• Current Political Environment (2009-2010) • Healthcare Reform Atmosphere • Major Issues Facing the Medical Device
Industry
• President & CEO
• • • •
Aide to U.S. Senator Howard H. Baker, Jr. (R-TN) & U.S. Secretary of State Lawrence S. Eagleburger (1993-94) Executive Director, Medical Device Manufacturers Association (1994-98) President, Kimbell& Associates (1998 - 2008) Appointed to Bush-Cheney Transition Team Advisory Council for U.S. Department of Health & Human Services (HHS) on January 3, 2001
• Led, Lobbied & Assisted in drafting:
• • • • • • • • •
Medical Device Export & Enhancement Act of 1996 – Eliminated export restrictions Food & Drug Administration Modernization Act of 1997 – Expedited approval mechanisms Biomaterials Access Assurance Act of 1998 – Limits liability of raw material suppliers Balanced Budget Reform Act of 1999 – $850 million for new medical technologies The Medicare Givebacks Bill of 2000 – Key provisions related to blood Omnibus Appropriations Act of 2001 – Cybersecurity provision(s) Medical Device User Fee Act of 2002 – Established user fees for faster FDA approvals Medicare Prescription Drug, Improvement & Modernization Act of 2003 (H.R. 1 - P.L. 108-391) – key blood provisions The Medical Devices Technical Corrections Act of 2004 (H.R. 3493 - P.L. 108214), which provides technical corrections to amendments to the Federal Food, Drug & Cosmetic Act made by the Medical Device User Fee Modernization Act The American Jobs Creation Act of 2004 – Tax repatriation Regulation of Contact Lens as Devices (S. 172 - P.L. 109-96) Medical Device User Fee Stabilization Act of 2005 Food & Drug Administrations Amendments Act of 2007
• • • •
•
President Obama Approval Rating 51.5%
• • • •
Presidential “capital” is real & media criticism (thus far) virtually silent (even SNL) Seasoned veterans in Cabinet largely from Capitol Hill, Chicago, Academia, Clinton Administration and Rivals
Major health leaders for Obama in place (awaiting CMS) Populist messaging from 2008 Presidential Campaign’s lingers (“us” against “them”: “Big” Oil, “Big” Pharma, “Big” Insurance Companies, & target on Executive Pay) “One Party” Control by large margins Anti-industry sentiment at all time high Major scrutiny at FDA (media and Congress) is slowing approvals and increasing enforcement actions (Examples will be made) Investigations and oversight of industry & physicians by Congress will continue and likely get more aggressive Cost and access are main drivers of “Reform”
• • • • •
U.S. Senate
111th Congress (2009-10) - 60-40 Democratic Control (Reid v. McConnell) 110th Congress (2007-08) - 51-49 Democratic Control (Reid v. McConnell) 109th Congress (2005-06) - 55-45 Republican Control (Frist v. Reid) 108th Congress (2003-04) – 51-49 Republican Control (Frist v. Daschle) 107th Congress (2001-02) – 50-50 Democratic Control (Daschle v. Lott) 106th Congress (1999-00) – 55-45 Republican Control (Lott v. Daschle) 105th Congress (1997-98) – 55-45 Republican Control (Lott v. Daschle) 104th Congress (a95-96) – 53-47 Republican Control (Dole/Lott v. Daschle) 103th Congress (1993-94) – 57-43 Democratic Control (Mitchell v. Dole) 102th Congress (1991-92) – 57-43 Democratic Control (Mitchell v. Dole) 101th Congress (1989-90) – 55-45 Democratic Control (Mitchell v. Dole) 100th Congress (1987-88) – 55-45 Democratic Control (Byrd v. Dole) 99th Congress (1985-86) – 53-47 Republican Control (Dole v. Byrd) 98th Congress (1983-84) – 55-45 Republican Control (Baker v. Byrd) 97th Congress (1981-82) – 53-46 Republican Control (Baker v. Byrd) 96th Congress (1979-80) – 58-42 Democratic Control (Byrd v. Baker)
U.S. House of Representatives
111th Congress (2009-10) – 225-178 Democratic Control (Pelosi v. Boehner) 110th Congress (2007-08) – 235-198 Democratic Control (Pelosi v. Boehner) 109th Congress (2005-06) – 232-202 Republican Control (Hastert v. Pelosi) 108th Congress (2003-04) – 229-206 Republican Control (Hastert v. Pelosi) 107th Congress (01-02) – 223-210 Republican Control (Hastert v. Gephardt) 106th Congress (99-00) – 223-212 Republican Control (Hastert v. Gephardt) 105th Congress (97-98) – 228-207 Republican Control (Gingrich v. Gephardt) 104th Congress (95-96) – 230-205 Republican Control (Gingrich v. Gephardt) 103th Congress (1993-94) – 258-177 Democratic Control (Foley v. Michel) 102th Congress (1991-92) – 270-165 Democratic Control (Foley v. Michel) 101th Congress (1989-90) – 261-174 Democratic Control (Wright v. Michel) 100th Congress (1987-88) – 258-177 Democratic Control (Wright v. Michel) 99th Congress (1985-86) – 253-182 Democratic Control (O’Neill v. Michel) 98th Congress (1983-84) – 272-163 Democratic Control (O’Neill v. Michel) 97th Congress (1981-82) – 244-191 Democratic Control (O’Neill v. Michel) 96th Congress (1979-80) – 277-158 Democratic Control (O’Neill v. Rhodes)
Sen. Chris Dodd (D-CT)* Sen. Barbara Boxer (D-CA)* Sen. Michael Bennet (D-CO)* Sen. Harry Reid (D-NV)* Sen. Arlen Specter (D-PA)* Sen. Kirsten Gillibrand (D-NY)*
Sen. Byron Dorgan (D-ND)* Sen. Blanche Lincoln (D-AR) Sen. Daniel Inouye (D-HI) Sen. Evan Bayh (D-IN) Sen. Barbara Mikulski (D-MD)
Sen. Chuck Schumer (D-NY) Sen. Ron Wyden (D-OR) Sen. Patrick Leahy (D-VT) Sen. Patty Murray (D-WA) Sen. Russ Feingold (D-WI)
Republican Incumbents
Sen. David Vitter (R-LA)* Sen. Richard Burr (R-NC) Sen. Richard Shelby (R-AL) Sen. Lisa Murkowski (R-AK) Sen. John McCain (R-AZ)
Sen. Johnny Isakson (R-GA) Sen. Mike Crapo (R-ID) Sen. Chuck Grassley (R-IA) Sen. Tom Coburn (R-OK) Sen. Jim DeMint (R-SC)
Sen. John Thune (R-SD) Sen. Bob Bennett (R-UT)
Retiring
Sen. Jim Bunning (R-KY)* Sen. Ted Kaufman (D-DE)* Sen. Kit Bond (R-MO)* Sen. Sam Brownback (R-KS)* Delaware Illinois
Sen. Mel Martinez (R-FL)* Sen. George Voinovich (ROH)* Sen. Judd Gregg (R-NH)*
Sen. Ronald Burris (D-IL)*
Open Seats
* - War Expected
• U.S. Senate Breakdown
• 58 Democrats • 2 Independent (Caucus with the Democrats) • 40 Republicans
• U.S. House Breakdown
• 256 Democrats • 177 Republicans • 2 Vacancies (CA-10, NY-23)
•
House of Representatives
• • • • • •
Henry Waxman (D-CA), Chairman – Energy & Commerce Committee Charlie Rangel (D-NY), Chairman – Ways & Means Committee Pete Stark (D-CA), Chairman – Ways & Means Health Subcommittee George Miller (D-CA), Chairman – Education & Labor Committee “The Blue Dogs” Speaker Nancy Pelosi (D-CA)
•
Senate
• • • • •
Max Baucus (D-MT), Chairman - Finance Committee Tom Harkin (D-IA), Chairman - Health, Education, Labor & Pensions Committee (HELP) Chuck Grassley (R-IA), Ranking Member - Finance Committee Mike Enzi (R-WY), Ranking Member – HELP “The Maine Sisters”
LEADERSHIP
Majority Leader Harry Reid (D-NV) Minority Leader Mitch McConnell (R-KY)
Senate Finance Committee
Chairman Max Baucus (D-MT) Ranking Member Charles Grassley (R-IA)
Senate HELP Committee
Chairman Tom Harkin (D-IA) Ranking Member Mike Enzi (R-WY)
Medicare Medicaid Taxes Trade
ERISA FDA NIH Public Health CDC
Senate Finance Committee
•
Democrats:
▫ ▫ ▫ ▫ ▫ ▫ ▫ ▫ ▫ ▫ ▫ ▫ ▫ •
Republicans:
▫ ▫ ▫ ▫ ▫ ▫ ▫ ▫ ▫ ▫
Max Baucus (D-MT), Chair John D. Rockefeller, IV (D-WV) Kent Conrad (D-ND) Jeff Bingaman (D-NM) John Kerry (D-MA) Blanche Lincoln (D-AR) Ron Wyden (D-OR) Charles Schumer (D-NY) Debbie Stabenow (D-MI) Maria Cantwell (D-WV) Bill Nelson (D-FL) Robert Menendez (D-NJ) Thomas Carper (D-DE)
Charles Grassley (R-IA), Ranking Member Orrin Hatch (R-UT) Olympia Snowe (R-ME) Jon Kyl (R-AZ) Jim Bunning (R-KY)* Mike Crapo (R-ID) Pat Roberts (R-KS) John Ensign (R-NV) Mike Enzi (R-WY) John Cornyn (R-TX)
* Retiring in 2010
Senate HELP Committee
•
Democrats:
▫ ▫ ▫ ▫ ▫ ▫ ▫ ▫ ▫ ▫ ▫ ▫ ▫ •
Republicans:
▫ ▫ ▫ ▫ ▫ ▫ ▫ ▫ ▫ ▫
Tom Harkin (D-IA), Chair Christopher Dodd (D-CT) Barbara Mikulski (D-MD) Jeff Bingaman (D-MN) Patty Murray (D-WA) Jack Reed (D-RI) Bernard Sanders (I-VT) Sherrod Brown (D-OH) Robert Casey (D-PA) Kay Hagan (D-NC) Jeff Merkley (D-OR) Al Franken (D-MN) Michael Bennet (D-CO)
Michael Enzi (R-WY), Ranking Member Judd Gregg (R-NH)* Lamar Alexander (R-TN) Richard Burr (R-NC) Johnny Isakson (R-GA) John McCain (R-AZ) Orrin Hatch (R-UT) Lisa Murkowski (R-AK) Tom Coburn (R-OK) Pat Roberts (R-KS)
* Retiring
LEADERSHIP
Speaker Nancy Pelosi (D-CA) Majority Leader Steny Hoyer (D-MD) Minority Leader John Boehner (R-OH)
Committee on Oversight & Government Reform
Chairman Edolphus Towns (D-NY) Ranking Member Darrell Issa (R-CA)
FDA Oversight & Subpoena Power
Committee on Ways & Means
Chairman Charles Rangel (D-NY) Ranking Member Dave Camp (R-MI)
Committee on Energy & Commerce
Chairman Henry Waxman (D-CA) Ranking Member Joe Barton (R-TX)
Subcommittee on Health
Chairman Pete Stark (D-CA) Ranking Member Wally Herger (R-CA)
Subcommittee on Health
Chairman Frank Pallone (D-NJ) Ranking Member Nathan Deal (R-GA)
Subcommittee on Oversight & Investigations
Chairman Bart Stupak (D-MI) Ranking Member John Shimkus (R-IL)
Medicare Part A Medicare Part B (share) Medicare Part D (share) Taxes
Legislation FDA, CDC, NIH, Medicare Part B (share) Medicare Part D (share) Medicaid
Implementation of Law Agency Oversight
Secretary of State Hilary Clinton
Secretary of the Treasury Timothy Geithner
Secretary of Defense Robert Gates
Attorney General Eric Holder
Secretary of Interior Ken Salazar
Secretary of Agriculture Tom Vilsack
Secretary of Housing &Urban Development Shaun Donovan
President Barack Obama
Secretary of Health and Human Services Kathleen Sebelius
Secretary of Transportation Ray LaHood
Secretary of Energy Steven Chu
Department of Education Arne Duncan
Secretary of Veterans Affairs Eric Shinseki
Secretary of Homeland Security Janet Napolitano
Secretary of Commerce Gary Locke
Secretary of Labor Linda Solis
HEALTH & HUMAN SERVICES (HHS) Kathleen Sebelius Secretary
National Institutes of Health (NIH) Dr. Francis Collins Director
– – – –
Center for Medicare/Medicaid Services (CMS) Charlene Frizzera (Acting) Administrator
– – –
Food & Drug Administration (FDA) Dr. Margaret A. Hamburg Commissioner
–
– – – – –
$28 BIL budget 8,200 employees 27 Institutes and Centers
Primary government entity doing research in health – Based in Bethesda, MD
–
$600 BIL budget 4,500 employees Gov’t insurance agency for citizens on Medicare (65+) & Medicaid (disabled/poor) Based in Baltimore, MD
$2.5 BIL budget
$2.0 Billion (Appropriations) $550 Million (User Fees) 11,000 employees Made up of 8 centers Regulates food/devices/drugs, biologics/cosmetics/veterinary drugs, etc. Goods regulated total more than 25¢ per every U.S. dollar Based in Rockville, MD
– –
COMMISSIONER Dr. Margaret Hamburg
DEPUTY COMMISSIONER Dr. Joshua Sharfstein
OFFICE OF THE CHIEF COUNSEL Michael M. Landa, J.D. (Acting)
OFFICE OF REGULATORY AFFAIRS Associate Commissioner Michael Chappell (Acting)
OFFICE OF THE CHIEF OF STAFF VACANT
OFFICE OF SCIENTIFIC & MEDICAL PROGRAMS Deputy Commissioner Jesse Goodman, M.D, MPH (Acting)
OFFICE OF INTERNATIONAL & SPECIAL PROGRAMS VACANT
OFFICE OF POLICY, PLANNING & PREPAREDNESS Deputy Commissioner Randall Lutter
CENTER FOR BIOLOGICS EVALUATION & RESEARCH Acting Director Karen Midthun, M.D.
CENTER FOR FOOD SAFETY & APPLIED NUTRITION Director Stephen Sundlof
CENTER FOR DURG EVALUATION AND RESEARCH Director Janet Woodcock
CENTER FOR DEVICES AND RADIOLOGICAL HEALTH Acting Director Jeffrey Shuren
CENTER FOR VETERINARY MEDICINE Director Bernadette Dunham
OFFICE OF EXTERNAL RELATIONS Assistant Commissioner Larence Bachorick
OFFICE OF CRITICAL PATH PROGRAMS Associate Commissioner Rachel Behrman
OFFICE OF INTERNATIONAL PROGRAMS Assistant Commissioner Mary Lou Valdez
OFFICE OF COUNTERTERRORISM & EMERGING THREATS Assistant Commissioner Boris Lushniak
OFFICE OF LEGISLATION Associate Commissioner Stephen Mason
OFFICE OF SCIENCE & HEALTH COORDINATION Assoc. Commissioner Norris Alderson
OFFICE OF PEDIATRIC THERAPEUTICS Director M. Dianne Murphy
OFFICE OF POLICY & PLANNING Associate Commissioner for Policy & Planning Jeffrey Shuren Assistant Commissioner for Planning Malcolm Bertoni
OFFICE OF PUBLIC AFFAIRS Assistant Commissioner George Strait, Jr.
NATIONAL CENTER FOR TOXICOLOGICAL RESEARCH Director William Slikker
OFFICE OF COMBINATION PRODUCTS Director Thinh Nguyen
• New Commissioner, Deputy Commissioner, Chief
Counsel
• Larger trials • Stronger enforcement in field • Compliance with post-markets studies • Crackdown on off-label promotion, etc. • More Panel Meetings
• New world with Waxman & New Leadership at FDA • Plaintiffs Bar is VERY real, aggressive and (now) has
numerous, powerful allies throughout the Congress
• Industry needs to be carefully coordinated throughout
the process
• Physician/Surgeons groups…how close are they? • Public Disclosure of Everything
• SCHIP and American Recovery & Reinvestment Act (ARRAaka “Stimulus Bill”) • SCHIP covered millions of additional children
(signed into law February 5, 2009)
• Stimulus (signed into law February 17, 2009) • $17B for Health IT • $1.1B for Comparative Effectiveness Research (CER) • AHRQ - $300M • NIH - $400M • HHS - $400M
18
19
• Administration and Hill have outlined 3 pillars of reform
•
Expand Coverage • Public option? (Battle lines have been drawn) • Employer mandate? Individual mandate? (both are likely in some form) Improve quality/delivery system reform Cost containment (most difficult) • How to finance? (provider cuts? taxes? Increased rebates/fees, etc.)
• •
• Hill dynamics
• Baucus, Dodd/Harkin, Enzi, Stark, Waxman & Pelosi • Bipartisan, partisan, or use Budget Reconciliation (World War III)? Concerns • Innovation viewed by some as the enemy (short sighted • •
perspective) Centralized decision making by government vs. physician autonomy Increased coverage leading to rationing (to contain costs/pay-for, and lack of capacity/resources)
•
20
• On July 17th, the Senate HELP Committee wrapped up work
on its $611 billon health reform package (voted/reported the bill out of committee on a party-line vote, 13 to10) • Includes public health insurance option, pay-or-play employer
mandate, requirement that every individual obtain health insurance, and government subsidies for those who will have trouble affording coverage
• Included in the package are a number of policies of
interest or concern: • Comparative Effectiveness Research – further expansion
(concern that CER would be tied to costs and used to restrict coverage or create barriers to access to contain costs)
• “Medical Advisory Council” that would make decisions such as
benefits and criteria for coverage (could be used to restrict coverage or create barriers to access)
21
•
Oct. 13th voted 14 to 9 to pass the America’s Healthy Futures Act
• •
All Democrats on the committee and one Republican, Senator Olympia Snowe (RME), voted for the legislation Final SFC product did not include a public option large fight looms ahead on the Senate floor – Senate Majority Leader Reid (D-NV) recently announced that the combined Senate bill will contain a public option
•
SFC bill contains a number of policies of interest or concern:
• • • • • • •
$4 billion annual tax on manufacturers and importers of Class II and III medical devices Significant expansion of Comparative Effectiveness Research (CER) Physician “Sunshine” Act – disclosure of financial relationships with physicians Extension of gain-sharing demonstration Limit FSA contributions to $2,500/year (patients use for co-pays, deductibles and eligible expenses such as Lasik surgery) Independent Medicare Commission Hospital payment reductions
22
•
On October 29, House Democratic leaders introduced HR 3962 – Affordable Health Care for America Act
• •
Combination of 3 bills passed out of Ways & Means, Energy & Commerce and Education & Labor Committees earlier this year, plus some new provisions Due to opposition by moderate Democrats to the “robust” public option, HR 3962 contains a compromise public option (negotiated rates rather than Medicare-based rates for providers who treat patients in the public option) Still significant disagreements within Democratic caucus over abortion and immigration issues Floor vote expected before Veterans Day (November 11)
• •
•
Included in the House package are a number of policies of interest and/or concern:
•
Imposes 2.5% tax on first sale of a medical device (retail items are exempted); tax would be effective January 1, 2013 and is expected to place $20 billion tax burden on medical device industry over next 10 years Creates a National Medical Device Registry Creates a Center for Comparative Effectiveness Research within AHRQ supported by public and private funding Requires disclosure of financial relationships between medical device companies and physicians (“Physician Payment Sunshine” provision) Extends gain sharing demonstration project until 2014
• • • •
23
• In February 2008, the Supreme Court ruled 8-1 in favor of
upholding federal preemption of state liability claims against FDA-approved PMA devices [Riegel v. Medtronic]
• Legislation (Medical Device Safety Act – HR 1346/S 540)
introduced in both the House and Senate to effectively reverse Riegel decision and eliminate preemption
• Efforts to pass legislation mostly led by trial bar lobby and
strongly supported by Democratic leadership in both chambers
• Not currently included in either House or Senate health
reform packages, but anything can happen in conference
• If not this Congress, possible inclusion in next major FDA
legislative package – PDUFA V/MDUFMA III in 2012?
24
• Would dramatically overhaul the current U.S. patent system
(most sweeping change to patent law since 1952)
•
Damages (calculated and awarded) - would establish a strict, one-sizefits-all formula which uniformly discounts the value of a patented component in an end product Post Grant Review – would create new, costly, and duplicative quasijudicial avenues to challenge patents Inequitable Conduct – would take very minimal steps to reform this overused, abused, and too easily applied legal defense to patent infringement
• •
• Outlook - momentum has slowed
• •
Last Congress the bill was passed by House and languished in the Senate Patent Reform Act of 2009 was passed out of the Senate Judiciary Committee in early April (15-4), House Judiciary Committee has not marked-up the bill
•
Federal “Pay Czar” recently announced strict restrictions (up to 90% cut) in compensation at companies receiving federal assistance
•
On top of restrictions already put into place at TARP recipients: tax deductibility of exec comp cut to $500K, limitations and 20% excise tax on golden parachute payments
• •
House Financial Services Cmte Chairman Barney Frank’s (D-MA) ongoing efforts to limit exec comp at publically traded companies Senate Finance Committee’s health care reform bill restricts the tax deductibility of exec comp for health insurance companies
•
Decreases the amount ($500K), and expands the scope (applies to all employees)
•
Because of the significantly large expenditure of federal dollars, those seen as making a profit in health care are likely next on the list of entities which the government asserts expanded exec comp authority
•
Companies that are seen as benefiting from federally funded programs such as Medicare, Medicaid, Veterans Administration, NIH research, etc. (and a public option if one were enacted), could be required to limit exec comp in order to have their products covered and reimbursed
•
Historically the life-sciences sector has not experienced large scale unionization efforts
•
However, pharmaceutical, biotech & medical device companies are considered ripe targets for unionization
•
Effectively eliminates the secret ballot in unionization elections
• •
Union is formed with a majority of employee signatures, with union knowing who did and did not sign card in support Little protection against employee intimidation and fraud (no process to verify signatures, employees do not have the right to rescind a card)
•
Would be the end of good-faith bargaining and create government-run workplaces through binding arbitration
•
Gives unions the power to have federal arbitrators (i.e., government bureaucrats) write the terms of a mandatory, binding two-year contract – setting wages, benefits, hours, work rules, terms of employment, etc. Organized labor is likely to make outrageously high demands, knowing that a government arbitrator will come in and give them less than what they ask for (i.e., “split the difference”)
•
•
Overturned Supreme Court’s decision in Ledbetter v. Goodyear Tire and Rubber Company (ruled that Ledbetter was required to bring suit within 180 days of the act of discrimination) Effectively eliminated statute of limitations for employment discrimination claims
•
Specifies that the statutes of limitations under 4 discrimination statutes (protecting classes such as age, disability, race, color, religion, sex, and national origin) begin anew each time an individual is compensated
•
•
Also expands the class of potential plaintiffs to anyone “affected by” discrimination
•
A spouse or heir who receives pension checks and was not a victim of discrimination could sue (even if the employee never thought he/she was a victim of discrimination)
•
Allows an employee to sit on a claim as part of a litigation strategy (rack-up damages), even though our discrimination laws had been crafted to facilitate early settlement and remediation Senate Republicans referred to as “Trial Lawyer Bailout Bill”
•