Strict regulation and limited reimbursement threaten the future of the medical device industry, a 275-page report released last week by a trade group contends.
The report could be a significant force in the industry's campaign for legislation to reform the Food and Drug Administration, loosen Medicare reimbursement rules and limit product liability. It was prepared by the Wil-kerson Group, a New York-based consulting firm, for the Health Industry Manufacturers Association.
For the first time, a large national study quantifies some anecdotal claims the association has made. In many cases, however, the report can't separate the impact of market changes, such as the Technology
growth of managed care, from that of government policies. Additionally, its methods and conclusions have yet to be analyzed by other interested parties.
The FDA is driving research and manufacturing abroad. Some 58% of 526 companies surveyed are increasing clinical trials in Europe. Some 43% are increasing their foreign manufacturing operations. In both cases, respondents cited FDA regulation as a critical reason for their decisions.
Public policy is denying American patients access to new technologies. Some 61% of companies are selling or plan to sell products overseas first because of FDA regulations. Additionally, Medicare's refusal to cover investigational devices means Medicare patients don't receive them. Some 15% of companies said hospitals had suspended trials of their products. Many of those firms moved trials abroad (Feb. 20, p. 34).
Fear of lawsuits is causing raw materials suppliers to abandon the business, jeopardizing the manufacture of devices. Some 41% of companies said they are having a hard time obtaining raw materials, such as polyester and silicone.
The combination of forces will put 1,500 device companies-or 20% of the industry-at "high risk" for failure or consolidation with another firm in the next five years.