From the March 19, 2007, issue of "The Gray Sheet"
AdvaMed will invest $2 million in 2007 to accelerate its public campaign to underscore the "value" of medical technology to patients, practitioners and policymakers, placing added emphasis on the long-term cost savings devices provide to the U.S. economy.
The association plans to renew and expand a Washington, D.C.-based advertising campaign initiated last year and develop a series of white papers reporting socioeconomic analyses.
The expanded 2007 "value of technology" (VOT) campaign responds to increasing pressure on device firms to debunk views that their products cost too much and that they have inappropriate relationships with physicians.
It also stems from concerns that the device industry is too closely linked with negative public perceptions of the pharmaceutical sector.
"Last year was a test [for VOT]; this year is the reality. Now we are going to make this an ongoing commitment," said Jim Mazzo, CEO of Advanced Medical Optics.
Mazzo is on AdvaMed's board of directors and chairs the board's VOT committee. He and Andy Stapars, AMO's vice president of global public policy who heads up a VOT subcommittee, sat down with "The Gray Sheet" March 8 to discuss the effort during AdvaMed's annual meeting in Chandler, Arizona.
Device Sector Still Grouped With Pharma
The VOT program was formally launched last June at a Capitol Hill event highlighting 25 individuals' successful experiences with medical devices ranging from heart valve replacements to urethral slings to neurostimulators.
The event was followed by a six-week, inside-the-beltway print and radio advertising campaign based on patient stories and the launch of the "Progress You Can See" Web site (www.progressyoucansee.org).
The 2006 efforts relied on limited "focus funding," according to Mazzo. The enhanced $2 million budget - which will support an extended ad campaign beginning in the next several weeks and continuing at least through the end of the year - was raised entirely from extra funds requested from AdvaMed members above and beyond normal dues. "You can see that the industry is very serious about this," the AMO chief said.
The original VOT effort developed out of a survey of the general public, health care practitioners and congressional staffers performed for AdvaMed by Harris Interactive in 2005.
The survey results showed respondents had a generally positive view of the device industry, but showed signs that device firms were sometimes perceptually grouped with the drug industry, a sector that received much lower favorability ratings.
"We are not saying that we are better or worse than pharma. We are different," Mazzo said. "When government officials are looking at how they are going to regulate, we want to make sure they do not just put us all together."
A follow-up Harris survey conducted after the 2006 VOT campaign generated predominantly positive feedback, showing particularly high marks in response to buzzwords like "reliability," "innovation," "effectiveness" and "visionary." But the industry scored lower on measures including "openness," "accountability" and "trustworthy."
"We are still grouped with pharma," Stapars said. Further severing that link "is one of our biggest goals."
The drug industry erred in not effectively communicating the overall cost-benefit value of its products and the device sector should learn from this mistake, a Harris representative told attendees of AdvaMed's 2006 meeting.
Device companies are particularly vulnerable to this issue due to the hefty sticker prices for many leading industry products including implantable defibrillators, imaging equipment and orthopedic implants.
Historically, medical technology prices have been concealed by health insurance, but price transparency initiatives, such as one promulgated in an executive order issued by the Bush Administration last August, might help fill that knowledge gap.
In response, the renewed VOT effort will be more explicit in making economic arguments for continued adoption of innovative new medical devices.
Messages With A "Bit More Edge"
The new ads, for one, will have a different feel. Rather than simply highlighting the technologies and the patients treated with them, the messages will focus on long-term overall cost savings. The ads will also have legislative tie-ins.
"Our ads and messages are going to have a bit more edge," AdvaMed President Steve Ubl said during March 8 remarks at the annual meeting.
For instance, one planned ad highlights laser surgery's role in saving a farmer named John Bucholz from going blind, noting that "Medical technology really did save the Bucholz family farm."
"What we're trying to do with this ad is to not only highlight the economic benefits of medical technology, but broaden our appeal to a wider legislative base," Ubl said. "In this case, rural legislators [might] look at this ad during congressional consideration of the farm bill, thus allowing us new avenues to tell our story to new legislators."
Other ads will specifically seek to highlight what industry reps say is the necessary collaborative relationship between device manufacturers and physicians.
Device firms "work with the physicians closely, not only in the development of the device, but also post-approval to help [teach] new surgical techniques and in company-sponsored skill-transfer sessions," Stapars explained. The process is "fundamentally very different from that of pharmaceuticals," he said.
Still, the device industry has been scrutinized under federal and state anti-kickback and marketing compliance provisions for close consulting relationships with physicians.
AdvaMed "Fact Tables" Will Support Lobbying Efforts
The $2 million VOT budget also is funding ongoing retrospective socioeconomic analyses that will be published in a series of white papers in 2007 and 2008.
"We are looking at research that has been done within disease states, and we are compiling the data together to create a larger database so that we can demonstrate that when you look at populations with intervention versus non-intervention that longer term savings are realized by having the medical device intervention," Stapars said. "We will build a fact table."
An example of the type of information that might be highlighted in the white papers is a study Stapars cited showing that by performing cataract lens replacement on an elderly individual, the patient can contribute an extra $95,000 back into the economy over the five years following surgery.
"What is critical is that we educate people to understand that because of the advances in technology, we can actually help lower costs in the overall health system," he explained.
Health Care Reform Debate Heats Up
This argument will be important as Congress and other policymakers look for strategies to slow what many see as an untenable Medicare spending growth rate.
The Medicare Board of Trustees reported last year that, as the program currently stands, Medicare costs are slated to outpace income by 2018. There is significant political momentum to cut costs but at the same time expand the number of people with health insurance.
Congress has already picked out high-priced medical technology as a potential target in its effort to reduce federal health care spending.
The most notable example is the inclusion in the Deficit Reduction Act of 2005 of payment cuts to physicians performing medical imaging (down to the mostly lower levels in the outpatient payment system).
"This is the perfect time" to step up the VOT initiative, Mazzo said, because it allows the industry to educate the new Democratic-controlled Congress and to have more of an impact on the 2008 election, in which health care reform is expected to be a major issue.
AdvaMed says it does not plan to take a backseat in the broader reform debate. On March 7, AdvaMed's board adopted a set of health care reform principles, which support providing universal coverage through a mix of private and public programs. The principles emphasize health care quality and the value of medical innovation.
Not surprisingly, the proposal dismisses programs that rely on "arbitrary" price-setting or limiting access to care, citing the VOT message that medical innovation improves quality while lowering costs.
But industry members attending the annual meeting did not need to wait long for a March 9 lunch presentation by health insurance provider Wellpoint's former chairman and CEO Leonard Schaeffer to get the message that their VOT and health care reform principles will not be an easy sell in some circles.
Schaeffer, who was brought in to offer a payor perspective, asserted that although newer technologies are improving outcomes, insurers are increasingly convinced by data showing that the longer life spans and increased number of interventions that result from the technologies are adding significantly to health care spending (a point opposed by many at the meeting).
Unless the device industry can either convince payors otherwise or figure out a way to lower their prices, the products will be the target of increasingly less thought-out spending cuts as larger and larger portions of the federal budget are eaten up by health care, Schaeffer maintained.
"If you have a device that either lowers the unit cost of some procedure or improves the quality of that procedure ... you think you are adding tremendous value," he noted to the device industry audience. "[But] more of those procedures will be done, and as a result [there will be] higher cost to the system."
"My point is that you can't divorce yourself from that fact. ... If by virtue of creating something that adds value in its application, [but] the result is higher cost to the system as a whole, ... then you have a problem."
- David Filmore
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