No doubt, repealing the 2.3 percent medical device excise tax has been a top priority for the industry since it went into effect at the start of this year. But automatic spending cuts, or so-called sequestration, which is set for March 1 and is expected to slice $85 billion from the federal budget, is of immediate concern for industry stakeholders. The U.S. Food and Drug Administration's budget is on the chopping block, and if cut, will likely impact timely reviews of medical devices.

During a briefing on Tuesday, leadership from the Advanced Medical Technology Association (AdvaMed), a medical device trade group, said they are working with members of Congress to help them understand how the medical device industry will be affected by cuts to the FDA. New user fees that went into effect in 2013 are meant to help improve and speed up the review and approval of new products. Without having access to all the fees it collects, a timely process could be blanketed.

"The agency should be properly funded under new user fee agreements," said David Dvorak, chairman of AdvaMed.
According to Dvorak, the 2013 impact of sequestration will amount to an across-the-board cut of between 5.1 and 5.3 percent in federal funding. This will apply to both FDA's appropriated budget, as well as industry user fees. The current federal budget continuing resolution, unless corrected, also limits the FDA's ability to access user fees.

"The fees voluntarily paid by industry are not taxpayer dollars, and should not be considered in the same light as appropriated funding," said Dvorak.

In addition to much larger cuts to federal health care agencies, the sequester also includes a 2 percent cut to Medicare, another budget issue negatively impacting the industry, according to Stephen Ubl, president and CEO of AdvaMed. He said the numbers of hits to imaging and hospitals are definitely "eye-popping," but more indirectly, the cost of chronic disease is skyrocketing.

"My point is that all our [medical device] companies are developing solutions for these and can help with costs," he said.

Although no one can determine the fate of the budget negotiations, Ubl said he's more optimistic about repealing the medical device tax. Earlier this month, a bipartisan bill was introduced in the House to repeal the $30 billion tax, which, according to Ubl, is having a "a toxic effect on innovation, jobs and U.S. leadership of the medical technology industry."

So far, the bill has garnered over 175 cosponsors, including 20 Democrats. A similar bill in the Senate was introduced shortly following the House bill.

"This is the first time we've had bipartisan support and we feel good about both bills taking shape," said Ubl.

In fact, AdvaMed praised the efforts of many manufacturers who testified before the Senate this week to make the case that repealing the tax should be a priority.

AdvaMed leadership also discussed priorities abroad during the briefing, including "seizing" on opportunities in growing markets, which include China, Brazil and India.

"These nations are experiencing rapid economic growth, and their burgeoning middle-class populations are demanding the best treatments that modern health care can deliver," said Dvorak.

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