Medical Device Daily Washington Editor
The Advanced Medical Technology Association (AdvaMed; Washington) is perhaps the most prominent voice of makers of medical devices and, with the addition of AdvaMed Dx, a division devoted to diagnostics, is arguably a major voice for makers of diagnostics as well. A change at the board chairmanship could augur a different tone of voice for these industries, but the newly installed board chairman says they can expect AdvaMed to steer essentially the same course going forward as it has for the past two years.
Jim Mazzo, President/CEO of Abbott Medical Optics (Santa Ana, California) and the newly installed board chairman at AdvaMed, addressed a few issues in a brief interview with Medical Device Daily yesterday, stating that he “will not change anything, but will continue to uphold“ the efforts of the past couple of years under the direction of his predecessor, Mike Mussallem, CEO of Edwards Lifesciences (Irvine, California). The new board chairman also sounded anything but pessimistic about the industry's fortunes in the U.S. market over the next few years.
Mazzo said that device makers are “all about technology and patient care,“ adding that medical technology “is geared to making people independent and productive.“ Mussallem had also vowed to “keep the focus on the patient“ when he took the chairmanship at AdvaMed two years ago (MDD, March 17, 2008).
“Nobody can dispute“ the improved numbers on morbidity and mortality provided courtesy of med-tech for a range of diseases such as cardiovascular disease, Mazzo asserted, but he also made the economic argument for continued growth of the industry. “We cannot afford to let our country lose“ a competitive commercial edge, especially in a weak economy, he said. He also hinted that the association is still as focused on small firms as it was at the start of the Mussallem era.
“More than 70% of our industry earns less than $30 million in revenues,“ Mazzo said. However, that focus has cost the association at least one prominent membership, given that the focus on small firms was a reason cited by St. Jude Medical (St. Paul, Minnesota) for its resignation from AdvaMed (MDD, Nov. 12, 2009). St. Jude's CEO/chairman Dan Starks said in a letter to AdvaMed that large firms “are the minority within AdvaMed,“ and that the association's proposal to set a device tax floor of $100 million in annual revenues revealed a bias. Starks asserted that St. Jude “no longer feel[s] that the trade organization can effectively represent our interests.“
Many larger device firms may be of the view that the survival of smaller firms is essential to maintenance of the innovation pipeline, partly because stock prices are often highly sensitive to failed device applications. Wall Street firms can avail themselves of new technology with buy-outs of their smaller brethren, though, an increasingly likely exit strategy for small firms given the persistently anemic market for initial public offerings.
Mazzo seemed to offer a different threshold for the definition of “small“ where healthcare reform is concerned, stating that “it's small companies with less than $30 million“ that will be most profoundly affected by any device tax imposed by healthcare reform legislation. He further bolstered the economic argument by noting that the device industry employs more than 350,000 Americans and that device makers “pay 30% more than the average job.“
AdvaMed, Mazzo said, supports harmonization of global device regulation, but he noted that improved standards of care in other regions in the world are also important when firms submit clinical trial data conducted outside the U.S. in their FDA applications. “Improvement [in care standards] is required across the globe,“ he said, but he also pointed out that AdvaMed member firms are not especially averse to launching devices in Europe first. “We're pleased with that model“ for commercialization, he said, remarking that in FDA's view, “foreign data are acceptable as long as they're collected under good clinical practices.“
Mazzo said, however, that the American market offers plenty of room for growth. “We don't believe it's saturated here in the U.S.,“ he said, partly because the device iteration cycle is 18 to 24 months. Mazzo remarked that device makers “have to continuously innovate here, but must continue to get our products out across the globe“ as well.
Overseas markets are looking more robust of late, said Steve Ubl, president/CEO of AdvaMed, who was also in on the call. “We're obviously interested in looking at emerging markets,“ such as Brazil, India and China, the last of which recently announced a major financial commitment to upgrading its health systems. “You're seeing those governments spending more to recapitalize their healthcare structures,“ Ubl commented, offering fresh opportunities for firms that can find their way through formal and informal channels.
Mazzo said he has heard mixed reviews of FDA's turn-around times on 510(k) applications. “Data from FDA indicates they're meeting their . . . commitments“ under the device user fee agreements, he observed, although he acknowledged that companies sometimes complain. “We are openly expressing our opinions with FDA“ on this topic, he said, adding, “I would have to tell you that some companies are not pleased.“
On the subject of the Medical Device Safety Act, which would strip PMA devices of regulatory pre-emption, Mazzo said, “I think it's going to slip“ out of any healthcare reform legislation, which promises to have a substantial mass of political baggage in any case. Ubl seemed to believe that the legislation has short legs, if any, as a stand-alone bill. “There's always a risk that Congress will try to move this“ as a solo piece of legislation, he said, but assured, “we're hopeful and working with Congress“ to avert passage.
Mazzo and Ubl both acknowledged that reform of how providers are paid is a fact of life regardless of the fate of healthcare legislation. Ubl said AdvaMed believes that the Centers for Medicare & Medicaid Services “will move forward“ with ideas such as bundling and fostering the development of accountable care organizations, adding that AdvaMed expects “to engage proactively with CMS to ensure that integrated delivery system reforms“ do not squeeze out innovation. Mazzo asserted that transparency “is critical and we're going to closely monitor“ such developments.
“This is one of the critical elements“ of healthcare for the device industry, Mazzo said.
Mark McCarty, 703-268-5690