There is a bit of holiday cheer going into 2010, as the Senate delayed the implementation of a healthcare reform tax on medical device makers to 2013. This amendment also provides an exemption to the small startups and companies with yearly revenues of less than $100 million. But those with revenues above that mark will see their tax burdens increase. This is perhaps a boost to the early-stage startups that are looking to raise funds to commercialize their products. The climate is difficult enough to find investors willing to fund an early-stage, pre-commercialization company.
The Food & Drug Administration has begun to implement its stepped-up 510(k) oversight, even though its report card shows an increase in its review time, despite an increase in staff and budgets. A client of mine is taking extra steps to get all the testing done to have as much data as possible available for its FDA 510(k) filing. Although this is a prudent move, the company will experience a quarter-long delay in filing, costing it more time and money. Investors need to understand the increased regulatory pressures faced in this climate and adjust their expectations for market launch — and thus revenues — in the coming months and years.
More worrisome are the long-term implications for this market that depend upon the results of healthcare reform. Technological advances may not find the same level of acceptance through working with surgeons who are enthusiastic about the newest gadget. Depending upon the final shape of the reforms, a public option will dampen the introduction of new technologies, or at least delay their appearance in everyday use. Although the use of evidence-based medicine is a good approach, its usefulness in controlling expensive-but-not-effective devices will only be as good as the data gathered or the reviewers examining it. Objective measures must be used to evaluate new medical technologies, so that we can level the playing field and improve access to all those newly insured people, rather than limiting it.
Healthcare reform will not reduce costs until and unless they require the insured to take some personal responsibility for their health. For example, gastric banding is a fine procedure that has helped many individuals manage their obesity, but this type of surgery must be accompanied by counseling and nutrition education to support the person’s new food and lifestyle choices. Medical devices and diagnostic products will not exclusively solve our obesity epidemic. In fact, the economics of the use and success of the procedure in a prospective trial should be evaluated. Such studies will support future medical technology programs and product developments.
The medical device community must take its destiny into its own hands and not leave it to reforms from Congress or the FDA. That’s a recipe for disaster and would expose the industry to a passive demise.
Wishing for a happy 2010? Then let’s be vocal out there. Patients’ lives depend upon this industry.