A history of executive orders that impacted healthcare

executive order

On his first day in office, President Donald Trump signed an executive order instructing federal agencies to minimize the burden of the Affordable Care Act, pending congressional repeal. According to the language, it is intended to “minimize the unwarranted and regulatory burdens of the Act, and prepare to afford the States more flexibility and control to create a more free and open healthcare market.”

Executive orders that impact the healthcare industry are not new, although the majority of them have been issued during the last three administrations. Some have become famous, such as President Reagan’s executive order in 1987 that led to the President’s Commission on the Human Immunodeficiency Virus Epidemic, and which officially recommended “HIV infection” as appropriate to replace the obsolete term “AIDS.”

Some executive orders have had a significant impact on healthcare providers and researchers, perhaps even more so than the general public. A few noteworthy examples include:

On May 19, 1992, President George H.W. Bush signed executive order 12806 that established a human fetal tissue bank to be administered by the Department of Health and Human Services. It is believed that fetal stem cell research is critical to developing therapies for diseases such as Parkinson’s, diabetes and certain inherited disorders. It was also assumed that the bank would eliminate the “medico-ethical tangle” by making fetal tissue available to researchers from a “non-controversial” source, according to Dr. James Mason, HHS Assistant Secretary of Health at the time.

President William Clinton’s March 7, 2000, executive order established a White House Commission on Complementary and Alternative Medicine Policy. The commission’s mandate was “to develop legislative and administrative recommendations that would help public policy maximize potential benefits, to consumers and American health care, of complementary and alternative medicine (CAM) therapies – chiropractic, acupuncture, massage, herbs, and nutritional and mind-body therapies, as well as a host of other approaches.” This executive order helped pave the way for insurance coverage of CAM therapies, as well as to help legitimize such therapies throughout the greater healthcare establishment.

Another executive order signed by Clinton in September 1996 established an Advisory Commission on Consumer Protection and Quality in the Health Care Industry. This led to the now-famous “consumer bill of rights” concerning health care. Basic tenets of the health care bill of rights include information disclosure, choice of providers and plans, access to emergency services, participation in treatment decisions and confidentiality of health information.

On September 18, 2014, President Barack Obama signed an executive order entitled Combating Antibiotic-Resistant Bacteria. Considered to be one of the greatest healthcare concerns of the modern era, antibiotic-resistant bacteria renders antibiotic drugs obsolete in a short period of time. This executive order lead to the development of a National Action Plan for Combating Antibiotic-Resistant Bacteria. The plan called for the enhancement of domestic and international capacity to prevent and contain outbreaks of antibiotic-resistant infections, maintain the efficacy of current and new antibiotics and a call to develop and deploy next-generation diagnostics, antibiotics, vaccines and other therapeutics.

Looking back at the past several administrations, it is clear that executive action has been used as a tool for broadly impacting healthcare in the U.S. While President Trump’s Affordable Care Act executive order has no immediate statutory effect, it clears the way for legislative action on the sale of health insurance policies across state lines and for the elimination of the individual mandate, one of the act’s most unpopular tenets.


Healthcare-related executive orders since 1980 include:

July 30, 2015 – Implementing the National HIV/AIDS Strategy for the United States for 2015–2020

September 18, 2014 – Combating Antibiotic-Resistant Bacteria

July 15, 2013 – HIV Care Continuum Initiative

August 31, 2012 – Improving Access to Mental Health Services for Veterans, Service Members and Military Families

October 31, 2011 – Reducing Prescription Drug Shortages

March 24, 2010 – Patient Protection and Affordable Care Act’s Consistency with Longstanding Restrictions on the Use of Federal Funds for Abortion

December 30, 2009 – Medical Countermeasures Following a Biological Attack

April 8, 2009 – Establishing the White House Office Of Health Reform

March 6, 2007 – Establishing a Commission on Care for America’s Returning Wounded Warriors and a Task Force on Returning Global War on Terror Heroes

January 13, 2006 – Designating the Global Fund to Fight Aids, Tuberculosis and Malaria as a Public International Organization Entitled to Enjoy Certain Privileges, Exemptions, and Immunities

May 28, 2001 – President’s Task Force to Improve Health Care Delivery for Our Nation’s Veterans

May 10, 2000 – Access to HIV/AIDS Pharmaceuticals and Medical Technologies

March 7, 2000 – White House Commission on Complementary and Alternative Medicine Policy

September 5, 1996 – Advisory Commission on Consumer Protection and Quality in the Health Care Industry

June 14, 1995 – Presidential Advisory Council on HIV/AIDS

May 26, 1995 – Presidential Advisory Committee on Gulf War Veterans’ Illnesses

January 15, 1994 – Advisory Committee on Human Radiation Experiments

May 19, 1992 – Establishment of a Fetal Tissue Bank

November 13, 1989 – Establishment of the President’s Drug Advisory Council

June 24, 1987 and July 16, 1987 – Presidential Commission on the Human Immunodeficiency Virus Epidemic

September 15, 1986 – Drug-Free Federal Workplace

December 22, 1983 – Revised list of quarantinable communicable diseases

Share


Share


Repealing Obamacare: What it could mean for medical device companies

Affordable Care Act

Since its inception, there has been much debate about the consequences of repealing the Affordable Care Act (ACA), and the effect it could have on low income families, those with preexisting conditions and the previously uninsured. But how will it affect the medical device companies who develop and market the equipment, tests and devices that healthcare professionals use to diagnose and treat those patients?

The ACA included a medical device excise tax of 2.3% that was imposed starting in January of 2013. On the surface, a 2.3% tax doesn’t sound like much… these companies can afford it, right?

A common misperception is that the medical device industry is comprised mainly of massive companies such as Stryker, General Electric and Johnson & Johnson. But just like the rest of America, the medical device industry is 80% small business—companies with 50 or fewer employees.

Here’s another problem. An excise tax is not a sales tax—which means it cannot be applied to equipment sales the way sales tax is applied to your purchase of a new car, a new piece of furniture or a bottle of wine—as a pass-through cost to the end customer. The excise tax is calculated on gross sales, not profits.

Many companies operating in a competitive marketplace must operate lean with thin margins. This tax has the potential to not only reduce profitability, but eliminate it altogether. Having already been hammered by reductions in reimbursements resulting from the ACA,hospitals and health systems vehemently opposed this tax being passed onto them.1 In order to continue selling to their customers, device companies would have to eat the tax themselves.

To illustrate, let’s say a small breast biopsy device manufacturer sells $1 million worth of biopsy systems. The profit resulting from these sales is 5%, or $50,000. The excise tax is calculated by multiplying the $1 million in gross sales by 2.3%, or $23,000. This is the amount that the manufacturer now has to pay the IRS. In this case, the tax effectively halved the company’s profits. Even if a company posted a loss, it would still have to pay taxes on gross sales of its medical devices.

A new medical device faces hurdles that are simply not experienced by companies in other industries. The extensive regulatory process and FDA approvals take many years, and adoption by the medical community is agonizingly slow. By forcing manufacturers to pay the excise tax on gross sales (during the initial unprofitable years), their path to profitability is now longer and less certain, and thus much less attractive to investors.

According to the Joint Committee on Taxation (JCT), revenues collected from this tax were $1.7 billion in FY 2013. So, what effect did this tax have on the medical device industry?

New taxes do have a real impact on businesses, on jobs and on the economy. In anticipation of the excise tax, device manufacturers started eliminating jobs. A 2014 AdvaMed survey2 of device and diagnostics manufacturers revealed that as of December 2013, 14,000 jobs had been eliminated. 30% of respondents reported a reduction in R&D spending, and 10% of respondents said that they had moved manufacturing abroad.

Those who still question whether or not new “modest” taxes devastate entire industries need only look back the 1990 Omnibus Budget Reconciliation Act, better known as George H.W. Bush’s broken “read my lips” promise to veto any new tax legislation. A new luxury tax imposed by Congress that year would be placed upon yachts, private airplanes, expensive automobiles and jewelry. The tax, we were assured, would result in an additional $30 million in revenue. Best of all, we were told, the tax wouldn’t affect the average consumer, because it was only “the rich” who purchased these products.

The tax destroyed more than 300 jobs in jewelry manufacturing and 1,400 jobs in the aircraft industry during the first year alone. Hardest hit was the boating industry, which saw sales plummet 77% the first year with 45,000 jobs lost.3 Over the next two years, the United States shifted from a net exporter of boats to a net importer of them, as many U.S. companies either went bankrupt or relocated overseas. Instead of earning the treasury millions, job losses cost the U.S. government more than $24 million in unemployment benefits and untold amounts lost in the corporate taxes of relocated companies.

The tax was repealed three years later.

Fortunately, there are those on both sides of the political aisle who realize this, and in a rare instance of bipartisanship during December 2015, Congress passed and President Obama signed an agreement to suspend the medical device excise tax for two years. Ironically, the suspension went into effect three years after the tax was instituted.

If the suspension (scheduled to expire at the end of 2017) were to become permanent through a full or partial repeal of the ACA, it would likely free up capital for medical device manufacturers to start hiring again and invest in innovation.

The excise tax on medical devices is just one component of many contained within the Affordable Care Act. If nothing else, repealing this one tax—this one provision out of thousands—can have a very real and positive effect on jobs and the kind of innovation that can save lives and/or improve the quality of our lives.

That’s why this tax needs to go.

  1. Medical device excise tax: Is it being passed on to your hospital? Healthcare News & Insights March 5, 2013
  2. Impact of the Medical Device Excise Tax: A Status Report from AdvaMed January 2015
  3. The Bottom Line/Christopher Byron New York, May 4, 1992
Share


Share


A Highly Personalized New Year

personalized medicineWith a predicted annual growth rate of 4.8 percent, the health and wellness industry is, in a word, healthy. However, one of the segments within health care expected to grow at more than twice the rate of the industry as a whole is a specialty known as “personalized medicine.”

 

The simple definition of personalized medicine is “the right treatment for the right person at the right time.” According to The Institute for Systems Biology co-founder Dr. Leroy Hood, there are four attributes of personalized medicine:

 

It is personalized, because it takes into account an individual’s genetic profile;

It is predictive, because it anticipates health problems and drug reactions;

It is preventive, focusing on wellness and not on disease;

It is participatory, empowering patients to take more responsibility for their health care decisions.

Personalized medicine is made possible by advances in genomic testing and proteomic science that have resulted in more highly targeted diagnostics and treatment options. Supporters of this approach cite increased efficiency of treatments, reduced instances of adverse drug reactions, elimination of unnecessary treatments and improved outcomes. As individuals become more aware of their individual risk, low-tech approaches like functional foods and nutraceuticals will also play an important role in personalized medicine.

 

In a report entitled “The new science of personalized medicine: Translating the promise into practice,” PricewaterhouseCoopers predicts:

The U.S. personalized medicine market is estimated at about $232 billion and is projected to grow 11% annually, nearly doubling in size by 2015 to over $450 billion. The core diagnostic and therapeutic segment of the market—comprised primarily of pharmaceutical, medical device and diagnostics companies—is estimated at $24 billion, and is expected to grow by 10% annually, reaching $42 billion by 2015. The personalized medical care portion of the market—including telemedicine, health information technology, and disease management services offered by traditional health and technology companies—is estimated at $4-12 billion and could grow tenfold to over $100 billion by 2015. And the related nutrition and wellness market—including retail, complementary and alternative medicine offered by consumer products, food and beverage, leisure and retail companies—is estimated at $196 billion and projected to grow by 7% annually to over $290 billion by 2015.

 

By all accounts, personalized medicine is a disruptive innovation, taking place at a time when the U.S. health care system is already undergoing many changes. As a result, there are several exciting opportunities for companies within the core B2B medical industry sector, which includes pharmaceutical, biotech and medical device companies:

  • A reduction in the time, cost, size and failure rate of clinical trials
  • The ability to command premium pricing for drugs and therapies of proven effectiveness
  • Reduced number of drugs or devices recalled due to safety concerns

 

Healthcare providers who embrace this approach will benefit as well. According to the report, “the biggest opportunity in personalized medicine may lie in identifying new products, services and information targeted directly to consumers. Success in this space will require new approaches, new relationships and new ways of thinking.”

 

How does this relate to Armada clients and their marketing challenges in 2015 and beyond?

 

I believe the trend toward personalized medicine presents excellent marketing opportunities across the spectrum of healthcare businesses:

 

Device manufacturers are able to position their technologies to specialists for greater utilization within at-risk populations. For example, an individual at risk for stroke could benefit from enhanced cerebral perfusion monitoring on everything from complex cardiovascular surgical procedures to less invasive interventional radiology or orthopedic procedures. Marketing strategies include surgical team education, pre-op patient education and payer initiatives.

Biomedical testing companies can work with primary care physicians to better identify personal risk within broader patient risk categories. For example, a test that determines the effect of aspirin resistance can lead to a more personalized approach to reducing cardiovascular risk that may result in adjusted aspirin doses or alternate medications to achieve therapeutic goals. Marketing can capitalize on this with increased physician education through direct marketing and public relations targeting print and online media read by PCPs, as well as strategic partnerships with pharmaceutical companies.

Genetic testing improves the identification of cancer risk, and genomic tumor profiling results in more targeted and potentially less toxic cancer treatment with fewer side effects. For example, a hospital or diagnostic center specializing in breast health can embrace these technologies and differentiate itself from other providers in both referring physician and direct-to-consumer marketing, such as television, print, radio and digital advertising in order to attract and maintain loyal customers.

 

These examples represent the proverbial “tip of the iceberg” in marketing opportunity, and as history has shown, adoption can be accelerated through direct-to-consumer marketing approaches—even for companies that have previously focused exclusively on provider marketing.

Share


Share