Medical Device Makers Court Unlikely Allies in Health Debate

By Dan Eggen and Ceci Connolly
Washington Post Staff Writers
Sunday, October 18, 2009

Sens. Amy Klobuchar and Al Franken of Minnesota are blue-state Democrats strongly supportive of President Obama's health-care reform efforts. Minnesota Gov. Tim Pawlenty is a Republican presidential contender who has loudly criticized Obama's plans.

But the two camps have come together to defend a powerful home-state industry in the political doghouse: medical device firms.

The companies, whose products range from $3,000 heart stents to $30,000 implantable defibrillators, refused to offer direct financial concessions earlier this year to help pay for health-care reform, unlike drugmakers, hospitals and other health- care players.

The move angered Democrats on the Senate Finance Committee, who view the industry as a key contributor to soaring health-care costs, and led the panel to approve a $40 billion fee on device makers over the next 10 years. Backers of the levy note that profit margins top 20 percent for many popular medical devices and that spending on such technology is far higher in the United States than in other countries with better health outcomes.

The companies' leaders say they are not making unfair profits, and they are pushing back with an aggressive lobbying campaign featuring an unlikely alliance of liberals and conservatives, including lawmakers who have received generous campaign contributions from the industry and its employees. Their aim is to reduce or eliminate the tax.

"They've been very stubborn," said Richard Kirsch, national campaign manager at Health Care for America Now, a pro-reform group. "They don't accept any responsibility for their role in driving up health-care costs. . . . That's why folks are going after them."

The fight over medical devices is one of several little-noticed obstacles that could pose serious problems for health-care negotiators in coming weeks, as Democratic leaders strive to hold together a precarious coalition of interest groups and industries that have agreed to help pay for reform through reimbursement cuts or other sacrifices. As always, home-town economic concerns are playing a significant role in swaying lawmakers, particularly as high unemployment and other financial woes continue.

Democrats and Republicans from Minnesota, Indiana, New Jersey and other states with prominent medical device operations are rallying to oppose the proposed fee, which would collect $4 billion annually from the $130-billion-a-year industry. Fourteen Democratic senators sent a letter to Senate Majority Leader Harry M. Reid (Nev.) and other top Democrats last week, urging them to "moderate" the levy, which they said will "threaten the existence of some manufacturers" and cause "significant job reductions" for those that remain. Five GOP governors also have weighed in with objections.

"The issue here is that these are very good jobs in our state and in our country," Klobuchar said in an interview, acknowledging that she is among a group of "strange bedfellows" rallying around the industry. "You want to be very careful when you start assessing taxes on an industry like this."

The proposal has prompted a last-minute scramble by the device makers, including industry leaders such as Medtronic and St. Jude Medical in Minnesota and Boston Scientific in Massachusetts, which failed to reach agreement with the White House and Senate leaders on targeted cuts. The companies and their main trade group, the Advanced Medical Technology Association (AdvaMed), are locked in negotiations with Democratic leaders in hopes of shaping the final legislation to their advantage.

The industry's efforts are made more difficult by evidence that the push to sell pricey medical devices, from artificial joints to magnetic resonance imaging (MRI) machines, has been a significant contributor to skyrocketing health-care costs in the United States. One manufacturer, New Jersey-based ReGen Biologics, has come under fire for aggressively lobbying the Food and Drug Administration to gain approval for a knee-surgery device. A recent FDA review concluded that the Bush administration was swayed by outside political pressures in clearing the product, despite its risks and doubts about its effectiveness.

Steven Nissen, chief of cardiovascular medicine at the Cleveland Clinic, called device makers "a Wild, Wild West" industry that uses aggressive marketing, including confidential payments to doctors, to drive up demand for its products. "Given the way they have encouraged overutilization, it makes sense that some of that should be given back to help bend the cost curve," he said.

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