FDAnews Device Daily Bulletin

DEVICE INDUSTRY MAY BE HURTING ITSELF IN BID FOR TAX RELIEF, EXPERT SAYS

April 27, 2006
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Recently proposed reductions in the Centers for Medicare & Medicaid Services' (CMS) reimbursement rates for hospital inpatient procedures on devices such as pacemakers have raised concerns for devicemakers. But those concerns may be misguided, an expert says.

The biggest risk to device manufacturers is not the recent reimbursement changes by the CMS, but the "judicial wars" between companies fighting to protect their patents, says Princeton economics professor Uwe Reinhardt. Reinhardt shared the stage with CMS Administrator Mark McClellan at the World Healthcare Congress held recently in Washington, D.C.

The device industry has brought risk upon itself by the constant stream of manufacturers suing each other, and by spending as much money on legal costs as it does on R&D, Reinhardt says. "The U.S. government is one of the most stable entities industry deals with."

"When we cover new technologies, we are also covering processes to find evidence" that they address the condition they target, and possibly other conditions," McClellan told conference attendees recently. "We seek to develop better evidence," he said.

While McClellan has touted the CMS' approach to implementing Medicare changes as a matter of "choice" and "value," Reinhardt expresses skepticism that the device industry will work to contain costs.

"Some of these technologies reduce costs, like stents, but in doing so they increase demand for the procedure, so more are used," he told FDAnews. "There is a difference between lower costs in treatment and overall annual health spending on such treatments."

(http://www.fdanews.com/ddl/33_17/)