trends affecting the medical technology industry
TRANSCRIPT
Trends Affecting the Medical Technology Industry
Stephen J. UblPresident and CEO, AdvaMed
March 27, 2008
About AdvaMed
• World’s largest medical technology association
• 1,600+ member companies and subsidiaries
• Members produce 90% of sales in domestic market,50% of sales in global market
• 70%+ of member companies have less than$30 million in annual revenue
• 65 staff with global expertise, bi-partisan backgrounds
• 45 member Board of Directors including 5 from smaller companies
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AdvaMed’s Role
Design Clinical Review
Idea through FDA: 2-6 yrs
Coverage Payment
Coding
Cov & Paymt: 0-6
JapanCanada
UKKoreaGermany
MexicoChina
IndiaFrance
Think Tanks 3
The Policy Environment
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Democratic Suspicion of
Business
Activist Congress
Budget Driven Policy
Health Reform
Increased Oversight
Critical Media
Trends Affecting the Medical Technology Industry
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Medicare evolving into an aggressive purchaser
Challenges:
Movement toward pay-for-performance
Commoditization via competitive bidding
Greater bundling of services
Trend #1
Medicare evolving into an aggressive purchaser
Our Response:
Ensure pay-for-performance promotes quality & efficiency, not “cheapest is best” approach
Work for payments that reflect true cost of care
Protect patient access to the most appropriate therapies
Trend #1
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Difficult environment for industry reputation
Challenges:
Increasingly negative press coverage
Recalls raise questions of safety and efficacy
Sales & marketing practices under fire
Trend #2
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Industry Favorability: Congress
45 46
63
4852
67 70
42 44
66 6973
0
10
20
30
40
50
60
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Health Insurance Pharmaceutical ordrug industry
Hospitals Medical technologyor device industry
2005 2006 2007
PHYSICIANS
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Difficult environment for industry reputation
Our Response:
Proactive and positive policy proposals
Build positive industry image through Value of Medical Technology program
Demonstrate continued leadership on ethicsand compliance
Trend #2
FDA credibility under fire
Challenge:
FDA may become more risk adverse in reaction to media & congressional scrutiny
Preemption authority questioned
FDA resources vs. increasing responsibilities
Trend #3
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FDA credibility under fire
Our response:
Focus on appropriate MDUFMA implementation
Support adequate FDA funding
Defend FDA preemption authority
Promote least burdensome regulatory approach (IVD proposal)
Trend #3
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Global race to the bottom
Challenge:
Growing interest in foreign reference pricing
Proposed price-driven tendering processes
Nascent regulatory and pricing systemsin emerging markets
Trend #4
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Global race to the bottomOur Response:
Provide evidence demonstrating how FRP is inappropriate
Partner with patients, physicians & local device associations
Engage early with authorities in key emerging markets (China, India)
Highlight value of technology and industry’s contributions to economic development
Trend #4
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Misperception: Technology Drives Health Care Costs
Trend #5 Our Biggest Challenge
“The bulk of the long-term rise in health costs resulted from...new medical services that were made possible by technological advances...”
“Future increases in spending could be moderated if costly new medical services were adopted more selectively...than they have in the past and if diffusion of existing costly services was slowed.”
Our Response: Four-Pronged Approach
1. Medical technology reduces health care costs
• Testing hospitalized patients for drug-resistant infections = $8.3 billion in savings in 2005
• Medical imaging to diagnose & treat stroke yields savings of $800 million per year
• Total knee replacements save $77,000 per patient in lifetime health care costs
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Our Response: Four-Pronged Approach
2. Medical technology generates real economic value
• From 1970 to 1998, improvements to life expectancy from cardiovascular care advancements alone added
$2.6 trillion per year to U.S. wealth
• Nearly half of GDP for this period
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Our Response: Four-Pronged Approach
3. Focus on the root causes of cost growth
• Fee-for-service systems reward providers for delivering more care – not better care
• Lack of effective prevention measures
• Costs of chronic disease
• Inefficiency in the health care system
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Our Response: Four-Pronged Approach
4. Quality of life improvements due tomedical technology are priceless
• Medicare inpatient payment rates FY 2007– Cochlear implant = $8,650– Knee replacement = $9,281– ICD = $28,886
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In closing...
• Push for health care reform & budgetary pressures = continued spotlight on medical technology’s role in health care
• We intend to have a seat at the table. We will fight for a health care system that provides access to quality medical care for all.
• Policy decisions over the next 25 months could affect the industry for the next 25 years...
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Two roads...
Static road vs. dynamic road
• Slowed innovation, rationed care, short-term price cuts, growing ranks of uninsured, or...
• Emphasis on health promotion/disease prevention, focus on quality, more efficient delivery system, quality health care for all
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Questions?
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Trends Affecting the Medical Technology Industry
Stephen J. UblPresident and CEO, AdvaMed
March 27, 2008