Medical devices, from pacemakers to wheelchairs and surgery tools, can improve the way doctors deliver care and even help patients avoid trips to the hospital by allowing them to monitor their own symptoms.
The companies behind these products hope to continue developing innovative tools. In recent weeks, members of the industry have celebrated victories on Capitol Hill, including the suspension of Obamacare's medical device tax in the January spending bill and the Republican-backed tax law.
Overseeing the advocacy work for the industry is Scott Whitaker, president and CEO of AdvaMed, the world's largest medical technology organization.
A former chief of staff and assistant secretary for legislation at the Department of Health and Human Services, Whitaker is familiar with how the federal government operates. He also brings his experience to AdvaMed as former chief operating officer at the Biotechnology Innovation Organization.
Whitaker discussed the future of the device industry with the Washington Examiner at the organization's offices in downtown Washington. He discussed how the government could help promote innovation and what the recent legislative wins will mean for his industry.
Washington Examiner: Tell us a little bit about your industry.
Whitaker: I represent the medical technology industry. We’re the industry that cuts across so many different aspects of healthcare. I like to describe it in this way: If you’re in the hospital or you’re in the doctor’s office, other than the drug that you may take or the human capital that exists there, we populate the hospital and the doctor’s office. We care for lives from their earliest days to late stage of life. So, we’re there all along the way and impact lives, I think, in a very positive way, in many different ways.
Washington Examiner: Your industry logged a major victory during a recent short-term spending bill. The medical device tax was suspended as part of the deal. How will that benefit your industry, and why it was so important?
Whitaker: The medical device tax was part of the Affordable Care Act [Obamacare] originally, and what we learned after a few years of ACA being implemented was that it was having a very negative impact on jobs and innovation in our industry. So, we began a concerted effort to try to get rid of the tax. The good news is that it’s suspended for two years, and as a result of that, companies now can go back to doing what they do, which is creating jobs, moving new innovative treatments and therapy through the Food and Drug Administration and through the Centers for Medicare and Medicaid Services to patients, and doing more to impact lives.
The tax was an incredibly onerous tax. It was bad tax policy, bad healthcare policy. It was bad for our companies as well. It was a tax on top of revenue, not on top of profit, so even the smallest company was hit hard by the tax, even if the profits were minimal or even very, very small. What we’ve now seen as a result of that is that companies are beginning to reinvest money, create more jobs, and creating new, innovative products through the pipeline to patients very soon. We’re excited about that.
Washington Examiner: What are some of the benefits that you’ve been able to observe so far from the Republican tax law that President Trump signed late last year?
Whitaker: I think with all of our companies, the benefit of the corporate tax rate going down is going to be very, very meaningful for them. Most of our companies really want to create more jobs here in the U.S. We’re still a net exporter of devices, and we want to make sure that continues. So, the changes in tax law will certainly incentivize companies to do more in this country, creating more jobs in this country, manufacture more products in this country as well. If we continue to receive the progress at the FDA and CMS that we hope for, this uniquely American success story will be even more of a success story than we are already in the United States.
Washington Examiner: What are some of the issues that you will be working on in the coming year?
Whitaker: Over the past few years, we’ve been very focused on regulatory policy with the FDA, and we’ve made tremendous strides in that. Right now, the FDA under Dr. [Scott] Gottlieb's leadership, and Dr. [Jeffrey] Shuren's leadership, who runs the Center for Devices and Radiological Health, the agency that deals with our issues, have done a great job in creating a more clear, more transparent, and predictable process for our companies to get products approved.
The next stage of challenges we face, though, is making sure that insurance companies – Medicare is a public payer — understands the value of that technology, and then reimburses that technology so patients can see it. The pathway in CMS is not nearly as clear and transparent as the pathway in FDA. A lot of our work in the next year or so will be helping to make sure that CMS and payers understand the value of medical technology to change and transform people’s lives.
Washington Examiner: Let’s dive into that a little bit. What are some of the barriers that you run into when you look at different payers and the products that you provide?
Whitaker: Let me give you a great example. There was provision in the [20th Century] Cures Act that allowed FDA for breakthrough products – these are new, novel devices and therapies that would be available for patients – to have an expedited pathway, so we can get that through the FDA a little more quickly. They did not include that same provision for CMS.
So, while we made progress on these breakthrough products, what will happen is: A breakthrough product gets designated, gets approved by the FDA, but then it will sit with the payer community for weeks, months, and in many cases, two or three years before they will take that up as reimbursed product, and have it in the healthcare system. That’s the issue that we really need to resolve, making sure breakthrough produces are approved by the FDA, safe, effective, and for patients, can get in the healthcare system that way. It’s going to be a big part of our work, and in broader coverage and coding issues, and the value of medical technology will be focused on as well.
Washington Examiner: You are a former chief of staff at the Department of Health and Human Services. Can you tell us a little bit about how that role has helped shape your job here?
Whitaker: That was a wonderful opportunity. I served from 2001 to 2005. At many momentous times, we dealt with a lot of issues, including Sept. 11, the Anthrax attacks that we dealt with, and then the passage and implementation of the Medicare drug benefit, which has been a big benefit for seniors across the country. I learned a lot there.
One, I learned the impact that federal programs can have on private industry, and if federal programs work well, the private industry thrives. If federal programs are stifled, if they’re not transparent, if they’re not clear and workable, you find private industry really suffers as a result of that. In the healthcare space, it’s particularly important, because when private industry suffers, patients suffer at the end of the day. We’re all about creating treatments and cures, and if the FDA and the CMS process is not allowing us to get those products to patients, it’s kids, it’s adults, and it’s the elderly who really suffer from a poorly functioning HHS.
I’ve learned a lot about how the public programs interact with the private sector, which I think has helped me understand how to best advocate for private industries like ours.
Washington Examiner: Do you have any examples from recent years in which there were some functions of government that perhaps didn’t work so well?
Whitaker: I think of the diabetes space, primarily Type 1 diabetes space. There are a couple of products that went through the FDA quite swiftly. It was a product called continuous glucose monitors. What those are for is to really measure your sugar levels for people who have diabetes on a regular basis all day long, as opposed to pricking your finger, drawing blood, and checking in a few times a day. It took a while for those to get approved through the FDA, but once they got approved by the FDA, CMS just kind of sat on that.
They’ve also sat on a number of different novel technologies in the diabetes space. It just didn’t get to patients and the Medicaid programs as quickly as they should. In the diabetes space, we’ve seen it a bit, and now we’re making progress. I think the new administration, with Secretary [Alex] Azar in it, with Seema Verma at CMS, and with Gottlieb at FDA, I think they understand the value of new and innovative technologies, and I think that will change, but it did slow down the innovation cycle a bit for companies in previous years.
Washington Examiner: You sound pretty optimistic about the years ahead for your industry.
Whitaker: I do. It’s an amazing industry, like no other industry. We impact people’s lives in a way that I’m not sure everybody fully understands. I reflect back on the diabetes space. I’m familiar with that because my daughter, who is now 15, was diagnosed with Type 1 diabetes at age 8. When she was diagnosed, she was giving herself, or I was giving her, six to seven insulin injections a day, which is a regular needle and insulin.
Over the course of the last seven years, that has transformed into an unbelievably exciting, almost science fiction-like technology that allows us to monitor her blood sugar levels on my iPhone or on my Apple Watch. I can watch her blood sugar levels rise and fall. The ability for a parent to monitor the care needed for their child because of new technologies is transformative.
She also just got a new pump just about a month ago, and now this pump has [continuous glucose monitoring], and an insulin pump, and they talk to each other. So, as her blood sugar goes up, the insulin pump knows that and delivers more insulin. As her blood sugar goes down, the pump knows that, and it pulls back on the insulin delivery. It’s an automatic delivery system that is unbelievable. Seven or eight years ago, we would never have thought that would be the case, and today, it’s reality. It’s an example of why I’m so excited about what’s happening in medical technology.
Washington Examiner: The Trump administration has talked about ways to lower healthcare costs. What are areas that could be addressed?
Whitaker: One of the unique things about this industry that’s different than many other industries in the healthcare space, is we have essentially been, from a pricing standpoint, flat to deflation area over the course of the last 25 years. You haven’t seen the double-digit price increases in medical technology that you’ve seen in other industries. That’s a result of a robust competitive environment in the medical technology space. What I would say to policymakers is this: When you have an industry like ours, who has proven to be a flat pricing industry, but also an incredibly innovative industry, embracing those technological advances will actually drive down the cost of healthcare more broadly.
Again, I think of people like my daughter, who has Type 1. Embracing technology that allows us to keep her out of the hospital and out of the doctor’s office drives down costs tremendously, whether it’s cardiac care or diabetes care or orthopedics, the impact we have on keeping people out of long-term hospital settings is tremendous. The more you keep people out of those long-term hospital settings, the lower cost is of healthcare, and I think we can contribute to it that way.
Washington Examiner: What other technologies should we be looking out for?
Whitaker: I think of two areas. One is in the cardiac space. There are a number of companies who have come up with new, innovative ways to provide new valve technology for people who have heart valve disease. Ten or 15 years ago, after an open-heart surgery, you would be out of work for two or three months, and unable to get back to being healthy for quite a while. Today, new technologies and new heart valves that are being created allow almost two or three-day procedures, essentially, and have people back in the office a week later. That’s transformative healthcare, and it’s amazing how it impacts the workplace, and also, impacts people’s lives.
The other I would mention is digital technology. I talked about digital technology for diabetes, but in the cardiac space as well. Monitoring and assessing disease at an early stage and managing that to keep people out of hospital settings is going to be very, very impactful.