Med-Devices Sector Keeps Pressure On Senate's Fee Proposal

The medical-devices sector's trade organization asked Senate Finance Chairman Max Baucus on Monday to drop a proposed $4 billion annual fee for the industry as the Senate works on health-care legislation.

The Advanced Medical Technology Association, or AdvaMed, has already come out strongly against the idea, which arose last week in a proposal from Baucus, D-Mont. The industry considers it a tax that, assessed based on U.S. sales of devices, would hit bluntly without consideration for device complexity while hiking costs for patients, hospitals, consumers and physician practices.

"We ask you to eliminate this proposal from consideration," said the letter from AdvaMed and more than three dozen other trade and advocacy groups.

Executives throughout the devices industry have put up a consistent front of resistance against the proposal, with several executives addressing the matter during analyst conferences in recent days.

According to Gary Ellis, chief financial officer at devices giant Medtronic Inc. (MDT), the fee proposed by Baucus means an inappropriate "double-impact" on the devices sector, which anticipates a squeeze from reduced government payments to hospitals that buy devices. Ellis spoke at a Morgan Stanley health-care conference on Monday.

"We are resisting that (proposal) vigorously as just bad thinking," added Edward Ludwig, chief executive of medical products-maker Becton Dickinson & Co. (BDX), while speaking at the same event. Officials from orthopedics company Zimmer Holdings Inc. (ZMH) and heart device-maker Boston Scientific Corp. (BSX) have also spoken out against the plan.

Scott Garrett, chief executive at medical test-maker Beckman Coulter Inc. (BEC), said in an interview with Dow Jones Newswires that he doesn't think the Baucus proposal will wind up in legislation as first presented. But Garrett - an AdvaMed board member - also doesn't think a lesser hit is palatable.

"Half a bad idea is still a bad idea," he said.

-By Jon Kamp, Dow Jones Newswires; 617-654-6728; [e-mail]