Study: Operating Environment Changes Will Hurt

PHILADELPHIA, PA - A significant change to the U.S. advanced medical technology industry's operating environment could cost tens of thousands of jobs, lower personal incomes and reduce business opportunities worldwide, according to a new study released today by the Advanced Medical Technology Association (AdvaMed).

This data is particularly timely and critical for policymakers with the $20 billion medical device tax set to go into effect in 2013, which could trigger such negative impacts, according to the Association.

The study, "The Economic Impact of the U.S. Advanced Medical Technology Industry," by Battelle Technology Partnership Practice, models different scenarios, or "economic events," whereby the industry's operating environment is affected.

"The economic impact of the industry is felt broadly across the nation and there are significant opportunities for future growth," the study says. "Realizing these growth opportunities, however, will require attention to be paid to sustaining a competitive operating environment for the industry within the United States."

According to the study, the advanced medical technology industry "is among the signature industries for the U.S. and stands among a select group of ideal industries," because it is R&D driven, produces products that are in demand around the world, and creates high-wage jobs. It is responsible for generating almost 1.9 million U.S. jobs, total personal income of more than $113 billion, and nearly $382 billion in national economic output on an annual basis. The study concludes any policies or changes that negatively impact the industry's operating environment will cause damage to America's economy.

Specifically, the study analyzed a hypothetical economic event that results in a $3 billion decline in the industry. Examples of such events cited by the authors include increasing foreign competition; changes in health care reimbursement policies; or changes in the business climate from such sources as pricing, demand, or taxes. Such an event would result in the loss of nearly 39,000 jobs and more than $8 billion in economic output. Imposition of the new medical device tax is projected to cost the industry approximately $3 billion a year over the next seven years.

"It's a critical time for our economy, and medical technology companies can be an engine of economic recovery and growth," said Stephen J. Ubl, president and CEO of AdvaMed. "But for advanced medical technology companies to create the jobs needed to help power America's economic future, we need to operate in a business environment that will lead to tomorrow's treatments and cures after investment in research and development."

"The new tax on medical innovation takes our industry and our economy in exactly the wrong direction. It is time to repeal this anti-competitive, counterproductive, job-killing tax," said Ubl.

Repealing the device tax is part of AdvaMed's "Competitiveness Agenda," a list of six policy initiatives that will make it easier for American medical progress to thrive: from promoting early-stage R&D and more efficient and predictable FDA regulation, to adequate reimbursement and fair access to foreign markets.

Battelle is the world's largest non‐profit independent research and development organization, providing innovative solutions to the world's most pressing needs through its four global businesses: Laboratory Management; National Security; Health and Life Sciences; and Energy, Environment and Material Sciences.

A copy of the study can be found here.

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AdvaMed member companies produce the medical devices, diagnostic products and health information systems that are transforming health care through earlier disease detection, less invasive procedures and more effective treatments. AdvaMed members range from the largest to the smallest medical technology innovators and companies. For more information, visit www.advamed.org.

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