To hear most in the medical device industry tell it, the medical device tax proposed by the Obama administration would result in hellfire and damnation raining down on the industry.
Jobs will be cut, production will shift overseas, American innovation will be stifled and the U.S. will lose its position as the world’s dominant player in medical technology — all because of stupid and short-sighted bureaucrats in Washington, D.C.
Then there’s Paul Stein — a California scientist and clinical investigator who previously worked with Medtronic and St. Jude Medical, and is a member of the device industry who (gasp!) actually supports the tax.
Sure, Stein’s just one guy, and, sure, his stance puts him in opposition to 99.9999 percent of the industry (that’s just a ballpark guess), and, sure, his reasoning may be flawed. To put a finer point on it: If you’re in the device industry, it’s a virtual certainty you think his logic is poor.
That’s exactly why Stein’s perspective is worth hearing. He’s seemingly a singular voice drowned out by sometimes histrionic industry shouting about the evils of the device tax. So, here’s what that voice has to say.
Stein believes the tax could “give the industry the kick in the ass it needs to get back on the innovation train it built years ago.”
Here’s his thinking: Major medical device companies have been poor innovators on their own over the last decade or so, and too heavily reliant on pricey acquisitions of uncertain risk to build product pipelines instead of funding internal research and development. The tax could eat into big device companies’ cash they’d otherwise use for acquisitions, giving them little choice but to fund relatively inexpensive R&D programs aimed at developing products to solve unmet medical needs.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
“I see that the tax can be useful to 1) redistribute wealth to startups through a large SBIR and STTR grant expansion, and 2) to force the large medical device companies to go ‘old school’ to invent from within to re-instill better, more sustainable profits from unmet medical needs,” Stein said.
So, by following Stein’s logic, the device tax could ultimately turn out to be a positive not only for device companies, but for patients who don’t presently have good treatment options.
Is there any validity to Stein’s viewpoint on the device tax? Maybe, maybe not; decide for yourself.
But it is refreshing for at least a moment to hear one voice that dissents from the endless and monotonous forecasts of doom and gloom that have been flowing so freely from all corners of the industry whenever the device tax is mentioned.
[Photo from flickr user Fields of View]
