Feature | May 09, 2014

New Report Shows Execs Not Sure If New Patients Will Cover Cost of Medical Device Tax

Massachusetts medtech companies now say they are more likely to innovate new products from patient needs, not doctors' ideas

MassMEDIC ACA Medical Device Tax Innovation

May 9, 2013 — Medical device executives from across the region are not sure the influx of new patients using their devices and the promised sales boost expected from the Affordable Care Act (ACA) will offset the costs of the ACA’s medical device tax, according to a new survey analysis presented to more than 350 medical technology leaders at UMass-Boston at the Massachusetts Medical Device Industry Council’s (MassMEDIC) 17th annual conference.

Only 8 percent of the respondents in the survey said they believe the jump in new patient sales will offset the device tax.

Meanwhile, the study of 119 senior-level medical device executives also shows that there is a changing path to new device innovation — from one that was focused solely on doctors to one that is more focused on other key influencers. While executives cited in last year’s study stated their innovation effort in developing new products and devices is primarily focused on doctors, this year executives indicate that who they focus their innovation on will shift and that patients are nearly as important as doctors (61 percent will be extremely focused on doctors in future innovation and 57 percent will be extremely focused on patients in future innovation). Additionally, executives indicate that they will focus more on hospital administrators, payers and policy makers than they do currently when it comes to future innovation.

The study, conducted by Kadence Intl., also shows that fewer companies are reducing their workforce, but there are indications that the ACA may be pushing R&D spending lower by using more offshore labor. The survey indicates that regulation of the ACA and how well a company manages the new regulatory landscape is a key part of future success — even equally as important as their ability to successfully innovate.

“Another year has now passed as the medical device sector learns to live under the new healthcare reform rules and impacts,” said Tom Sommer, president of MassMEDIC. “Our device companies, which contribute thousands of jobs and millions in economic activity to our state, have been doing the best they can under challenging circumstances,” he added.

The survey examined current medtech industry perspectives on the impact of policy changes contained in the ACA. Data for the study were collected through a 10-minute online questionnaire in March and April of 2014. The questionnaire was completed by 119 MassMEDIC members and industry colleagues, many of whom carry senior product manager, vice president of marketing and vice president of regulatory affairs titles.

“The nature of innovation is changing in the medtech industry,” said Andrew Wilson, insight director at Kadence Intl. “The successful medical device OEMs of the future will think differently about how they innovate; they will focus as much on innovating their business model to meet the demands of health care reform as they will on the products they manufacture.”

The conference agenda also included:

  • Keynote speech from Stephen N. Oesterle, M.D., senior vice president for medicine and technology at Medtronic. Oesterle offered his expert perspective on the future of medical technology innovation in an address titled, "Massachusetts Medical Device Bonanza: Why Here, Why Now?"
  • Remarks from Laura Mauri, chief scientific officer and principal investigator at the Harvard Clinical Research Institute about new policies and trends in medtech clinical trials.
  • Remarks from Sreekanth Chaguturu, M.D., entitled, “The ACO Model — What is it? What it Means for Health Care Delivery.”
  • "Reducing Health Care Costs — Begin With the End in Mind," a panel discussion featuring Joseph Ferrara of Boston Healthcare; Susan Rockwell of AptivSolutions; Brian Scrivens of MPR Associates; and Perry De Fazio of Covington Associates.

For more information: www.massmedic.com

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