Right about this time last week, somewhere between the third slice of pumpkin pie and a turkey-induced coma, my mind drifted over some of the stories Medical Device Daily has covered in 2014 and all the things the med-tech industry should be grateful for this year. A surge in IPOs and an active M&A market were high on that list.
But Thanksgiving is over and my thoughts have turned to the gift-giving season. As I tell my six-year-old every time a new toy catches his eye, “ask Santa.” This year, as I helped my son compose his annual letter to the North Pole, I began to imagine what a holiday wish list for the medical device industry might look like.
1. Medical device tax repeal. Our resident expert in this area, Washington Editor Mark McCarty, recently put it this way during our morning staff meeting: “If you ask 10 different people, you’ll get five or so fairly distinct forecasts for the device tax repeal.” He explained that, assuming the tax will be repealed, there is still the question of how it would be repealed. Would it be a stand-alone piece of legislation, which Mark says would almost surely be vetoed, or would it be gift wrapped together with corporate tax reform (more on that in a moment). As Mark recently reported, AdvaMed has explicitly said it sees the device tax and corporate tax reform as two sides of the same coin. Others, like Joe Antos of the American Enterprise Institute in Washington, say the device tax is a separate issue from corporate tax reform. Mark says it is tough to imagine that the U.S. Chamber of Commerce would lobby for corporate tax reform if there is a risk that the device tax repeal might jeopardize corporate tax reform. Regardless of if or how the tax will be nixed in 2015, most in the industry have been against the device tax from the beginning. Thus, it is appropriate to put it at the top of our Med-tech wish list.
2. Corporate tax reform. The issue of tax inversion roared its ugly head in 2014, particularly after Medtronic announced in June that it would buy Irish rival Covidien and move its corporate headquarters to Dublin, Ireland. While some U.S. policy members scrambled to put up roadblocks to prevent U.S. companies from practicing tax inversion, one idea that has stuck with me is a comment made by Larry Haimovitch, founder of Haimovitch Medical Technology Consultants and a regular contributor at MDD. Haimovitch said that, rather than trying to stop deals like the Medtronic-Covidien merger, U.S. policy makers should consider fixing the root of the problem, the tax laws. Otherwise, he said, “it’s like putting wallpaper on a building that’s falling down.”
3. Clearer oversight for mobile medical apps and tighter information security. There is no doubt that mobile medical apps are playing an increasingly important role in healthcare. The rise of mobile med-tech, however, has created some gray areas and blurred lines between devices/apps that are subject to regulatory approval and those that pose such a low risk that they fly under the regulatory radar. Going forward, the health IT sector would benefit from clearer guidelines about which mobile apps should and should not be brought to the FDA.