THE TREATMENT OCTOBER 9, 2009
The Wall Street Journal has the goods on the medical device industry’s “11th hour scramble” to hammer out a health care deal with the Baucus folks. In dispute is the $40 billion in fees that the Senate Finance bill would impose on the device industry—a proposal that isn’t in any of the other bills. While most of the other industry groups quietly accepted the original Baucus plan, having already done much of their dealmaking with Baucus and the White House, the device industry lashed out against the bill and launched a full-court lobbying press via Advamed, its principle lobbying arm. Advamed has managed to line-up an impressive team of supporters from legislators and governors from states where medical device manufacturers have set up shop.
Over the past few weeks, everyone from Indiana Governor Mitch Daniels to Senator John Kerry has stood up for the industry’s interests, defending them as the drivers of employment and innovation in their states. Right after the CBO score on the Finance bill was released this week, a group of 10 Democratic Senators sent a letter to the Democratic leadership protesting the tax. Even Sherrod Brown--one of the Senate’s most prominent liberals and a vocal supporter of the public plan--sent his own letter to Baucus, adding a personalized flourish at the end in blue marker: “thank you, Max.”
Will the lobbying effort pay off in the end? While Baucus and the White House were willing to make big concessions to heavyweights like Pharma, such deals were struck earlier on in the process, when the Democratic leadership was trying to avoid crippling backlash from industry groups. Earlier this summer, the Journal reports that that both Baucus and administration officials “were troubled that AdvaMed and the $200 billion industry didn't offer any concessions” when the other industry deals were happening, instead proposing that wholesale purchasers be taxed instead. Such intransigence, in turn, prompted the $40 billion fee to be included in the Finance bill without prior negotiation.
Now that far more pieces are in place, it could conceivably be trickier for the device industry to extract everything they want from the bill.
That being said, AdvaMed’s lobbying effort has come just as doctors, insurers, hospitals and other industry groups have begun grumbling about the cutbacks that happened the Finance Committee’s mark-up, which reduced the number of people who’d be covered. While these interest groups have yet to open fire, the Democratic leadership is unlikely to risk alienating any of them from the process. While Baucus has reportedly rejected Advamed’s proposal of cutting down the $40 billion fee to a $15 billion as too low, the negotiations are continuing, and insiders expect a deal to be struck—if not before the Finance Committee vote, then sometime soon thereafter.
“The advantage they have a very narrow focus in a very broad bill,” one health policy consultant told me. Unlike some of the larger industry groups, like hospitals or insurers, the medical device industry doesn’t have broad-ranging demands that need to be reconciled and played off one another. Their target is simple, and the legislators who are supporting them have the most elementary reason to do so: bringing home the bacon. It’s a textbook case of how lobbying drives the legislative process.