The Federal Government's War On Medical Innovation
By Paul Hsieh
The federal government is waging a stealth two-pronged war on medical innovation. And it will cost not just American jobs, but American lives.
The first prong is through new taxes. Recently, the Cook Medical company announced that it was canceling plans to open new factories because of the impending ObamaCare tax on medical device manufacturers scheduled to take effect in 2013. The 2.3% tax on total sales (not profits) will cost Cook $20 million dollars a year. As a result, the company will not be opening five plants that would have employed up to 300 people each.
Cook is not the only medical device company affected by the tax. Stryker (which makes artificial joints) will cut 5% of its workforce. Medtronic has announced the tax will cut into its investments in future products. Jonathan Rennert, chairman of Zoll Medical (which makes advanced cardiac defibrillators) has stated that the tax will mean “less innovation, fewer jobs, and fewer lives saved.”
The second prong of the war on innovation is through regulations. The Wall Street Journal recently reported how a single FDA scientist, Dr. Robert Smith, blocked approval of digital mammography machines for several years last decade. Breast cancer specialists like Dr. Etta Pisano stated that Smith had imposed “obstacles to approval that were unreasonable.” This was especially frustrating for Pisano, who had co-authored a 42,760-patient study in the 2005 New England Journal of Medicine that demonstrated the reliability of digital mammography and showed that it was “‘significantly better’ than film in finding cancer in women under 50 and those before or during menopause.”
However, Smith’s lawyer claims that Dr. Smith was merely following proper FDA procedure. Smith contends that too many other FDA regulators have an improper “cozy relationship” with medical device manufacturers, whereas Smith was merely being “an honest and rigorous regulator.”
It would be bad enough if Smith had been a rogue, overzealous regulator. But it’s even worse if Smith is correct, because that means Smith represents how the system is supposed to work.
As the Wall Street Journal notes, “There is no way of knowing whether any women had cancers advance because of the delays of digital technology.” But a friend (and breast cancer survivor) whom I will call “Cynthia” told me:
I just realized that if this particular bureaucrat had continued in his position, I probably wouldn’t be here… [P]erhaps I should send him a “thank you for moving on” card.
(Cynthia had an invasive breast cancer that was detected at a still-treatable stage with a digital mammogram. It might not have been detected until a year later if she had been obliged to have a conventional film mammogram.)
Even though this particular regulator is gone, how many more Dr. Smiths still work at the FDA, delaying other vitally-needed medical innovations for American patients?
The ObamaCare tax on medical device manufacturers will likewise hamper innovation and cost American lives. In medicine, as in the rest of technology, progress tends to follows a roughly exponential curve. Today’s progress forms the base of tomorrow’s innovation, creating a virtuous cycle. The resultant exponential gains are akin to the exponential growth we see in our bank balances when we allow compound interest to operate over time. Conversely, seemingly small barriers to early innovations can deprive us of enormous future gains, just as a seemingly small decrease in a bank’s interest rate can compound into a large loss over time.
Most people take for granted the benefits of exponential growth in the realm of consumer electronics. In 1998, the Apple iMac had a 233 MHz processor, 32 MB RAM, and 4 GB hard drive, selling for $1300. In 2012, the low-end MacBook Pro sports a 2.5 GHz processor, 4 GB RAM and a 500 GB hard drive for $1200. This represents a greater than 10-fold increase in processor speed and over 100-fold increases in RAM and hard drive sizes for roughly the same nominal dollar amount (30% fewer real dollars after adjusting for inflation).
Medical technology has undergone similar progress over the years. During my medical career, MRI scanners have advanced from creating crude but workable images of brain tumors to generating high-resolution scans displaying not just their anatomic extent, but also their internal chemical composition and the extent of functional disruption caused to the rest of the brain architecture. These advances allow doctors to precisely plan surgery and radiation treatments to remove the tumor while preserving as much normal brain function as possible.
The ObamaCare tax on medical devices will jeopardize such future advancements. According to Benjamin Zycher of the Pacific Research Institute, this tax will translate into roughly one million life-years lost annually. The casualties could include your mother, your spouse, or your children.
Repealing the medical device tax (and all of ObamaCare) is feasible. The House has already passed such a bill. We only need a supportive Senate and President, which American voters can elect in November if they so choose.
Eliminating the regulatory barriers caused by the FDA would take more work. But free-market economists have already proposed ways to replace the FDA with private agencies to certify the safety and performance of medical devices. This would protect consumers while respecting the rights of patients, doctors, and manufactures to trade to their mutual benefit without government interference.
For most people, using a 1998 home computer to surf the Internet in 2012 would be unthinkable. For most doctors, using 1998 medical technology to treat brain tumors in 2012 would border on malpractice. When you need advanced medical care in 2022, don’t let the government’s war on medical innovation restrict your doctor to today’s 2012 technology.
Your life — like Cynthia’s — may depend on it.
Paul Hsieh, MD, is a physician and co-founder of Freedom and Individual Rights in Medicine (FIRM). He practices in the Denver area.
http://www.forbes.com/sites/realspin/2012/08/08/the-federal-governments-war-on-medical-innovation/print/
(Photo credit: Wikipedia)
The federal government is waging a stealth two-pronged war on medical innovation. And it will cost not just American jobs, but American lives.
The first prong is through new taxes. Recently, the Cook Medical company announced that it was canceling plans to open new factories because of the impending ObamaCare tax on medical device manufacturers scheduled to take effect in 2013. The 2.3% tax on total sales (not profits) will cost Cook $20 million dollars a year. As a result, the company will not be opening five plants that would have employed up to 300 people each.
Cook is not the only medical device company affected by the tax. Stryker (which makes artificial joints) will cut 5% of its workforce. Medtronic has announced the tax will cut into its investments in future products. Jonathan Rennert, chairman of Zoll Medical (which makes advanced cardiac defibrillators) has stated that the tax will mean “less innovation, fewer jobs, and fewer lives saved.”
The second prong of the war on innovation is through regulations. The Wall Street Journal recently reported how a single FDA scientist, Dr. Robert Smith, blocked approval of digital mammography machines for several years last decade. Breast cancer specialists like Dr. Etta Pisano stated that Smith had imposed “obstacles to approval that were unreasonable.” This was especially frustrating for Pisano, who had co-authored a 42,760-patient study in the 2005 New England Journal of Medicine that demonstrated the reliability of digital mammography and showed that it was “‘significantly better’ than film in finding cancer in women under 50 and those before or during menopause.”
However, Smith’s lawyer claims that Dr. Smith was merely following proper FDA procedure. Smith contends that too many other FDA regulators have an improper “cozy relationship” with medical device manufacturers, whereas Smith was merely being “an honest and rigorous regulator.”
It would be bad enough if Smith had been a rogue, overzealous regulator. But it’s even worse if Smith is correct, because that means Smith represents how the system is supposed to work.
As the Wall Street Journal notes, “There is no way of knowing whether any women had cancers advance because of the delays of digital technology.” But a friend (and breast cancer survivor) whom I will call “Cynthia” told me:
I just realized that if this particular bureaucrat had continued in his position, I probably wouldn’t be here… [P]erhaps I should send him a “thank you for moving on” card.
(Cynthia had an invasive breast cancer that was detected at a still-treatable stage with a digital mammogram. It might not have been detected until a year later if she had been obliged to have a conventional film mammogram.)
Even though this particular regulator is gone, how many more Dr. Smiths still work at the FDA, delaying other vitally-needed medical innovations for American patients?
The ObamaCare tax on medical device manufacturers will likewise hamper innovation and cost American lives. In medicine, as in the rest of technology, progress tends to follows a roughly exponential curve. Today’s progress forms the base of tomorrow’s innovation, creating a virtuous cycle. The resultant exponential gains are akin to the exponential growth we see in our bank balances when we allow compound interest to operate over time. Conversely, seemingly small barriers to early innovations can deprive us of enormous future gains, just as a seemingly small decrease in a bank’s interest rate can compound into a large loss over time.
Most people take for granted the benefits of exponential growth in the realm of consumer electronics. In 1998, the Apple iMac had a 233 MHz processor, 32 MB RAM, and 4 GB hard drive, selling for $1300. In 2012, the low-end MacBook Pro sports a 2.5 GHz processor, 4 GB RAM and a 500 GB hard drive for $1200. This represents a greater than 10-fold increase in processor speed and over 100-fold increases in RAM and hard drive sizes for roughly the same nominal dollar amount (30% fewer real dollars after adjusting for inflation).
Medical technology has undergone similar progress over the years. During my medical career, MRI scanners have advanced from creating crude but workable images of brain tumors to generating high-resolution scans displaying not just their anatomic extent, but also their internal chemical composition and the extent of functional disruption caused to the rest of the brain architecture. These advances allow doctors to precisely plan surgery and radiation treatments to remove the tumor while preserving as much normal brain function as possible.
The ObamaCare tax on medical devices will jeopardize such future advancements. According to Benjamin Zycher of the Pacific Research Institute, this tax will translate into roughly one million life-years lost annually. The casualties could include your mother, your spouse, or your children.
Repealing the medical device tax (and all of ObamaCare) is feasible. The House has already passed such a bill. We only need a supportive Senate and President, which American voters can elect in November if they so choose.
Eliminating the regulatory barriers caused by the FDA would take more work. But free-market economists have already proposed ways to replace the FDA with private agencies to certify the safety and performance of medical devices. This would protect consumers while respecting the rights of patients, doctors, and manufactures to trade to their mutual benefit without government interference.
For most people, using a 1998 home computer to surf the Internet in 2012 would be unthinkable. For most doctors, using 1998 medical technology to treat brain tumors in 2012 would border on malpractice. When you need advanced medical care in 2022, don’t let the government’s war on medical innovation restrict your doctor to today’s 2012 technology.
Your life — like Cynthia’s — may depend on it.
Paul Hsieh, MD, is a physician and co-founder of Freedom and Individual Rights in Medicine (FIRM). He practices in the Denver area.
http://www.forbes.com/sites/realspin/2012/08/08/the-federal-governments-war-on-medical-innovation/print/
This is devastating. I hope the economy will soon be lifted by whoever will be elected President in the coming election.
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