Diagnostics & Imaging Week Washington Editor

WASHINGTON From Band-Aids to implantable defibrillators the size of pocket change, the medical device industry is a diverse sector, though that may not be widely recognized outside the industry.

According to Pamela Bailey, president of the Advanced Medical Technology Association (AdvaMed; Washington), the dynamics of medical devices are having an important, tangible impact on the shape and cost of medicine at all levels of healthcare.

In an interview last week, Bailey sat down with Diagnostics & Imaging Week to discuss her organization's progress in 2004 and its goals for the year ahead.

Citing recently released studies indicating that the over- all growth of healthcare and Medicare spending is slowing, Bailey said the credit in large part could be given to medical technology.

"My theory is that we are beginning to see the impact of medical technology in enabling the broad healthcare system to do more with less in the way of expenditures," she said. "It reflects a shift away from expensive inpatient procedures to less-expensive outpatient care and procedures. We are treating people, better, faster and at less cost. This will be a continuing trend."

In part, Bailey cited the current national dialog on health- care as a good sign for the industry.

That good sign, she said "started with President [Bill] Clinton, and now we have it with President [George] Bush. It is that it is expected that our president is conversant, active and committed to talking about healthcare, which is positive for our industry."

Growth in the sector translates also into new company members for AdvaMed. Bailey pointed to the organization's membership growth as one of it main successes in 2004. AdvaMed ended the year with 320 members, the group's largest membership base since 1998.

"I am particularly proud that 71% of companies are 'emerging growth' companies, and that represents a 21% increase over the previous year," she said. "The other major membership success story of the year is that we have six separate sectors. When I got here in 1999 we only had one."

Those sectors are diagnostics its largest, blood technologies, digital information and electronic records, ophthalmic, orthopedic and wound management. Bailey said that categorizing the association's efforts into these divisions allows it to better target its work on payment and regulatory issues, while leveraging the group's overall resources.

AdvaMed continues to work heavily in coverage and payment issues, she said, and she hailed the Centers for Medicare & Medicaid Services (CMS; Baltimore) for its efforts to implement and move forward with the Medicare Modernization Act of 2003.

"We have a great deal of work under way in that area, and I think the guidance process and the openness with which the agency has approached that is a significant accomplishment," she said.

Bailey said that what was "most significant in 2004" and will be a priority for AdvaMed in 2005 will be working with CMS Administrator Mark McClellan "in his vision for a more open, transparent and faster process, of initial coverage determinations and his vision for collection of post-coverage data."

"He [McClellan] is committed to getting patients access to new technologies as quickly as possible," she said.

Many questions still need to be answered concerning the collection of post-coverage data, Bailey said, but she called the opportunities "tremendously important for the advancement of innovation."

In the diagnostics area, Bailey said AdvaMed would be releasing a pivotal study in February that outlines the state of the diagnostics industry, including the "potential that industry has for transforming healthcare diagnosis and treatment because of the new opportunities through molecular diagnostics."

She also said the association has begun work with the hospital community to find ways to collaborate, not only by looking at the value of technologies in improving healthcare and lowering its costs, but on new solutions for more modern hospital payment systems.

In 2004 and so far this year, AdvaMed has increased its international focus on payment issues with the creation of a "well-rounded" global strategies team, Bailey said. The organization has tapped professionals with experience in international trade and commerce to push its overseas efforts.

AdvaMed has been working with its member companies and local authorities in Germany, the UK, Italy, France, Japan and now China.

"What we found is that we can leverage our expertise, because DRGs [diagnosis-related groups] are a distinctly American product, and as they are implemented and interpreted in other countries, we have learned lessons for the process here that have been very helpful to colleagues in other countries and with the governments in Germany and the UK."

DRGs are codes used to assign hospital payments for products and services.

"We have stellar global strategies team that will enable us in 2005 to not only cover the existing priority markets for this industry but [also] now begin to develop programs to facilitate access in developing markets such as China," Bailey said. "In '05, we are broadly engaged globally in a balanced way on both regulatory harmonization consistency of approach, transparency of objectives and payment."

Bailey met recently with company representatives in China, where she reported having one of AdvaMed's largest meetings in any country outside the U.S.

On the home front, Bailey said AdvaMed's priority with the FDA in 2005 will be to continue its work with the agency "in a collaborative way on a balanced premarket and postmarket regulatory system."

The association meets regularly with Dan Schultz, director of the FDA's Center for Devices and Radiological Health, she noted.

"Much progress has been made in transparency and predictability" regarding post-market and post-approval studies, she said, adding that the FDA has done a better job providing more clarity upfront for the companies concerning agency expectations.

AdvaMed also continues to work on early legislative action in fixing the compensating adjustor trigger in the user-fee program.

"If fixing the trigger is going to forgive the federal government of the $40 million shortfall that they have incurred for their part of the program, we in turn would like forgiveness for the $4 million that is included in the compensating adjustor. If the government is going to be forgiven, it is quite fair that the private sector be forgiven its share. We have made this very clear to the FDA and to the Hill."

Legislatively, 2005 will be an "implementation year" for industry, Bailey said.

"There will be legislation that will continue the process to a broad healthcare system paradigm shift toward one based on consumer-driven healthcare and putting in place incentives for consumers to make their own decisions," she said. "Where this ties in with our industry is that information is going to be key in making a consumer-driven healthcare system work. You can't purchase based on value if you don't know where the value is. So, for this industry, there is opportunity for legislation."

Bailey predicted "broad bipartisan consensus on health information technology" and additional funding for that sector. "There was a bill last year that did not progress, but I think this year it will," she said.

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