Medical Devices Today

U.S.-China Device Talks Yield Some Concessions, But Big Issues Unresolved

This article is reprinted from "The Gray Sheet" – April 28, 2008

A recent meeting between U.S. and Chinese government officials and device industry reps yielded some concessions to opening up China's market, but left many more issues on the table, according to a U.S. industry participant.

"There are a number of outstanding regulatory concerns," said Nancy Travis, VP of global analysis and strategy for AdvaMed, in an interview.

Travis traveled to Guilin, China, the week of April 7 to participate in talks with staffers from the U.S. Department of Commerce and China's State Food and Drug Administration about issues impacting trade between the two nations. In addition to AdvaMed, the Medical Imaging Technology Association and the China Association for Medical Devices Industry represented device firms.

The talks were part of the U.S.-China Joint Commission on Commerce and Trade, a long-standing dialogue vehicle that includes a medical device task force. FDA often participates in the meetings, but did not attend this year.

CMS Inpatient Payment Proposal Addresses “Charge Compression”

This article is reprinted from "The Gray Sheet" – April 21, 2008

CMS plans to take steps next year to improve the accuracy of its payments to hospitals for high-cost devices, though the agency does not promise as quick of a remedy as sought by manufacturers.

The so-called "charge compression fix" is included in the agency's fiscal year 2009 inpatient prospective payment system ¹proposed rule, which was released April 14.

Charge compression, as described in a March 2007 CMS-commissioned report from research firm RTI International, relates to variations in hospital markup practices for certain products, and most notably affects devices and medical supplies.

Hospitals generally mark up charges for relatively inexpensive supplies at a higher rate than expensive devices. But CMS payment calculations, which are based on hospitals' cost reports, group all the products together to derive an overall payment for a procedure or diagnosis. Based on the math, the costs for services that include expensive products with low markups tend to be underestimated in the payment rates.

Datascope Investors Cheer Divestiture, Send Stock Up 13% In Q1 – Index

This article is reprinted from "The Gray Sheet" – April 14, 2008

Datascope's divestiture of its patient monitoring business in March and its plans to pass on the proceeds to shareholders drove a 13.8% stock price gain for the company in the first quarter of 2008.

The sale of the monitoring business to China's Mindray Medical for $202 million, announced March 11, will result in an estimated $185 million after-tax gain for Datascope (¹"The Gray Sheet" March 17, 2008, p. 3).

The firm plans to use the proceeds to either provide a special dividend to shareholders, or repurchase company stock, or do a combination of both.

"If we distribute all the cash as a special dividend, stockholders will get between $11 and $12 per share," CEO Lawrence Saper said when announcing the deal. If the firm uses all the cash to buy back stock, it would increase earnings per share "substantially," the exec added.

Investor enthusiasm for the deal pushed Datascope's stock price up 14% that day, or $4.75, to close at $38.28. For the quarter, the issue closed at $41.43, representing an increase of $5.03 for the three-month period. Datascope's stock had been roughly flat in 2007.

Questions Remain Over Usefulness Of The Expanding National ICD Registry

This article is reprinted from "The Gray Sheet" – April 7, 2008

Some cardiologists doubt the value of the national registry for implantable cardioverter defibrillators that was created to satisfy CMS coverage requirements, even as the registry is about to expand.

Brian Olshansky, University of Iowa, is among ICD implanters who question whether the National Cardiovascular Data Registry data will be used in a scientifically valid way.

"The information is going to be used for political purposes by CMS to limit implantation of devices," Olshansky said at the American College of Cardiology's annual meeting in Chicago March 30.

"It's not going to be for the benefit of the patients, and it's not going to be for the benefit of the profession."