Medical Device Makers Haggle With Sen. Baucus Over Fee
By Martin Vaughan and Jared A. Favole, Of DOW JONES NEWSWIRES
WASHINGTON -(Dow Jones)- Medical device makers are negotiating with Senate
Finance Committee Chairman Max Baucus, D-Mont., to shave billions off fees the
industry would face under Baucus' health overhaul bill.
The Advanced Medical Technology Association, or AdvaMed, a leading trade group
of device manufacturers, is asking Baucus to reduce the fee on the industry from
$40 billion to $15 billion over 10 years, according to industry and
congressional officials. Congressional aides say that offer is too low.
A deal might come within days, according to industry sources. The fees would
affect makers of a wide range of products, from walkers and hearing aids to
surgical stents and high-tech imaging equipment.
AdvaMed spokeswoman Wanda Moebius declined to comment on the $15 billion
offer, calling it "rumors and speculation."
"AdvaMed continues to work with members of Congress to educate them of the
onerous nature of this $4 billion tax - nearly half of the total of the
industry's research and development investment in 2007," said Moebius.
Industry lobbyists have recruited a number of sympathetic lawmakers to their
cause since Baucus unveiled his health-care legislation, including the medical
device fee, in mid-September. Sens. John Kerry, D-Mass., Amy Klobuchar, D-Minn.,
and Evan Bayh, D-Ind., have all voiced objections to the tax.
AdvaMed's members include Boston Scientific (BSX), Minneapolis-based
Medtronic, Inc. (MDT), and Indianapolis-based Eli Lilly and Co. (LLY).
Nevertheless, the Finance Committee rejected late Thursday night an attempt
from Sen. Jon Kyl, R-Ariz., to strip the medical device fee from the Baucus
bill, on a 13-10 vote.
Besides device makers, health insurers and drug manufacturers are also
targeted for fees under the bill. But insurers and drug makers reached deals
with the White House and Baucus to submit to the fees, on the grounds that the
bill would bring them millions of new customers thanks to expanded government-
subsidized health coverage. The device fee, by contrast, was not pre-negotiated
with industry.
Device makers are arguing that they will already suffer under separate
provisions of the bill that cut payments to hospitals. The great majority of
medical devices are reimbursed through hospitals - not the case with insurance
or prescription drugs, device industry sources note.
Under the Baucus bill, a $4 billion annual fee would be levied on
manufacturers of Class II medical devices, apportioned by market share. Class I
medical devices like tongue depressors and hand-held surgical tools, and devices
sold at retail for less than $100, are exempt from the tax.
The Senate Finance Committee might vote on the health care package as early as
Tuesday.
-By Martin Vaughan, Dow Jones Newswires; 202-862-9244; martin.vaughan@
dowjones.com
(Alicia Mundy contributed to this article.)
(END) Dow Jones Newswires
10-02-091620ET
Copyright (c) 2009 Dow Jones & Company, Inc.
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