Group purchasing organization Novation is mad as hell.
In a sharply worded statement Wednesday, Novation charges that several of its pediatric, community-based and academic hospitals are reporting that at least one medical device manufacturer is trying to pass on its medical device tax burden on to hospitals. The statement didn’t identify the offender.
The 2.3 percent medical device tax on the industry is something that lobby groups like AdvaMed and Medical Device Manufacturers’ Association have tried in vain to repeal. While some companies have spoken loudly against the tax, others have preferred to steer clear of any controversy.
In the statement, the chief executive of the GPO, Jody Hatcher, said the following:
Novation is taking a firm position with manufacturers that the Medical Device Tax may not be passed on to the hospital members we serve. While most device manufacturers are taking responsibility for this Tax, there are some manufacturers attempting to pass their obligation on to hospitals. This Tax should be the responsibility of the manufacturers, and Novation is dedicated to ensuring that member hospitals are impacted by it as little as possible.
The statement also points out that while healthcare providers contributed $155 billion to the government and the pharmaceutical industry $80 billion over the same time period to help pay for the Affordable Care Act, the medical device industry did not come willingly to the table.
“As a result, the government imposed the Medical Device Tax to cover their portion,” Novation’s statement said. ” This Tax was specifically intended to be a tax on the manufacturer. Even then, by comparison, the Tax is anticipated to amount to roughly $20 billion over 10 years.”
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.
A spokeswoman for Novation later said in an email that the evidence for which device firms are passing on the device tax to its hospital clients is anecdotal, but that it has seen “communications from suppliers such as Hans Rudolph (Kansas manufacturer of respiratory devices), Cardica (a device manufacturer out of California) and Dynasthetics (a Utah device manufacturer) that explicitly state they are passing the Tax on to their hospital customers.”
[Photo Credit: freedigitalphotos user renjith krishnan]
