See­ing mo­men­tum to­ward re­peal­ing the ACA de­vice tax

Modern Healthcare - - Q&A -

“We support the move­ment away from fee-for-ser­vice to­ward mod­els that re­ward providers for qual­ity rather than vol­ume.”

Stephen Ubl be­came pres­i­dent and CEO in 2005 of the Ad­vanced Med­i­cal Tech­nol­ogy As­so­ci­a­tion, a 270-mem­ber group rep­re­sent­ing man­u­fac­tur­ers of med­i­cal de­vices, di­ag­nos­tic prod­ucts and med­i­cal in­for­ma­tion sys­tems.

Ubl joined Ad­vaMed in 1998 as ex­ec­u­tive vice pres­i­dent of fed­eral gov­ern­ment re­la­tions. He pre­vi­ously served as vice pres­i­dent of leg­is­la­tion for the Fed­er­a­tion of Amer­i­can Hos­pi­tals and worked as an aide to Sen. Chuck Grass­ley (R-Iowa). As a lob­by­ist, Ubl has led ef­forts to change the Food and Drug Ad­min­is­tra­tion prod­uct-re­view process and Medi­care’s cov­er­age and re­im­burse­ment of med­i­cal tech­nolo­gies. Mod­ern Health­care re­porter Sabriya Rice re­cently spoke with Ubl about the po­ten­tial im­pact of new pay­ment mod­els, as well as reg­u­la­tory and tax is­sues, on the $110 bil­lion de­vice in­dus­try. This is an edited tran­script.

Mod­ern Health­care: What are the safe­guards Ad­vaMed be­lieves are needed to pro­tect in­no­va­tion as the use of val­ue­based pay­ment mod­els grows?

Stephen Ubl: We support the move­ment away from feefor-ser­vice to­ward mod­els that re­ward providers for qual­ity rather than vol­ume. We be­lieve med­i­cal tech­nol­ogy will be a key contributor to the suc­cess of those mod­els, en­abling providers to bet­ter man­age pa­tients with chronic con­di­tions. But the met­rics aimed at re­duc­ing costs are strong and the qual­ity stan­dards are pretty weak. If a provider is try­ing to keep their costs be­low a fi­nan­cial bench­mark based on his­tor­i­cal costs, there could be a dis­in­cen­tive for adopt­ing a new tech­nol­ogy that may in­crease costs in the short term but de­crease cost in the long term.

So we have ad­vo­cated for tran­si­tional mech­a­nisms to cre­ate room for new tech­nolo­gies, not un­like new tech­nol­ogy add-on pay­ments in the hos­pi­tal in­pa­tient set­ting. The tran­si­tional mech­a­nism might last for two to three years, after which that bench­mark can be re­cal­i­brated to re­flect the new tech­nol­ogy. We want to make sure as th­ese new treat­ment paradigms evolve that we don’t have un­in­tended con­se­quences, such as skimp­ing on care.

MH: How are Ad­vaMed and its mem­bers work­ing to ad­dress the con­cerns providers have about prov­ing the value of new tech­nol­ogy?

Ubl: One of the key take­aways from our re­cent con­fer­ence in Chicago was the need to fo­cus on ef­fi­cient ev­i­dence. We heard from Food and Drug Ad­min­is­tra­tion Com­mis­sioner Dr. Peggy Ham­burg about the FDA’s fo­cus on im­prov­ing reg­u­la­tory sci­ence and forms of ev­i­dence such as com­puter sim­u­la­tion that could ex­pe­dite the re­view process. We also heard from reg­u­la­tors and in­sur­ers about the po­ten­tial of registries to help build the ev­i­dence base. Our in­dus­try un­der­stands the ev­i­dence bar is be­ing raised, and the in­dus­try is up for that chal­lenge. But the fo­cus ought to be on smart reg­u­la­tion and ef­fi­cient data col­lec­tion.

MH: At the con­fer­ence there was dis­cus­sion about unique iden­ti­fiers for med­i­cal de­vices. Some man­u­fac­tur­ers say they need more time for roll­out of UDIs, and oth­ers ques­tion if that will ac­tu­ally ben­e­fit the pub­lic. What’s Ad­vaMed’s po­si­tion?

Ubl: We’ve long sup­ported the es­tab­lish­ment of the UDI sys­tem. There’s no ques­tion UDI will ben­e­fit the pub­lic. If it’s im­ple­mented ap­pro­pri­ately, we think it can pro­vide ac­cu­rate and use­ful post-mar­ket surveil­lance.

This is a tremen­dous un­der­tak­ing for our in­dus­try. There are over 1 mil­lion dis­crete (shelf­keep­ing units) in terms of de­vice types that will be im­pacted by this new re­quire­ment. We worked with the FDA around is­sues where we be­lieve the re­quire­ments ini­tially pro­posed would have added sig­nif­i­cant cost and bur­den with­out a com­men­su­rate pub­lic-health ben­e­fit. It will take some time for our mem­bers and providers to in­cor­po­rate UDIs into their work­flow.

MH: What’s driv­ing the con­cern that more prod­ucts are launch­ing out­side than inside the U.S.?

Ubl: First, FDA ap­proval de­lays have de­te­ri­o­rated sig­nif­i­cantly in re­cent years. It’s rou­tinely the case now that

break­through tech­nolo­gies such as per­cu­ta­neous heart valves have been avail­able to Euro­pean pa­tients for sev­eral years be­fore U.S. pa­tients have ac­cess to the tech­nol­ogy. That’s led to more com­pa­nies ini­ti­at­ing their clin­i­cal tri­als and seek­ing prod­uct ap­proval in Europe first. And un­for­tu­nately, in­vest­ments such as re­search and man­u­fac­tur­ing have fol­lowed suit. In ad­di­tion, ven­ture cap­i­tal in­vest­ment is ac­tu­ally more read­ily avail­able in Europe to­day than it is in the U.S.

Another fac­tor is that the ef­fec­tive U.S. cor­po­rate tax rate is about 31%. In Ire­land, it’s about 14%. This dis­par­ity is made worse by the im­po­si­tion of the Af­ford­able Care Act’s med­i­cal-de­vice tax, which adds about 30% to the in­dus­try’s ag­gre­gate tax bill. ( Ed­i­tor’s note: The de­vice tax also ap­plies to im­ported med­i­cal de­vices made by for­eign-based man­u­fac­tur­ers, and it does not ap­ply to de­vices ex­ported by U.S. man­u­fac­tur­ers). Other coun­tries look at the med­i­cal tech­nol­ogy in­dus­try as a win­ner they cul­ti­vate. In the U.S., reg­u­la­tory de­lays as well as the tax cli­mate have pushed many com­pa­nies off­shore.

Fi­nally, there is the re­im­burse­ment cli­mate. Even if there is a pos­i­tive cov­er­age decision by Medi­care, it is of­ten nar­rower than the FDA in­di­ca­tion.

On a more op­ti­mistic note, the FDA re­view process is im­prov­ing both for ini­ti­at­ing a trial as well as prod­uct ap­proval. We’re very heart­ened by the 21st Cen­tury Cures Ini­tia­tive. It’s a bi­par­ti­san ef­fort aimed at stream­lin­ing the reg­u­la­tory and re­im­burse­ment pro­cesses. We see great mo­men­tum around that leg­is­la­tion. We heard from a num­ber of speak­ers on both sides of the aisle around the need to re­peal the de­vice tax, and there is con­tin­ued mo­men­tum there. And there’s grow­ing dis­cus­sion around greater col­lab­o­ra­tion be­tween man­u­fac­tur­ers, providers and pay­ers as well as be­tween the FDA and the CMS to make the process more stream­lined and ef­fec­tive.

MH: What’s your re­ac­tion to the re­cent study in JAMA that found that many de­vice­mak­ers are not ad­her­ing to the FDA’s 510(k) re­quire­ments re­quir­ing pub­lic re­port­ing of ef­fec­tive­ness data?

Ubl:

It’s im­por­tant to clar­ify the dif­fer­ence be­tween the sum­mary of pub­licly avail­able in­for­ma­tion re­lated to a sub­mis­sion and the ac­tual data that are sub­mit­ted to the FDA in support of an ap­pli­ca­tion. Sub­mis­sions can in­clude hun­dreds of thou­sands of pages. There is an im­por­tant dis­tinc­tion be­tween the sum­mary in­for­ma­tion to­day not al­ways be­ing pro­vided and the ac­tual in­for­ma­tion be­ing pro­vided in support of a sub­mis­sion.

Hav­ing said that, ad­her­ence is im­por­tant. One of the new pieces of the user-fee leg­is­la­tion is the so-called refuse-toac­cept process, a check­list the FDA uses to en­sure that a sub­mis­sion is in or­der be­fore the re­view clock be­gins. One of the new re­quire­ments is the fil­ing of this pub­licly avail­able sum­mary in­for­ma­tion. That will be a valu­able new tool to en­sure ad­her­ence. We cer­tainly be­lieve that sum­mary in­for­ma­tion should be pro­vided.

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