Device Makers Fight to Cut New Fees in Senate Health Bill

This article from the WSJ provides background on the multi-billion dollar battle over new fees (taxes) placed on the makers of medical devices.


Medical-Device Makers Push to Cut New Fees in Health Bill
By ALICIA MUNDY and MARTIN VAUGHAN

WASHINGTON -- Medical-device makers, joining an 11th-hour scramble to influence the shape of health-care legislation in the Senate Finance Committee, have petitioned panel chairman Max Baucus to shave billions of dollars in fees that the industry would face under the measure.

The Advanced Medical Technology Association, or AdvaMed, the trade group for the larger device manufacturers, wants the Montana Democrat to reduce $40 billion in fees over the next decade to $15 billion, according to people close to the negotiations. But industry was told that offer is too low. As of Sunday, the final draft included the higher number.

Wanda Moebius, a spokesman for AdvaMed, declined to comment on the $15 billion counteroffer, calling it "rumors and speculation."

"AdvaMed continues to work with members of Congress to educate them of the onerous nature of this [annual] $4 billion tax -- nearly half of the total of the industry's research and development investment in 2007," Ms. Moebius said.

With the Senate Finance Committee expected to vote on its health bill as early as Tuesday, lawmakers, industry executives and others have been seeking to make final changes. A main challenge in passing a health bill has been finding a way to pay for the overhaul. That is the aim of the proposed fees on medical devices, along with other fees and taxes that would be imposed on the drug industry, hospitals and the insurance industry.

People close to the negotiations said the White House supported a medical-device tax to help pay for the overhaul. A White House spokeswoman said the administration doesn't comment on specific health-care legislative provisions.

Administration officials and Mr. Baucus were troubled that AdvaMed and the $200 billion industry didn't offer any concessions to the White House and Senate Finance Committee early this summer.

AdvaMed's president said in a recent interview that the industry had proposed a way to save billions of dollars that would involve a tax on hospital-supply and device wholesalers, which they could pass on to the device makers. Wholesalers strongly objected to the proposal. It was rejected by the Senate committee, AdvaMed said.

The pharmaceutical industry in June offered concessions that would save the government an estimated $80 billion on health-care costs over the next decade, and the coalition of hospitals proffered $155 billion. Executives from both industries believe some sort of health legislation is likely to pass and would prefer to have a say in shaping it. Administration officials have told them that expanded, government-subsidized health coverage would likely bring them millions of new customers.

Industry and congressional aides said a deal could still emerge with device makers before the Finance Committee votes on the health bill.

A number of lawmakers have voiced support for the device makers. Sens. Amy Klobuchar and Al Franken, both Minnesota Democrats, have publicly objected to the proposed fees, which they describe as a tax, as have Indiana's two senators, Republican Richard Lugar and Democrat Evan Bayh. Medtronic Inc., a major cardiovascular-device maker, is based in Minneapolis, and defibrillator maker Guidant Corp. is based in Indianapolis.

President Barack Obama pushed the health-care overhaul in his Saturday radio address, saying it would drive down the cost of insurance for small businesses, which, in turn, would help them grow and create more jobs.