March 2017 issue: Failure to Thrive: Lessons Learned from Medical Device Innovations + More


In this issue:

14 Medtech needs clinical registries for pre- and post-market data

22 Gaining a competitive edge with digital manufacturing

30 Reducing production waste with laser profiling

34 Five things you need to know about micromanufacturing


Want a word to sum up 2017? Try ‘uncertainty’


It’s March 1 as I write, and Wall Street investors remain on a sugar high from the new Trump administration and Republican Congress. The Dow Jones Industrial Average is up hundreds of points, the day after President Donald Trump’s promise to a joint session of Congress that he wanted to massively reduce corporate taxes and “job-crushing regulations.”

For the most part, the medical device industry’s top executives have sounded positive about the situation during earnings calls with analysts. And when Medical Design & Outsourcing and MassDevice. com readers responded to an online survey on Trump and the Republicans, 42% said they would be good for medtech, versus 33% who thought they would be bad.

Medtech insiders are especially optimistic that the much-hated medical device excise tax will soon be dead for good. “Fully repealing the medical device tax, establishing a more transparent and predictable regulatory process, lowering corporate taxes and properly reimbursing medical technologies would create an environment that allows this proud American industry to thrive,” Mark Leahey, president & CEO of the Medical Device Manufacturers Assn., said in a statement after Trump’s address to Congress.

Here is one word, though, that should give the device industry pause: Uncertainty.

Over my 16 years as a journalist – 10 as a business journalist – I’ve learned that “uncertainty” is a toxic word. It’s the one executives and business owners use when they’re explaining why they aren’t hiring, building a new plant, investing in R&D or taking other risks.

There is a lot of uncertainty in the present political environment. Don’t take my word for it: Respected hedge fund manager Seth Klarman – “The Oracle of Boston” – recently made waves with a private letter to investors, relayed by media outlets including CNBC and the New York Times. Klarman warned that Trump’s unpredictable style and protectionist trade stance create even more risk and uncertainty.

As the ancient Romans liked to say: “Fortune favors the bold.” But it is also smart to identify the unknowns out there, the hazards of the current environment.

Here are 5 major uncertainties to keep an eye out for as the year progresses:

1. What’s going to happen with the Affordable Care Act?
“Tonight, I am also calling on this Congress to repeal and replace Obamacare – with reforms that expand choice, increase access, lower costs, and, at the same time, provide better healthcare,” Trump said during his Feb. 28 address to Congress.

Mandating that Americans buy health insurance was the wrong solution, Trump said. He laid out 5 principles to guide Congress as it seeks to replace the ACA:

  • Keeping coverage for Americans with preexisting conditions (a popular feature of Obamacare);
  • Encouraging Americans to buy coverage through tax credits and expanded Health Savings Accounts;
  • Giving states more flexibility in managing the Medicaid health insurance program for the poor and disabled;
  • Lowering costs through legal reforms and combating high drug prices;
  • Allowing Americans to buy health insurance across state lines.

It remains unclear, though, whether Trump and his allies will be able to get a “repeal and replace” plan through Congress. A leaked draft of the legislation actually drew criticism from some of the most conservative House members, who complained about using refundable tax credits to help people pay for insurance, according to The Hill. Plus, Trump and Republicans face some major political risks: A previous GOP plan from 2015 to repeal parts of the ACA would have caused 18 million people to lose their health insurance, according to the Congressional Budget Office. That kind of thing won’t play well at the mid-term polls next year.

2. What’s going to happen to Medicare?
The situation could get even more dicey if Trump gravitates toward the previous positions of Dr. Tom Price, the former congressman from Georgia who is now Trump’s Health & Human Services secretary. Price for years has called for changes to the popular Medicare health insurance program for seniors. For now, Trump is adamant that Medicare will not be changed, and Price said during Senate confirmation hearings that there were no immediate plans to change Medicare.

It might be worth asking, though, whether Medicare is going to walk back its shift toward value-based payment models under the ACA. The new payment models have caused medical device companies to make significant strategy shifts. Industry insiders have generally insisted that value-based care is here to stay.

3. What’s going to happen with trade?
“I believe strongly in free trade, but it also has to be fair trade,” Trump said Feb. 28. Pressures to bring manufacturing back
to the United States could especially be a material burden on medical device companies, nearly all of which rely on low-cost manufacturing outside the country (including in Mexico), S&P Global Ratings said in a post-election report.

4. Is deregulation going to be confusion-free?
Here’s a recent example: Trump in January signed an executive order requiring all government agencies including the FDA to eliminate 2 regulations for every new regulation they institute – including guidance documents. Eliminating FDA guidance documents could cause confusion for medical device companies, which rely on the guidance to understand the thinking behind FDA standards and interpretation of the law. And what about product liability lawsuits, in which the legal profession defers to the FDA as a science-based organization? If that changes, it could upend years’ worth of legal cases.

5. What else is going to happen?
So far, every day has been an adventure with the new administration, especially when the president takes to Twitter. The biggest shocker could be something we never anticipated.

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