Expertise and skill in managing the various aspects of the service mix can help medical device and diagnostics companies offer service programs that are just enough to differentiate them from the competition. But the balance that must be achieved is a delicate one. Service programs that offer too much may result in revenue loss for the manufacturer. Meanwhile, programs that are perceived to be inadequate place the company at a competitive disadvantage.
In this issue’s top story, author Shara Rosen, senior analyst with Kalorama Information (New York City), discusses the results of a recent survey on maintenance and service contracts in the hospital laboratory marketplace. The May 2007 survey involved clinical lab managers and directors, chosen at random, at 13 hospitals of varying size (360 to 902 beds) from across the United States. The goal was to establish a benchmark for the current status of instrumentation service contracts now held by clinical core laboratories. [More]
Earlier this month, U.S. Senators Charles Grassley (R–IA) and Herb Kohl (D–WI) introduced new legislation that would impose greater scrutiny over payments to doctors by medtech and pharmaceutical firms. Known as the Physician Payments Sunshine Act (S. 2029), the proposed bill would require drug and device manufacturers to file quarterly reports listing all payments and gifts to doctors with a value of $25 or more.
“This legislation will bring much-needed transparency to the financial relationships that exist between the drug and device industries and doctors,” said Grassley, who is the ranking Republican on the Senate Finance Committee. “Drug and device companies spend billions and billions of dollars every year marketing their products. A good amount of this money goes directly to doctors in the form of these payments.”
“Companies wouldn’t be paying this money unless it had a direct effect on the prescriptions doctors write, and the medical devices they use,” Grassley continued. “Patients, of course, are in the dark about whether their doctor is receiving this money.” [More]
Changing of the Guard at Medtronic Draws Industry Attention
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During the annual shareholders meeting of Medtronic Inc. (Minneapolis), on August 23, the company’s board of directors elected William A. Hawkins III to the position of president and chief executive officer, carrying out a succession plan that had been announced in February of this year. Hawkins assumes command of a leading medtech company that can lay claim to a string of technological advances and product innovations, including the development of the first cardiac pacemaker. As the largest pure-play company in the industry, Medtronic has a strong record of achievement forged over its nearly six-decade history.
While most analysts still praise Medtronic for the quality and innovation of its products, some have begun to criticize the company’s overly optimistic projections and forecasts, which have often come up short. The most frequent refrain from Wall Street is the call for company management to take actions that will boost shareholder value. [More]
Boston Scientific Benefits as Guidant Liability Awards Diminish
If recent settlements are any indication, Boston Scientific Corp. (Natick, MA) may end up paying out significantly less in damage claims stemming from the failure of Guidant’s cardiac pacemakers and implantable cardioverter defibrillators (ICDs) than it originally thought.
Shortly after Boston Scientific closed its $27 billion deal to acquire Guidant, in April 2006, the company reportedly set aside $331 million to settle such claims. By the end of that year, it revised the figure upward to $485 million. And according to its filing with the Securities and Exchange Commission, in May 2007 the company raised the fund further, to $732 million. So far, however, the case settlements related to Guidant liability claims have fallen far short of even the lowest amount set aside. [More]
President Bush Signs FDA Amendments Act
On September 27, President Bush signed into law the FDA Amendments Act of 2007, including provisions to reauthorize the user-fee program for medical device manufacturers. Although the legislation also includes other device-related provisions, it has gained attention mostly for its wide-ranging changes related to drug safety.
Commenting on passage of the act, AdvaMed president and CEO Stephen J. Ubl said, “This law is good news for every patient who depends on medical innovation. The enactment of this bipartisan legislation before the current user fee program expires on September 30 means there will be no disruption in FDA’s work to ensure that medical devices continue to meet FDA’s high standards of safety and effectiveness.”
