Medical Device Link.

Originally Published MX September/October 2004

GOVERNMENTAL & LEGAL AFFAIRS

The activities of medical device firms in Washington, DC, encompass a whole lot more than just lobbying.

Moderated by Steve Halasey

Healthcare provision in the United States is largely a federalized industry. Its epicenter is the seat of national government, Washington, DC. There, policy is made through healthcare-related and specifically medical technology–related legislation and via the regulatory and reimbursement decisions of federal agencies that oversee aspects of healthcare delivery ranging from new product introduction to payment for services.

Also located in and around the district are trade and professional associations that advocate for various interest groups within the healthcare sector, including medical technology. And, in recent years, to supplement the efforts of the associations in influencing policymaking at the federal level, more and more individual medical device companies have been opening Washington offices to facilitate their own lobbying efforts. Access to Congress and the education of its members in matters of importance to the medtech community have never been more critical than they are today.

The policy advocacy practiced by device firms' representatives in Washington cannot be dismissed as mere lobbying, however, given the rapid pace of innovation in both medical technologies and the means of delivering healthcare services. To be able to keep up with such dizzying advances and their potential significance for maintaining a high standard of health in the U.S. population, decisionmakers on the floor of Congress and in staff rooms need to be informed more than persuaded.

MX spoke with three medtech company policy representatives who are actively making the industry's case with elected leaders in Washington. What they do, how they do it, how their work supports or is different from that of the associations, and what they perceive as the leading healthcare policy challenges of the future are among the topics that were covered.

MX: What is the scope of each of your offices? How much time do you spend, or does your office spend, working with FDA as opposed to working with the Centers for Medicare and Medicaid Services (CMS)?

Randel Richner: Boston Scientific is the model of a healthcare company that is growing rapidly because it functions, first and foremost, as a medical device company. So there is an emphasis on FDA and CMS as being critical to our business risks and opportunities. I think that is in the forefront of our strategy. However, we also recognize that we have international problems and issues. There is therefore an international side to our legislative agenda. And further, as we grow as a business, we face employer issues that are critical to functioning as a business in the United States. That gets us into corporate governance and tax and employer law and then, even further down the road, into state issues.

It is a very difficult job given the size of our company. Because of that, we choose from a menu of approaches, including using several trade associations—the National Association of Manufacturers, AdvaMed, and a variety of others—in order to cover all the issues we are most concerned about. We also continue to use outside lobbyists and contractors for specific issues, but it is hard to balance all of that.

Daniel Waldmann: I think that it is always an issue of prioritization, no matter what size the company is. For us, our Washington office is actually part of a worldwide government affairs and policy organization that is represented on the J&J management committee. Within that, all the major regions of the world are covered. Of course, we work within Washington, and the issues that I work on for our medical device and diagnostics businesses tend to be Medicare and healthcare-delivery related. We also have people who are responsible for other issues within our pharmaceutical and biotechnology areas. We have people who work on FDA issues and others who work on nonhealthcare issues that are important to the company, such as tax and trade and liability reform.

The Washington office does not typically get involved directly with FDA on product-specific issues—and I think that this is probably true of most medical device companies—whereas, on the CMS side, the company is more likely to be directly involved with how CMS is addressing and making policies around specific new technology. I think that is probably just because the regulatory affairs function has been around for so long, and is so well developed, that it has never really been part of the focus of the Washington office. The people who work on FDA issues in Washington tend to be focused on the much more across-the-board issues like funding for the review program, user fees, and major legislative reform, and are not getting into product-specific issues.

Tom Connaughton: I would agree with Dan on that analysis. With FDA it tends to be much more policy than specific items, and on CMS status he is exactly right. People in Washington do tend to get involved in discussing strategies for new technologies and reimbursement.

Cook is a different model from both Boston Scientific and J&J. We are small. I am in Washington and have an assistant who is a professional, but it is just the two of us. There are people in our company headquarters who are assigned to assist me and to be available; however, they have other responsibilities. I am also charged with trying to organize the company's international public policy, and people overseas have been assigned to work with us on developing that. Still, we are a relatively small model compared with J&J and Boston Scientific.

Educating Policymakers

All of you have alluded to legislation and congressional activities. Do you work closely with members of Congress and their staffs, or is legislative affairs outside of your area? Are you in fact registered lobbyists, or is the model different there?

Connaughton: I know that Dan and I are registered lobbyists. I do not know if Randel is or not.

Richner: Yes, I think that I had to register. That's required if you spend more than two hours with any member, or something like that. It is a really, really narrow focus. However, I think all of us work in one way or another with members of Congress and their staffs. All of us use our associations, too, whenever we can, or we use external lobbyists to supplement our own personal contact with different members.

Waldmann: Working directly with Capitol Hill is a very big part of my job in terms of priority, but it is not the biggest part of my job in terms of time. Working with members of Congress takes much more planning and development effort on the policy side than is expended actually sitting in their offices talking with them. We do spend a lot of time, as would any company that is interested in getting involved in government affairs, just in trying to cultivate relationships and establish an identity within the representatives' offices. I mean the offices both of representatives of districts where the company might have facilities and employees, and of members who are leaders in specific policy areas—people like Representative Bill Thomas (R–CA) and Senator Chuck Grassley (R–IA), who are leaders on the healthcare side.

Connaughton: I concur. A lot of my time is aimed at working with people on the Hill. Dan is quite correct in that you spend a lot more time preparing for meeting with folks than you do actually meeting with them. But we do try to provide information and be a useful resource for those members who have the responsibility of dealing with issues that affect medical technology. Again, that is one of my primary responsibilities as well as one of my top priorities.

Waldmann: It is a constant effort to try to ensure that you are maintaining a relationship with those people that is built not only on why Johnson & Johnson specifically might be important to them from a constituent relationship, or because we represent a company that would be affected seriously by certain policies, but also on how we can keep them informed. Congresspeople have very, very difficult jobs. They have so many issues to cover and nowhere near enough time to get themselves educated about these very complex issues to the extent necessary to make the tough decisions they have to make.

Our job is really to put in front of them the information that they need in order to make their decision. It is all about making sure that the information we give them is reliable, so that over time they are going to know that when they come to us because they have a question about something or how something will affect the medical device industry, we are going to give them a straightforward and honest answer about it.

Establishing a Medtech Industry Identity

In dealing with regulatory agencies other than FDA, do you find that they sometimes lack an understanding of where the device industry is coming from, or of how to separate the device industry from the hospital provider side or from the pharmaceutical industry? Or does the medtech area have a strong identity?

Connaughton: To a lesser degree than in Congress, but in both, yes. But particularly on the Hill. It is the constant effort of our companies and the trade associations to try to explain to them how medical technology is much different from pharmaceuticals.

Richner: It always unnerves me when we are bundled with pharmaceuticals, because we have such uniquely different problems in some ways. Unfortunately, we get lumped with them sometimes and have to ride out the occasionally negative public perception of pharma. So it is only normal that members of Congress would do the same.

Also, what I think has been difficult for us is that, although manufacturers are not paid directly by the government or by Medicare, there is an assumption that we are. Then we get lumped with providers sometimes, too, incorrectly. There are a variety of problems in this regard, but it is much better now than it was.

I think that we have done a good job of differentiating ourselves on some of our own key issues. But once again, we are dependent on congressional staff being there and having the reference framework and the memory necessary for awareness of some of those issues in order to carry them through for us.

Waldmann: Speaking for a company that obviously is involved in all of the above-named, I think that the medical device industry has done a lot to establish its own identity.

I think that Randel is right in saying that, because we are affected by the same programs, even distinct legislative proposals or other policy proposals intended to affect only the medical device industry often get mixed in with things pertinent to the pharmaceutical industry or the hospitals. That is just the nature of the beast—how policymaking works.

Richner: I am very concerned, actually, about next year as the Medicare Prescription Drug Improvement and Modernization Act of 2003 (MMA) goes into full swing. I think there is going to be a real challenge then. It is just my intuition that, with budget neutrality issues and the tweaking of MMA next year, devices are going to be simply overpowered by the pharmaceutical cost issues, and we will be swept along with all the massive budget cuts.

I do not know if there are going to be massive budget cuts, of course, but I do think that we are going to have to scrap it out next year in terms of saving the technology bucket of funds and making sure that we are not overpowered by the drug issue.

Connaughton: I think that your concerns are quite justified, Randel.

Waldmann: I would not say that it is only pharmaceuticals. We cannot look at it as prioritizing issues just among the products or industries that encompass the broader notion of medical technology; it also involves providers, the institutions, the hospitals, and the home healthcare industry.

Lobbying and the Moral Spectrum

From the layperson's perspective, the massive tarring of the pharmaceutical industry over the years may be justified. The lay press and the general citizenry assume that pharma companies are doing nothing more than lobbying for their own interests. How would you distinguish the kinds of activities that you are yourselves involved in most of the time?

Richner: It is such a shame, because I think that somehow along the way, with all the MMA debate, medtech was really tarnished as an industry within healthcare. You know, with the costs of healthcare spiraling up, people seem to forget about the value we have brought to society and to the general public. I think we in the device world have a wonderful story to tell of what less-invasive medicine does to reduce pain, improve the quality of life, and expedite care in new ways that are just game-changing for public health. But it has been blurred, unfortunately. I do not know the solution to this, and I think the situation is going to get worse before it gets better. Essentially, anything that is scarring the pharmaceutical industry hits us all. We are all challenged by that.

While I will not sit here and deny that there are people in our community in Washington whose specialty is in fact influence peddling, the real business of lobbying is much more what I said before: Policymakers have limited opportunity to go out and do the research on issues themselves. The ones that are worth their salt rely upon us to provide our best arguments for supporting the policy that we want to see for whatever reason our company may want that result. Then, they take that information and go to whoever the stakeholders might be on the other side of the issue and get their arguments. There have been times when I have been thrown into a room with those other stakeholders and it is almost like a little moot court exercise; it is an effort to get to the best result. I think that in most situations it is an effort to arrive at the best policy for our country. I can tell you that that is generally what my job is here.

Connaughton: I think that Daniel is right. We have got to come up with an identification of good public policy and then convince those in Congress to make that policy, or else they are not going to do it. It is not who you know that is going to make the difference. Congresspeople in 99% of the cases truly are trying to do what is best for the country.

Richner: I think that most of us have a passionate belief in and care about our industry deeply. Given that, as we have gone in to congressional staff and members of Congress and shown them credible information and credible data, we have garnered respect among them in a way that is pretty compelling. I think that this will overcome all of the negativity in time.

Key Policy Challenges

What are the key policy challenges now, in terms of things that will affect both your company in particular and the industry in general.

Richner: I think that MMA is going to be huge, as I mentioned. And I see some real opportunities and challenges in the near future involving reform of the payment systems for diagnostics. When we get into preventive healthcare and the issues of how we are going to pay for disease detection, there is going to have to be fundamental reform of the current methods and structure of paying for diagnostics. I think that AdvaMed is going to have to take up that challenge.

The next policy challenge is an old one that has been churned and discussed at length. That is the question of increasing the levels of evidence that are necessary for Medicare coverage decisions. That debate is going to continue to be relatively heated even though it has been going on for many, many years. But I still believe that, with the coming of MMA and the way that is going to be implemented, evidence is going to become a much hotter topic.

The last challenge I think of, and this is rather narrow again, would be related to implementation of the Medical Device User Fee and Modernization Act of 2002. The user-fee issue is going to take a front burner. The amounts of the user-fee increases are getting to be a little out of control, so there is going to have to be some reform of the user-fee act. That is another issue that is going to affect us.

Connaughton: Those are all very, very important issues. There is something else that is interesting to us at the moment, too, that is kind of a bigger-picture thing, and I do not know where it is going to go.

While Mark McClellan was FDA commissioner, he inspired something called the critical path initiative, which was basically concerned with how to turn discoveries going on in basic science into products and how to get those products to patients more quickly. That initiative was also picked up by the Department of Health and Human Services (HHS), which now has a task force on stimulating medical technology and is asking for comments and other input on the subject.

You never know on these things, but I do not think they should be ignored. This is an opportunity for us to weigh in with some thoughtful ideas on what could be done. I have been very impressed with Dr. McClellan. He is a very thoughtful guy who is looking at the big picture and is willing to do some bold thinking. His ideas present the industry with an opportunity. Whether this initiative will result in short-term legislation or major policy changes, who knows? But one would hope that it will lead to progress toward getting the discoveries that we are making in basic science—and never dreamed that we would make, a lot of them—through the product development and approval process and into the market more quickly. To accomplish that is also going to require reasonable reimbursement and coverage systems, as well as reasonable regulatory systems.

There has been some talk that CMS or FDA or both would weigh in with money to support that critical path initiative. Do you see that actually happening? Congress has a way of saying, "Yeah, that is a great idea. Go ahead and do that," and then not putting any money behind the encouragement.

Waldmann: Especially proposals that Dr. McClellan offers—including some of the things that he is working on in terms of information technology (IT) and the role it can play in changing how healthcare decisions are made and improving these decisions. Some major investments are definitely needed in those areas. Not much thought has been given about where the funding for these initiatives is going to come from, so we are not there yet. I think we are still in the idea phase. Once ideas start to emerge, then we will start dealing with the question of how to go about funding something that sounds like a legitimate and good proposal.

Connaughton: I agree completely. I think all progress on these things is incremental. To me, it is exciting that we are even at the idea stage about the application of information technologies.

At the MDMA annual meeting this June, McClellan said that FDA wanted more clinical evidence to support medical decisionmaking, but recognized it could not expect manufacturers to do new clinical trials or extend their existing clinical trials. But, he said, the agency already has lots of information, and if it would start working on how it can use that information to help manufacturers get clinical answers, then it could save everybody a lot of time.

If we use the information that we have, we can do so much. If I were investing bucks, I would sure invest it there. But I think it is going to take a while for the consensus to develop that indeed this is critical, not to mention how exactly to use that information. We could then start funding it incrementally. But we have got to start somewhere, and it is exciting that McClellan is bringing it to a head.

Richner: Whether this can get any traction could depend on the outcome of the November election. It will be important for the device industry to get the winner's vision in line with our technology and how it can be integrated with information technology, because these proposals could really improve efficiency and, ultimately, could reduce costs.

Connaughton: I am hopeful that whoever wins, they will pick up on this.

Waldmann: I think the two short-term issues that we are facing are FDA resources and user fees. Those of us who were around during the FDAMA debate know that user fees were being talked about back then. The issue revolved around FDA having to do more with what it had before resource shortcomings could be discussed. FDA stepped up to the plate, and there was substantial improvement in its regulatory processes after 1997. That brought about the opportunity to sit down and talk about the resource question, and to address the issue of user fees.

I think that we have big challenges as we deal with the appropriations trigger issues around user fees and begin negotiating the reauthorization of the user-fee act. It is critical that this program keep going, but it is also very important that industry's investment in FDA is appropriately utilized. Implementation of the original bill has been a difficult road, and user fees are definitely something that all of us are going to be spending a substantial amount of time on next year.

I agree with Randel that the evidence requirements for Medicare coverage decisions will be an important issue, but I don't think the issue ends there. It also involves a deliberate policy shift in favor of centralized decisionmaking, which is really being driven not so much by concerns about the evidentiary basis of decisions made by local Medicare contractors as by a cost-control mentality.

That is a major concern, because centralized decisionmaking and high, up-front evidentiary requirements run contrary to the nature of medical device innovation. Medical devices are much more like computers and other information technologies than they are like drugs. Once they enter the marketplace, it often takes several years for real evidence to coalesce and for medical consensus about appropriate use to develop. If CMS policy is going to move toward Medicare denying coverage for technologies until that evidence exists, that is going to be a critical issue for us. The policy that we would like to see is one in which Medicare is a partner in facilitating evidence development, working with the industry to ensure that evidence is developed to educate decisionmaking down the road, but realizing the evidence is just not going to be available up front.

So, my concern is that CMS is being driven by a cost-control mentality, rather than by an interest in getting evidence that would enable it to make the decisions that are the best for patients.

Richner: Issues related to the CMS coverage process are going to be absolutely critical to encouraging innovation. So we want to work very closely with CMS on coverage process implementation in order to encourage rapid innovation and quick coverage decisions.

Waldmann: I have one more challenge in mind, based on the change in the industry over the past 10 years. I have definitely seen a geometric progression of technological innovation. When I started in the industry, we were talking about educating congresspeople about where pacemakers come from and simple things like that. But this is an industry that is spreading out in many different directions.

There are information technologies that will give us information integrated throughout the healthcare system, if we want to realize Dr. McClellan's vision. We have computer-assisted surgical techniques. More interventional procedures than anyone could ever have imagined can now be performed in a minimally invasive way. Then there are the uses for electrical stimulation technology and deep-brain stimulation. And a big one is the things that might come out of the human genome project and gene mapping—for example, being able to develop increasingly sensitive diagnostic tests, leading us down pathways toward new therapies. All this innovation means that it is only going to be a bigger challenge to keep members of Congress and other policymakers and decisionmakers at CMS educated in a way that helps them to make the best decisions possible.

AdvaMed president Pam Bailey has worked very hard to generate funding for a foundation that will be able to do independent research on the kinds of policy issues that are raised by this explosion of medical technology. I think anyone would say that we are on the edge of another revolution in medical technology. And that could bring out many different policy questions and challenges that none of us could even speculate about right now.

Copyright ©2004 MX