Irvine drug maker Allergan Inc., its competitors and cosmetic surgeons are gearing up to battle against a proposed tax to help pay for healthcare reform.
A 10-year, nearly $1 trillion health reform proposal introduced about two weeks ago by Senate Majority Leader Harry Reid, D-Nev., has a provision that would place a 5% tax on elective cosmetic surgeries and procedures such as face lifts, liposuction or Botox injections.
Allergan makes wrinkle-remover Botox Cosmetic, breast implants and other medical cosmetics.
If the so-called “Botax” becomes law, it would raise $6 billion in total.
Allergan and Johnson & Johnson, which competes with Allergan in breast implants, are lining up their arguments against the proposed tax.
“It is a random hit on an easy target that is only punitive and not corrective,” Allergan spokeswoman Caroline Van Hove said in an article that appeared on Minyanville, an investor Web site.
Taxing cosmetic procedures “is unnecessarily punitive on people who have merely decided to enhance their appearance,” Van Hove said.
Allergan and others in the industry already have persuaded lawmakers to cut the tax to 5% from 10%, lobbyists and Senate aides familiar with the situation said in the article.
Cosmetic surgeons argue the “Botax” would hit many women who earn $30,000 to $60,000. Eighty-six percent of cosmetic surgery patients are female.
The tax also could be hurtful to newly jobless women who are looking for ways to increase their marketability to prospective employers, Phil Haeck, the Seattle-based president-elect of the American Society of Plastic Surgeons, said in the Minyanville article.
Cosmetic surgery isn’t the only sector of healthcare that’s fought a proposed tax that is part of reform efforts. Medical device makers already have succeeded in getting a proposed $40 billion, 10-year tax on their sales cut in half by lawmakers.
That effort was led by groups such as AdvaMed and the Medical Device Manufacturers Association.
Both groups are chaired by well-known OC device figures: Michael Mussallem, chief executive of Irvine-based heart valve maker Edwards Lifesciences Corp., and Joe Kiani, chief executive of Irvine’s patient monitoring device maker Masimo Corp.
Device Makers at Conference
In other Allergan and Masimo news, those device makers were among a few OC-based companies that appeared earlier this month at an investor conference sponsored by Lazard Capital Markets LLC.
During Allergan’s portion of the presentation, “We discussed Botox in detail,” said Sean Lavin, a Lazard analyst, in a client note.
Among other things, Allergan was “pleasantly surprised” by Botox’s resiliency during the third quarter, Lavin said. Botox sales grew 3% in the third quarter to $328 million.
Rival Medicis Pharmaceutical Corp. of Scottsdale has had unexpected delays in its launch of a rival to Botox.
The sales gain followed declines in previous quarters that Allergan had attributed to the waning use of cosmetic procedures during the economic downturn.
On Masimo, Lavin said the device maker talked about its core pulse oximetry product, which is attached to a finger or a toe and measures a patient’s oxygen level. It also talked about its Rainbow device for measuring blood protein and other substances.
Lavin believes that Masimo offers the most effective pulse oximeter on the market and that it should continue to gain share in the $1 billion worldwide market for pulse oximetry, he said.
Masimo competes with Covidien Ltd., which operates from Mansfield, Mass., in that market.
The two have been in a number of high-profile scrapes over the years.
Bits and Pieces:
The Edwards Lifesciences Fund, the charitable arm of Irvine device maker Edwards Lifesciences, said it would be granting $1.8 million to 107 nonprofits as part of its fifth annual grant cycle. Edwards said the new award would bring total grants to $4.6 million in 2009 and to more than $14 million since it was established in 2004. Children’s Hospital of Orange County said it received $10,000 from the Edwards Lifesciences Fund to support its lipid clinic for pediatric cardiac patients … Toshiba America Medical Systems Inc., a Tustin maker of medical imaging devices, said it was introducing a program for its customers that would allow them to buy previously owned, refurbished systems at reduced prices. The company developed the program, among other things, to address economic squeezes that its customers have faced … Hoag Memorial Hospital Presbyterian in Newport Beach said it was named a “most preferred hospital” in a consumer study conducted by National Research Corp. of Lincoln, Neb. The national study ranks hospitals in more than 300 U.S. markets … The Orange County CyberKnife and Radiation Oncology Center opened earlier this month at Orange Coast Memorial Medical Center in Fountain Valley. The CyberKnife is used as a surgical alternative for treating cancerous and non-cancerous tumors.
