Michael Mussallem of Edwards Lifesciences on the Health Reform Vote
Tuesday, October 13, 2009SUSIE GHARIB: Opposition is building against the Senate Finance panel's health overhaul bill. Tomorrow, 30 labor unions will run full-page newspaper ads opposing the proposed legislation. They are concerned that a lack of a public option in today's bill will mean higher premiums for their members. The ad calls for quote real health care reform and nothing less. Sponsors include the AFL-CIO and the Communications Workers of America. Executives from the medical technology industry also have problems with the legislation. A key issue for them: a $40 billion tax on medical devices in the bill and the changes that tax would bring to the industry. Stephanie Dhue talked today with the CEO of Edwards Lifesciences Mike Mussallem who leads the industry's lobby group.
STEPHANIE DHUE, NIGHTLY BUSINESS REPORT CORRESPONDENT: The Senate Finance Committee today is voting on a health reform plan. Is this a bill your industry can support?
MICHAEL MUSSALLEM, CHAIRMAN & CEO, EDWARDS LIFESCIENCES: You know, we're very impressed with the work that the Senate Finance Committee has done. There are a lot of great elements in the bill that really address health care reform and we've been supportive of health care reform from the very beginning. There's one provision within the bill we really don't like that we think is bad policy. This is the medical device tax. But besides that, we think a lot of great work in this bill.
DHUE: You did some lobbying to get that $40 billion device tax out of the bill so far without success. What impact would that have were it to go into law? What impact would it have on you?
MUSSALLEM: We're concerned that this $40 billion tax would have a devastating impact on the industry. This is probably accounts for two out of every $5 that's spent in R&D. And so for companies and many of which are struggling to try and bring their products to the marketplace or make very low margins, it would have a devastating impact on their very existence.
DHUE: How about for Edward Lifesciences in particular?
MUSSALLEM: Edwards is a company that is probably not so different than the rest of the industry. We're fortunate enough to be able to bring new innovations to the marketplace and add a lot of jobs. If we were to absorb this tax, we would be reflected in our R&D budget and probably the way that we'd be able to grow our company.
DHUE: How about in terms of being able to pass the cost off to your customers? You sell primarily to hospitals.
MUSSALLEM: Yes.
DHUE: Would you just say hey it's costing us more, we're just going to pass it off?
MUSSALLEM: We're in a very competitive marketplace. Edwards is, as well as most of the companies in our industry. And so this idea of whether it would be passed onto customers is not clear at this point. But whatever happens with this tax and there's probably goes in one of two directions, either it gets passed onto customers which is bad for the American public or it gets absorbed by companies in which case it would have a really negative impact on job growth and investment and innovation.
DHUE: Is the industry putting forward any other options to pay for health reform?
MUSSALLEM: Our industry has been very engaged in this from the very beginning and because we're the tool makers for physicians, we very much will end up participating in the broad reforms that are already in the bill. For example the reductions at hospitals, likely we as the suppliers to hospitals will very much be part of that solution. So we'll making substantial contributions with what's already in the bill.
DHUE: Also as part of reform there are provisions to measure the quality of care, so-called value based pricing and comparative effectiveness. How will that impact your industry?
MUSSALLEM: Yeah, these kind of programs like comparative effectiveness and value based pricing is likely to generate more information so that physicians and the public will be able to make more informed choices. I think that's likely to generate some winners and some losers and probably drive more appropriate utilization of technology. In some cases it may mean that there's less use. In other cases we may say the technology was under used for a group of patients and should be used more often. That has yet to be played out.
DHUE: It would seem that would boost innovation. How would you describe the bill overall in terms of innovation?
MUSSALLEM: Overall I think that the bill has an opportunity to do something very important, which is to reward innovation that not only improves and extends patient lives, but also saves money. And those kind of technologies are the kind that our industry is capable of, so I'm hopeful in the long run that the incentives are proper. That's why this policy of device tax probably doesn't fit with most of the rest of the bill.
DHUE: Mike Mussallem, chairman and CEO of Edwards Lifesciences, thanks so much for your time.
MUSSALLEM: My pleasure, thanks, Stephanie.
