AdvaMed Chief predicts a delay to the new 2013 Med Device Tax

AdvaMed Chief Predicts Device Tax Delay (Orthopedics This Week)

Stephen Ubl, the president and CEO of the world’s largest medical technology association, AdvaMed, told investors at a Wells Fargo luncheon on November 26 that he is hopeful that Congress will, in a bipartisan manner, delay implementation of the device tax as a “bridge to repeal.”

His comments were reported by a Wells Fargo investor note and confirmed to OTW by AdvaMed.

The Two-Step “Cliff” Solution

Regarding the so called “fiscal cliff,” Ubl said the cliff is likely to be avoided in two stages, with a down payment to pass this year (before holiday break) that sets the broader frame work for a longer term solution to be worked out in 2013. A deal on the device tax could occur as part of the fiscal cliff solution.

The fiscal cliff was created by Congress when Republicans and Democrats agreed on tax hikes and spending cuts in exchange for raising the nations’ debt ceiling.

According to Ubl, the potential risks for the medical device industry is more on the customer side (i.e., labs, hospitals) feeling the pressure of rate reduction, that could have some incremental impact on pricing.

Device Tax Repeal Uphill Battle

While AdvaMed is working to prevent implementation of the device tax, full repeal of the tax remains an uphill battle, Ubl told investors.

AdvaMed was successful in cutting the original device tax proposal in half. Ubl believes there will likely be 12 to15 Democrats in the Senate who will ultimately support addressing the tax. While many of these Democrats may be publically less vocal about repeal of the tax, there is consistent work being done behind the scenes, according to Ubl, because the medical device industry touches so many different constituencies across the country.

Final Tax Rules Expected

If the tax is not delayed or repealed, Ubl predicted that final regulations should be issued with ample time for compliance before the device tax is implemented, and while he believes that a specific rule will come out before the end of the year, he indicated that companies are still obligated to pay the tax even without specific guidance in place.

Predicts Better FDA

Ubl also believes that the FDA, under the new Medical Device User Fee Act (MDUFA) law with more rigorous application review goals, greater emphasis on FDA accountability and increased resources, will substantially improve the agency’s review times.

The new user fee law is establishing total review time as the new standard, with the goal of reducing active FDA review times for both premarket approvals (PMAs) from 680 to 320 days and 510(k)s from 138 to 90 days. Ubl noted a decline in FDA Center for Devices and Radiological Health (CDRH) performance in recent years, including increase in total review times and number of review cycles.

Additionally, MDUFA sets out the “no submission left behind” program to ensure that device applications that miss their review deadlines do not further languish at the FDA. Ubl also noted that new CDRH resources, with a focus on hiring of more review staff and better training, should also help to reduce the review backlog.

Further, Obama’s re-election which has solidified the Affordable Care Act (ACA) as the law of the land, has created a new paradigm where there will be increased willingness to examine individual components of the law, according to Ubl.

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