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After the medical device tax apocalypse: (Contract) workers survive

4:26 pm by | 0 Comments

Predictions about the impact of the 2.3 percent excise tax on medical devices are akin to a zombie apocalypse: the industry becomes lifeless, tens of thousands of jobs are consumed, investment drops and innovation at new medical device companies begins to dry up.

But even if every doomsday scenario is true, there will be life after 2013 – the first year of the medical device tax. For many medical device workers, though, their futures will be in contract work as opposed to full-time jobs, predicts Paula Norbom, president of Minneapolis-based staffing company Talencio, which places contract professionals within the medtech and biotech industries.

“Support functions (marketing, accounting, human resources) will continue to decrease and will force people to redefine themselves or be jobless,” Norbom said.

Plus, there will be additional contract work in areas such as regulatory affairs, reimbursement, clinical research, quality assurance as well as research and development roles.

It’s more than just the tax causing these changes, Norbom said. “Companies have lost confidence in their ability to predict the success of their regulatory strategy for their medical device due to the uncertain FDA regulatory environment,” she said, making contract workers in regulatory affairs necessary to contend with the rigor of the 510(k) process. “Companies report that 510(k) submissions are being delayed or rejected for unexpected reasons, and pre-IDEs are experiencing unforeseen questions and concerns. Also, U.S. companies are looking to initially commercialize their products outside the U.S. and are spending more time on international regulatory filings.

“For these reasons, and to mitigate risk, medical device companies have beefed up their regulatory staffs, including contract talent,” Norbom added.

Temporary work has already increased – it rose by 15.7 percent in 2010 alone. Norbom expects the trend to not only continue but to become more pronounced in the aftermath of the revenue tax. She shares the opinion of critics, who expect more than 40,000 medical jobs to be lost when the tax is enacted.

“I think it will have some impact [on small companies] because they’ll have more difficulty getting the capital investment to get the companies through commercialization,” Norbom added. “So they may fold earlier, they may not even get off the ground.”

Some of that work will move overseas. But the use of contract workers allows employers to scale up or down depending on revenue, while letting contract workers go as needed without significantly affecting company morale.

Contract workers with experience in reimbursement will be in demand since companies no longer wait until after receiving FDA clearance to work on reimbursement issues. “Now this is happening earlier and earlier. They want to make sure that if they design a clinical study, it meets not just the FDA’s needs, but that it would fill the needs of Centers for Medicare and Medicaid Services as well,” Norbom said.

Plus, the “lack of predictability of the FDA has led to more time and money spent on clinical research in terms of personnel,” Norbom said.

“The contractors who thrive have depth and breadth in their field. They have significant areas of expertise and are versatile…they are utility players and require little training and direction,” she added.

Whether jobs will be more dispersed is hard to predict, but contract workers will need to be ready for the possibility of travel throughout the country to maintain their standard of living.

“I believe people will go where the opportunities are,” Norbom said.

Copyright 2014 MedCity News. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

By Yael Grauer

Yael Grauer is an independent writer and editor who writes periodically for MedCity News.
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