to tobacco, has gone to the airwaves when the going gets tough. Ever heard of clean coal? The oxymoron that became part of two presidents’ energy policy?
“The medical device industry has been so driven to innovate and brand innovations that they forgot to brand themselves,” Judy Habib, the President & CEO of KHJ Brand Activation in Boston, told me. “Without that singular identity, the industry became an easy target for the revenue-raisers,”
Habib suggested it was time the industry went public with all the good it does. In part, change the conversation.
“Clearly there’s a perception that the industry can afford to pay more for the privilege of doing business—as if doing business was all it did. The medical device tax isn’t a result of something they did, but it may be a result of something they didn’t do—namely, establish a brand for the medical device industry that captures our role as economic engine as well as a force for good.”
Most device companies already use these tactics, Habib said, except they only do it for their products and aren’t thinking about the state of the industry as a whole. She warned me that “if they don’t come together in a meaningful way to brand the industry, then medical device companies will always be at the mercy of the interpretation of others.”
The reality is that this election cycle may be the device industry’s last chance to define this issue for a generation to come. Look at the history of excise taxes. They are rarely, if ever, rolled back once implemented. The statute the IRS is using in defining the constructive sales price goes back to 1956.
The time to act is now.
The ways are there. The question is, of course – is there the will?
What would Don Draper do?