Regulatory Editor

There are ways of talking about the medical device tax without saying "device tax," and the authors of an industry-sponsored report on the economic impact of medical imaging equipment seem to do just that. The report said that imaging has a $2.8 billion annual impact on the economy of the state of Pennsylvania, and generates a total tax revenue of $73.6 million for the Keystone State's public finances, figures that would presumably suffer should efforts to repeal the device tax falter.

The report, generated by John Dunham & Associates (New York) at the behest of the Medical Imaging & Technology Alliance (MITA; Arlington, Virginia) gives members of the Pennsylvania delegation to Congress a number of reasons to support repeal of the device tax. Passage of the device tax repeal bill in the House may have come across as the political no-brainer of the year, as suggested by the 280-140, veto-proof outcome of last month's vote (Medical Device Daily, June 19, 2015), but the Senate is a different proposition. Pennsylvania's two senators, Pat Toomey (R) and Bob Casey, Jr. (D) have both voiced support for the repeal, although Casey has made his support contingent on offsets, a stipulation that has repeatedly proven to be an insuperable hurdle for repeal.

The authors point out that Pennsylvania is home to nearly three dozen facilities involved in the manufacture of medical imaging hardware, and that the net impact of this and clinical use of imaging equipment is more than 11,700 full time-equivalent jobs when suppliers and other related activities are taken into account. Those jobs created directly by manufacturing are said to pay on average (when calculated for benefits and salaries) more than $100,000 while suppliers and other secondary players in this market receive salaries and benefits that average in excess of $74,000.

The analysis behind the report employs an economic statistics model by the Implan Group (Huntersville, North Carolina) as applied to data sets provided by the U.S. Bureau of Economic Analysis and other sources, including MITA's parent organization, the National Electrical Manufacturers Association (Arlington, Virginia), and Dunn & Bradstreet (Short Hills, New Jersey). The report explains that its conclusions are based on Implan input/output accounts from 2012, whereas other figures are of more recent origin, such as direct impact data from D&B, which are based on 2014 data.

The authors said that industry and employees "provide about $404 million in revenues" to state and local government as well as to the U.S. Treasury each year. Removing the amount attributed to state and local governments leaves roughly $330 million paid in taxes annually to Washington.

Patrick Hope, executive director of MITA, responded to MDD's query via email, stating that the intent of the study was "to demonstrate the importance of medical imaging in Pennsylvania," adding that the hope is that the demonstration of the impact on the state's economy "will encourage policy makers to support policies that protect jobs and enhance the economy." Hope specifically cited device tax repeal as "one policy that would protect jobs in Pennsylvania while promoting economic growth and safeguarding patient access to life-saving medical technologies."

Hope said MITA will share the report "with stakeholders on Capitol Hill as well as universities, hospitals, and other entities that may be interested in the value of medical imaging in Pennsylvania." He noted that MITA may opt to commission similar studies of imaging in other states.

NIH funding drops in Cures bill

The issue with legislation is not always with what the drafters of the bill want to do, but what the appropriators think is appropriate. This seems to be the case for the latest edition of the 21st Century Cures legislation, which in its latest form would send the National Institutes of Health an additional $1.75 billion per year between 2016 and 2020 instead of the $2 billion annual bolus initially provided in the legislation. NIH's backers are likely to be miffed, but FDA is still stuck at $550 million for the five years, a flat-funding scenario that may create a bottleneck at the regulatory end of things.

The original five-year amount of $10 billion for NIH from the Cures legislation was hailed as a potential game-changer where advanced medical therapies are concerned, although dissent grew in a number of quarters, including advocates of preventive medicine. The issue for FDA is that it expects its suite of tasks related to H.R. 6 to generate a tab in excess of $900 million over the five-year accounting period (Medical Device Daily, May 22), a figure that could exceed $1 billion should the agency be hit with a large volume of applications for biomarker validation.

The July 2 summary of the changes made to the bill makes note of provisions that would expand the use of prior authorization for some power mobility devices under the Medicare durable medical equipment program, but this latest edition would also peg payment amounts for Part B drugs to the average sales price plus 6%, the so-called ASP+6 methodology. Another section of the latest draft would drop the prices charged for authorized generics from the calculations of average drug manufacturer prices under Medicaid.

The House Rules Committee will meet Wednesday to provide rules for debate and voting on H.R. 6 on the House floor, which may come by week's end.

Teleflex recalls resuscitator

FDA recently announced a class I recall of resuscitators by Teleflex Medical (Research Triangle Park, N.C.), citing the Hudson RCI Lifesaver line of single-use units due to the potential for blockage of the device's oxygen intake port. FDA did not make note of the root cause of the blockage of the intake port, but said Teleflex had suggested that customers quarantine and then return the affected units. The announcement notes that the affected units were manufactured and distributed between June 2014 and this past April. A total of 2,405 units were recalled.

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