A tax on medical-device makers’ revenue might be delayed, but it won’t be repealed.
That was the view of at least one-high profile participant in a recent industry gathering of local medical-device executives and investors.
“I don’t see it overturned,” said James Mazzo, president of Santa-Ana-based Abbott Medical Optics Inc.
The federal device tax, set to take effect Jan. 1, is projected to raise about $30 billion in the next 10 years to help pay for healthcare reform. Companies in Orange County’s cluster of device makers are among those bracing to be pinched by the tax.
Medical-device makers and industry lobbying groups—including AdvaMed, a Washington, D.C. trade association that Mazzo formerly chaired—continue efforts to repeal the tax (see column, page 50). But Mazzo suggested pushing for a delay might be a more realistic goal for the present.
“I would say there’s a good chance of delay,” Mazzo said.
Repeal chances could improve in two years when “some very important Senate seats are up,” he added. Thirty-three of the 100 Senate seats go up for re-election in 2014, none from California.
The MassDevice Big 100 gathering—held last week in Newport Beach—is regularly organized by the Massachusetts Medical Device Journal, a Boston-based industry news website. Other speakers at the event included David Pyott, chief executive of Irvine-based drug maker Allergan Inc.; and Robert Grant, chairman of Newport Beach private equity firm Strathspey Crown LLC.
Strategy
Grant, a former Allergan executive, co-founded Strathspey Crown this year, to invest in cash-pay “lifestyle medicine” businesses.
Grant detailed Strathspey Crown’s plans at the event and spotlighted marketplace moves toward what he termed a two-tier healthcare system.
One tier involves so-called concierge medicine, or relationships between patients and doctors in which the patient pays an annual fee or retainer as well as fees for each medical service. The second tier is comprised of more conventional reimbursement-based medicine featuring patient health coverage by insurers and state agencies.
“[Insurers] don’t understand your particular needs and they’ve taken the voice away from the doctor,” Grant said. “As I see it, there will always be a segment of the population [who] wants their doctor to have a say. I think that’s why we’re seeing concierge medicine.”
Innovation
Elsewhere during the session, Pyott was asked how Allergan was able to hold up so well during the recession and recovery.
“Innovation will always beat the economy,” Pyott quipped.
Tom Prescott, chief executive of San Jose-based dental device maker Align Technology Inc., also participated in the evening’s discussions. Orange-based dental products maker Sybron Dental Specialties Inc. has a 10% stake in Align, maker of Invisalign braces, as the result of a 2009 patent lawsuit settlement.
Mazzo this year announced his retirement at year’s end from Abbott Medical, a maker of contact-lens-care products. He faces civil insider trading charges brought by the Securities and Exchange Commission.
Mazzo has denied the charges and has asked for a jury trial. The SEC alleges Mazzo was a source of illegal tips regarding the $2.8 billion sale of the then-Advanced Medical Optics Inc. to Abbott Park, Ill.-based Abbott Laboratories in 2009.
