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Orthopedic and Dental Industry News Complete Archive »

Device Fee Negotiations Continue as AdvaMed Counter-offers BY LAUREN UZDIENSKI, OCTOBER 5, 2009

The Wall Street Journal reported this morning that AdvaMed made a $15 billion counter-offer to reduce the impact of Sen. Max Baucus' healthcare reform bill on the device industry. The Senator reportedly said the offer was too low, and the latest drafts of reform legislation still have the proposed $40 billion in fees in place. AdvaMed wouldn't confirm the $15 billion offer, saying only that negotiations were ongoing and emphasizing that the $40 billion is a disproportionate burden compared to other industries.

Complicating discussions somewhat are rumors that Baucus is miffed by the device industry's refusal to offer up savings earlier in the year, when both hospitals and pharma agreed to save $155 billion and $80 billion, respectively, over ten years. In lieu of direct fees to devices, the device industry suggested taxing GPOs.

AdvaMed maintains that the device tax would suppress innovation, raise costs and result in job losses. Last week they released a study from Dr. Robert Carroll, a former U.S. Treasury Department official, who found that the tax would send companies abroad, raise the cost of procedures as manufacturers' costs increased and cause the industry to contract as funding slows. Dr. Carroll also notes that the tax burden could put unprofitable companies into serious jeopardy, calculating that 3,000 unprofitable companies in the device space will be expected to deliver $600 million in annual fees.

A committee vote on the Baucus plan could come as early as Tuesday. Senators Al Franken, Amy Klobuchar, Richard Lugar and Evan Byah have all publicly voiced opposition to the device tax.

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